which can be changed more quickly: monetary policy or fiscal policy? This is a topic that many people are looking for. newyorkcityvoices.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, newyorkcityvoices.org would like to introduce to you Bernie Sanders 2016 Advisor On Modern Monetary Theory. Following along are instructions in the video below:
“Only potential risk with the nnational debt increasing over time is inflation and to the the extent that you ndon t believe the us has a long term. Inflation problem shouldn t believe nthat. The us is facing a long term debt problem so i m not looking for a recession. I don t think there are very strong indicators that a recession is.
Imminent i think that the us. Economy continues to chug along the way nthat. It has now for about 10 years growth is fairly. Modest but maybe nit will pick up a bit in.
2019 so the us. Economy has shown itself to be nextraordinarily resilient and i don t see reasons to be concerned that in nthe next year or two things are likely to turn around when it comes to headwinds nof course anything could happen. Maybe. The fed moves too quickly.
If nsuddenly. The fed decides that it wants to get more aggressive than nit has previously indicated that it s looking to get with respect nto interest rates that could certainly pose. A potential risk. You know the fed has indicated that it is about nat.
The end of its rate hiking cycle. And you know if there were to nbe. A couple of quarters. Let s say in 2019 that came in really strong nand.
They began to worry about an acceleration in wages or something like that nthat led them to jump on another rate hike or two then ni. Think things could potentially get very different. I mean unexpected events can always nsurprise maybe even with emerging markets. You know the global slowdown is na real.
Thing it s just that for right now the us. Continues to look pretty strong to me so when i look at the republican ntax plan is it really a significant stimulus or is it not so that s sort of the question right nin terms of the raw numbers it looks like a significant stimulus. I think the latest estimates are nthat the republican tax cuts will add something like 19. Trillion to deficits over the next 10 years but of course for the word stimulus nto have much meaning the tax cuts have to actually produce broader economic nactivity they have to do something to jolt the economy.
They have to lead to higher nspending more sales more hiring more investment that s what stimulus nis supposed to be so because of the way the ntax cuts were structured they disproportionately benefit the folks at the nvery top of the income distribution. Who probably don t have na. Very high propensity to spend the republican tax cuts. They don t nseem to be doing a lot to jolt the economy.
So they helped growth has picked up a bit. But i don t think that i would call nthem a giant stimulus in spite of the price tag new questions about the sugar high nwe have seen from corporate tax cuts. We may be seeing a kind of sugar high. I think you get a sugar high from a tax cut the sugar high thing is a little puzzling nto me because this was not a one off this was not a one year tax cut event.
This is something that s been phased nin and will continue to be phased in and so we ve got many years ahead nwhere. We re going to be feeling the effects of the republican tax cuts. I mean people are beginning to file ntaxes. Now for the first time under the new tax laws right so some people i think are ngoing to turn out very pleasantly surprised other people are gonna be nvery surprised in a negative way especially some middle income higher nmiddle income folks in blue states are already discovering that they re npaying more in some cases much more than they were paying last year.
So on balance..
We re going to have to wait and see and this is going to be i think a pretty good test year to see how the republican tax cuts actually affect nthe broad swath of americans so i don t think it s a sugar high. I m waiting to see how it all nets nout after the end of this year. And there s a potential boost nin. The years ahead an unconventional economic theory.
Is ngaining some traction thanks to the policy teams of alexandria. Nocasio cortez and bernie sanders. I think the first thing that we need nto do is break the mistaken idea that taxes pay for 100 of government expenditure. My critics say you know nbernie that s a great idea you re into all this free stuff.
How you re gonna pay for it so mmt starts with a simple observation and that is that the us. Dollar is a simple public monopoly in other words. The united states ncurrency comes from the united states government. It can t come from anywhere else so what that means is that the nfederal government is nothing like a household in order for households or nprivate businesses to be able to spend they ve got to come nup with the money right and the federal government.
It can nnever run out of money. It cannot face a solvency problem nbills coming due that it can t afford to pay. It never has to worry about finding the nmoney in order to be able to spend so the deficit definitely matters so it s just that it matters in nways that we re not normally taught to understand normally. I think people tend to nhear deficit.
