YouSaid · the spoken record

Warren Mosler

lines on the record: 129
first: 2023-06-01
most recent: 2023-06-01
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Well, on Twitter, I keep pretty much a running commentary going on. I used to use an email list, but now I just use Twitter. It's been easier for me.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“I say absolutely not. It's there for other reasons. That's just a numerere internationally. And what we have, fortunately, are countries that are what I call have an export-led growth narrative. So you have Japan, Korea, China. And they buy US dollars because that causes them to be net exporters to the United States to support their exporters at the expense of their macroeconomy. And it keeps the dollar firmer than it would be otherwise. They don't care. They're doing it for other reasons. All right. And so I have a whole different narrative for what's going on there. And it's got nothing to do with... The headline narrative in the media. And that would be a good one for another show. Yeah,”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Talking to you Well, final thing I'll say just is that the Federal Reserve losing tons of money, that being stimulated for the American economy, that makes sense to me now because the Treasury bought tons of low yielding paper. But in 1996, when the Fed's balance sheet was not that large and they didn't buy tons of mortgage-backed securities when people were taking a mortgage at 3% and then they wouldn't refinance. Yeah, that's interesting. And also, I'll say on the currency thing that when Argentina raises rates to 20%, it's not enough. They raise it to 30%. I can see that spiral, but would you agree that the US dollar is at the top of the pyramid, it's the Kurgy hegemon, there will always be a bid for the dollar while we're in the dollar system. And people betting against the dollar system, it has not been a great track record for.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that was like 20 years. They haven't come out with those. Have you seen any study by any central bank showing that if they raise rates, we'll bring down inflation? No, because the staff can't find it in the data because the interest expense dominates is what I'm saying. And it dominated when debt-to-GDP was half of what it is today. Now it's double or three times if you look by the economy rather than held by the government. It's three times. It's got tripled the impact. I can't see any way it's not dominating. But I can be wrong. I mean, I'm just sitting here and saying crying a pair of shorts talking to you. Yeah.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Well, they've had the lowest inflation with the zero rates, and we've had higher inflation, much higher with the higher rates, and so is everybody else. Not that that's everything. But You know, look, all the central banks have done a lot of studies on whether interest rates can be used to support or not support their currency. And I used to read those reports all the time. The famous one was the Bank of England showing no correlation that interest rates are not the currency level of the currency is not a function of rates in the direction they want it to do. That was about 15 or 20 years ago, I think. I haven't read one since because there hasn't been one because they can't find that kind of correlation, so they don't even publish it. Remember, the central banks used to publish all these studies that showed a 1% increase in rates would cause inflation to go down by a tenth with a two to four-year lag.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“But look at Argentina. It only happens for short periods of time. It's more of a placebo effect. You've got everybody raising rates at the same time. And you have different inflation rates and you have different effects on trade from the price of oil. That was the biggest mover of the currency. The dollar got hurt less in terms of trade balance from the big run up in oil than like Japan. So the yen went down because they're a major importer of energy. They have to spend all this yen, flood the world with, you know, and so to put that.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Right, one other thing is when the currency raises interest rates, central bank Fed raises rates, that tends to, not always, maybe all things being equal, strengthen that currency. As we saw the dollar strengthen big time last year. And therefore, you know, if you're selling goods to Europe and China, it's really bad for producers. So that's”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Then borrow so clearly it's not applicable to that. The idea of crowding out in terms of monetary terms is just not applicable. And this is to a floating exchange rate system. The things you're talking about crowding out, they are applicable under fixed exchange rate system where the Fed has to have the money backed by gold or something like that and they could run out and there's not enough gold to go around. So they compete with rates and the market can drive up rates. All these other things where anachronisms from the gold standard.