Modern Monetary Theory with Stephanie Kelton

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“The people who were so sure that deficits drive interest rates up or that QE is inflationary, those people who asserted those things with real fervour, I think are demonstrably wrong.”
— Stephanie Kelton

SHOW DESCRIPTION

Location: Zoom
Date: Wednesday 29th July
Company: Stony Brook University
Role: Professor of Economics and Public Policy

With the abandonment of the gold standard in the early 20th century, there has been nothing to limit the amount of money a central bank can print, leading to a rapid rise in national debts. In the US debt alone, the national debt stands at $26.5 trillion, and the growth is accelerating.

While conventional economic theory would suggest this ever-growing debt is dangerous as it can lead to uncontrollable rises in inflation and a devaluing of the dollar, there is a newer school of thought; Modern Monetary Theory which makes a different argument. MMT suggests that governments should not be concerned with increasing debt, arguing the only risk is inflation, which is controllable.

MMT is the antithesis to the Austrian school of thought that aligns with Bitcoin’s monetary policy of fixed supply and deflationary issuance.

In this interview, I talk to Stephanie Kelton, professor of economics and public policy at Stony Brook University. We discuss the benefits of modern monetary theory, why increased spending may not lead to inflation, national debt and money printing.

TIMESTAMPS

00:05:15: Introductions
00:06:17: Stephanie’s background
00:09:51: Narrating her book
00:15:14: Modern Monetary Theory
00:18:18: Why the government isn’t broke
00:20:57: The deficit being a positive
00:26:06: Money supply and inflation
00:31:13: Current landscape leading to higher inflation
00:36:24: Measures of deflation
00:41:21: Risks to MMT
00:46:35: Safe range of inflation
00:48:23: Impact of coming off the gold standard
00:53:00: MMT doesn’t prevent corruption or malinvestment 
00:57:35: How to budget responsibly
01:02:23: Helping keep businesses afloat
01:05:40: Structures of US political system
01:10:47: Preventing Congress being constrained
01:15:06: Individual savings
01:17:29: Myth around dollar scarcity
01:21:25: Risks around MMT theory
01:23:50: Final comments

 

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SHOW NOTES

PodcastPeter McCormack