And think it s something that we should strive to eliminate nthat. We shouldn t be running budget deficits that they re nevidence of fiscal irresponsibility and the truth is the deficit can be too big evidence of a deficit that s too nbig would be inflation. But the deficit can also be too small. It can be too small to support demand in the economy and evidence of a deficit that nis too small is unemployment.
So if you think of the government deficit as the difference between what the government spends into the neconomy and what it taxes back. Out then imagine a government that nspends one hundred dollars into the us. Economy. But it only taxes 90 nof those dollars back out we label that a government deficit nand.
We record that on the government s books. But what we forget to do is npay attention to the fact that there s now 10 somewhere in the neconomy that wouldn t have been there otherwise that is put nthere by the government s deficit in other words their ndeficits become our surpluses and so when we talk about red nink and the government having all of this red ink. We have to remind nourselves that their red ink becomes our black ink and their ndeficits are our surpluses and the question is then nshould you expand fiscal policy. Should you run bigger budget deficits nin order to boost growth.
So what is the objective. What is the proper policy goal and i think the the right policy ngoal is to maintain a balanced economy. Where you re at full nemployment your guarding against an acceleration in inflation risk and economists tend to understand that nthe kinds of things that you can do to boost. Longer.
Term ngrowth are investments in things. Like education infrastructure. R. D.
Those. Are the sorts of things. Nthat tend to accelerate productivity growth. So that longer term real ngdp growth can be higher.
So there are ways in which nthe government can make investments today that increase deficits..
Today that nproduce higher growth tomorrow and build in the extra capacity nto absorb those higher deficits. So it s impossible really to put a number nobody can how much debt is too much debt. If you look at japan today. You.
See na country where. The debt to gdp ratio is something like 240 nwell above orders of magnitude above where the us is today or even where the us is forecast to be in the future. And so. The question is how is japan nable to sustain a debt of that size wouldn t it have nan inflation problem wouldn t it lead to nrising interest.
Rates wouldn t this be destructive nin. Some way and the answer to all of those questions as japan has demonstrated now for years is simply no japan s debt is close to 240 of gdp. Almost a quadrillion that s a very big number yen long term interest rates nare. Very close to zero there s no inflation problem and so despite the size of nthe debt.
There are no negative consequences as a result and i nthink japan teaches us a really important lesson. If you think about what happened after nworld war ii. When the us national debt went in excess of 100 close to 125 of gdp. If we were talking about it the nway we talk about it today as burdening future generations as posing na grave national security risk we would have to scratch our nheads and say do we think that our grandparents nburdened.
The next generation with all of those bonds that were sold during nworld war ii. To win the war build the strongest middle class. Nproduced. The longest period of peacetime prosperity.
The golden nage of capitalism. All of that followed in the wake nof fighting world war ii. Increasing deficits massively increasing the size of nthe national debt and of course. The next generation ninherits those bonds they don t become burdens to the nnext generation they become their assets.
The only potential risk nwith. The national debt increasing over time is inflation and to the nextent that you don t believe the us. Has a long term inflation nproblem. You shouldn t believe that the us is facing a long term debt problem.
So the best defense against ninflation is a good offense. And what mmt does is to try to be i think kind of hypersensitive to the risks of inflation. I don t see any other macro nschool of thought pay as careful attention as we do to the inflation risk question. And so what we would say is look n.
Considering a new spending bill. Which that new spending will add to nthe deficit or add to the debt you should be thinking about the ways nin. Which that new spending has the risk of accelerating inflation nand then avoid doing that so instead of going to the ncongressional budget office. And saying over time government agencies and say we re nconsidering passing this trillion dollar investment in infrastructure.
This is our bill would you look at nit and we plan to do this spending over the course of the next five years. Tell us if that would create nproblems in the real economy. Evaluate the inflation risk and come back. Nto us.
And give us some feedback..
That s the kind of responsible nbudgeting that i think that i would like to see congress begin to move towards so the question about different one and i think the first thing you have nto do is say. What is driving the inflation. Because to think that the inflation nthat is going to become important at some future. Date is likely to be the result of too much aggregate spending is really hard to believe i mean the us.