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Right. That got dismissed with the idea that you spend first and then you're borrowing some of the money you just spent. So you're not crowding out. You're adding the money first. Some gets used to pay taxes. The rest has nowhere to go. Money and Fed accounts can't go anywhere except to another Fed account. You give them another account called Treasury Securities to earn interest. You haven't crowded out or affected anything in nominal terms. Now, if the government buys all the bananas, it's crowded people out. Nobody can have any bananas. That's different. But for money in nominal terms, there is no such thing because of the sequence spend first.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“If the debt to GDP is high enough to offset the propensity, the difference in propensities between savers and borrowers. If it's high enough to offset that, then it flips over and the Fed can't use that as a tool anymore. They didn't specify whether that's 70%, 100%, 120%. They just said if it gets high enough. Now they're not even talking about it, not mentioning it at all. They're saying, oh, yeah, the rate hikes are going to be deflationary because the borrowers get hurt. They've just left that out of their equations. And it's in their textbooks. It's in their model. It's in the New Keynesian model. It's got the interest income right there. The deficit is a calculation in the New Keynesian model. They see it as 4% of GDP from interest, but they're not directing any attention at it.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“And the mainstream economists up until COVID were screaming about this. That's the risk of the deficit. And now they're quiet, not a word.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Data tells me they're spending it enough to offset these recession forecasts permanently and turn it on to expansion. And the more you add to it, the more of an impact it has. It becomes a larger and larger percent of GDP. It's almost one for one. If interest expense goes up, if rates go to 10%, interest expense ultimately goes to 10% of GDP if the public debt's 100% of GDP, it's actually higher than that. It goes up roughly proportional to GDP. So 1% interest when they raise rates a quarter of a percent, deficit spending went up a quarter percent of GDP roughly. Now, I know it might only be 0.2% or something, but roughly. That's what they're doing. And of course, the more you do it, the higher the public debt becomes as a percentage of GDP. So it gets worse and worse.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, they might not spend it. They might not spend it. But some of the stimulus checks went to me, and I didn't spend it. So let's say instead of this trillion and a quarter going to interest, it had gone to stimulus checks. Everybody'd be screaming. You're running off the deficit, stimulus checks, inflation, you're giving people all this money. Well, you give it to the high end and they don't even count it. I'm not saying they're going to spend it the same way.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“A receiver of income. It's a net saver. The private sector is a net saver of the entire public debt. The government's deficit is our savings. And when they start paying interest on it, they're just paying basic income to people who already have money in proportion to how much they have. A lot of people like basic income, but nobody likes, there's nobody supporting doing it that way.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Well, Warren, you've given me and. Here, a lot to think about. If I had to just look back at our conversation and sort of Draw some conclusions. One would be that high interest rates is not necessary deflationary. In fact, you think it is inflationary because the private sector is net, net. A lender, not a borrower.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Supreme Court could call it unconstitutional, I guess. Congress can pass something. The Supreme Court can say it's unconstitutional. So they could say the debt ceiling is unconstitutional if they could find a way, and that would change it, and then everything would fall into place. But I don't think anybody else has any authority to override the will of Congress. And there is no case being brought up before the Supreme Court to have the debt ceiling unconstitutional. It may not be. I mean, I'm not saying it is. I'm just saying that's the avenue for another branch of government to override the will of Congress.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“These other agencies, branches of government don't see themselves as their job is not to overcome the will of Congress. And so we've got to get past that first before they're going to do anything. They have to see it as their responsibility and not the opposite.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“But the larger point is, which President Biden made, is that the will of Congress is to do this, destroy the economy or whatever, default, and have a dynamic downward spiral. It's not for the Federal Reserve, an agent of Congress, to override the will of Congress. It's not for the executive branch to override the will of Congress. It's to carry out the will of Congress. And that's the macro principle. Now you can say, okay, but the Constitution says you're not allowed to default. The Constitution also set you up as there to carry out the will of Congress and they've taken the path, the position that that's their role. And so they're not going to do any what I call gimmicks. Okay. I'm not saying gimmicks in a disparaging way, but it's a way to get around the will of Congress. Clearly, the will of Congress right now until they pass something is to block all payments and to create a default situation.