Economy. Hasn t experienced. What we nmight call demand pull inflation for almost a century the types of inflation that have been nimportant in the us have almost always come on the cost side. What we call like oil price shocks you might nsee increases in headline inflation rates because the housing ncomponent or health care and so when you think about how nto fight inflation.
If you ve got inflation resulting from energy price nincreases. It s probably not going to do much to have the fed nraise interest rates or even to have congress raise taxes you ve got to do something else. That s going to work. So i reject the idea that mmt nis about using taxes to fight inflation.
That s a mischaracterization nof. Pretty much everything we ve written. But people say it all the time. Hillary clinton called you the king of debt well no she didn t call me i ncall myself the king of debt.
I m the king of debt. I m great with debt you know after initially worrying about nthe national debt. We got 18 trillion in debt. We ngot nothing but problems as a candidate he talked about nthe need to possibly negotiate you ve also renegotiated debt agreements over the years do you believe that we in terms of the united states nneed to pay 100 cents on the dollar or do you think.
There s nactually ways that we could renegotiate that debt yeah. I think look i ve i ve nborrowed knowing that you can pay back with discounts now we re in a different situation with the country. But i would borrow knowing that if nthe economy crashed you could make a deal and there was a lot of backlash against those comments and i think he had a nreally important conversation with someone and then he changed his narrative and he came nout and he said let me tell you you don t have to negotiate with your creditors ok. I hate to tell you but we print.
The money first of all you never have to default because you print. The money. I hate to tell you ok ok i hate to tell you there s never gonna be a default. But these people are crazy.
This is the united states government and he just kept repeating. So i think the king of debt figured out that there s a difference between taking on debt to finance. Ncasinos and real estate in your personal capacity. Or in your capacity.
Nas. A business and selling treasuries and having a national debt nand being able to afford to make every payment on time in perpetuity. Well. He knew what he wanted to do he already had an agenda laid out nbefore the two of us even met for the first time.
He had a 12 point agenda that became sort of the bedrock for his presidential run and so i was useful to him where i could be but the big policy ideas had taken shape really before i got involved bernie. Sanders. Proposing an estate tax nthat would be the highest in over 50 years. Senator.
Elizabeth warren s plan to tax the super rich alexandra..
Ocasio. Cortez. Is calling on america s uber. Wealthy to pay a bigger share in taxes.
I think. It s a couple of things ok. I think that for some of the ncandidates. There is a real desire to do something on the tax side to nimpact distribution to say look the concentrations of wealth and nincome in the us.
Today look very much like they did in nthe late 1920s. That there is a belief that somehow this is problematic nfor. Both economic reasons and for democracy itself. And that there nis interest in trying to rebalance the distribution of wealth and nincome in this country and that the tax code is seen by some nof these individuals as one way to go about doing that so i do think.
It s got something nto do with a desire to impact distribution on the revenue side. Nthis gets interesting. Because the way the congress forces itself to noperate today. And you know the house has reinstated paygo rules recently nwhich means that any new spending has to be fully offset either nby finding new revenue or by cutting some other part of the budget and so if you want to do anything nyou have to quote unquote pay for it and because democrats in particular are nstarting to think about really big policy ideas.
Really ambitious stuff nthe price tags tend to be very. Large. And so where do you go when you need a lot of money it s sort of natural. I think for ndemocrats to turn to the very wealthy and to view them in a sense as their pay for you ve got all the money.
So we ve got to come. And we ve got nto raise taxes both to deal with the fact that you ve got all the money nand to get the revenue that we need in order to write the legislation get nit to the floor get a vote and ultimately pass it i just look at the field. You know nof people who have entered so far. And i see democrats kind nof swinging for the fences.
I think that you re seeing more nambitious policy proposals. This time than you would have seen probably. If nthe way hadn t been paved for this kind of thing in 2016. So there are a lot of people nsenator booker s got a big proposal for doing.
Something called senator harris is talking about very nbig tax cuts for the middle class. Senator warren s talking about na green. New deal. Senator sanders has talked about a njob guarantee.
So there s just all kinds of big stuff out there and ni think. There s just going to potentially be a lot of excitement nin. The democratic party around some of these big ideas are you working with any of the n2020 candidates on the democratic side currently yes. Mhmm and you ll just leave it at that i better because if they don t go npublic.
Then i don t go public. ” ..
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