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. So he can't even talk about it. That's where we're at right now. So how do you forecast what's coming next? It's like, you can't. You're second guessing what these people are going to do with their buttons that they have to push. Look at this insanity of the death ceiling. That's like every congressman has a button on his desk where if he pushes it, he launches 10 nuclear warheads. And he says, if you don't cut spending, I'm going to push this button. It's like government by extortion, right? The button has nothing to do with the expenses he wants to cut. It's just a way to blow up the economy if I don't get my way. And it's interesting times. I mean, I'm 74. I'm glad I got to see this. But, you know, I guess I could say things were worse in the 60s and in the 70s, but they're not good now.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“I offered to give him a briefing, Jerome Powell on what I was thinking. And the answer came back is that he can't talk to me because it would be on their logs at the Fed that he talked to me. And they were concerned that if it got out, that he talked to me, there'd be some kind of monetary collapse and a systemic collapse.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“So, like, when you got it backwards, where does it end? There's a head of the Federal Reserve say, look, we've had this backwards, and now we're going to have to cut rates to control inflation. He can't do that. He's scared to death that if anything like that happened, that the whole monetary system would collapse because they believe it runs on faith. I'll tell you, it runs on tax liabilities. They'll tell you it runs on faith. I'll tell you if it ran on faith, it would have been gone a long time ago. I've seen lots of times where there was like no faith and it keeps going because you haven't paid taxes. But they don't know that, okay? And they are afraid that this can't get out.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“And he said, you know, we really can't do what you're talking about. We have to do this. And it was a nice meeting, but it didn't change anything. So after I left, inflation went to like 35, so rates went to 40, and inflation went to 50 and rates go to 55 or 60. And they just raised rates to 97%. And inflation's up there at 90 or 100 percent or something like that. And clearly the interest payments are driving this thing. Over there, the people who get these pesos, they don't want sell them in the foreign exchange markets. Peso goes down, imported prices go up. So inflation goes up. So they raise rates and give them more pesos they don't want. They sell in the foreign exchange market. So they get this vicious cycle going there. And it hasn't ended. Their unemployment's way down. The economy's good. You know, it hasn't caused a recession.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“That meant like this like you, but it was ahead of the central bank and he had a couple of people with. And the first thing he says, you know, we've been reading here for 10 years, so you don't have to introduce yourself, which is kind of nice. And one of his analysts had some paper by, I don't know, Sergeant Wallace or some mainstream paper showing that what I was just telling you about how the public debt gets too high. And we talked about Argentina. So they had 30% interest rates. The IMF told them they have to keep the rate above the inflation rate. So they had 25% inflation and 30% interest rates.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Well, Volcker had a situation like this where they were kind of like at these kinds of numbers. And then suddenly the employment numbers came out and the inflation numbers were higher than expected. And they just went from, they had like an emergency meeting or something. Over the weekend, they raised rates by what was it 200? And then they went up from there because as they raised rates, the inflation kept going up, which is exactly what will happen now. If they raise rates by another 5%, it goes to 10 or something, 10 and a quarter. And now we've added another trillion of deficit spending on interest. So it's over $2 trillion now. That's just going to make it worse. And so they do it again and it makes it worse. Now, if the inflation gets high enough where it brings down the public debt even after these payments, we could have a recession. So I was in Argentina a year ago, April.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Sure, what's the easiest way to cut, a trillion, two trillion in spending? Go back to zero rates. Are they going to do that? No. They're going to go to 10%, right? They're going to be spending another. You think they're going to go?”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“So, if rates are at 5% are high, and that is inflationary, as you say, and the US government continues to run a quite large government deficit, not as large as 2020, but still quite large. Would the solution to that be to curb government expenditure? Because I know modern monetary theory, reading Stephanie Kelchin's book. One side of the coin is if inflation is low, the government can do a lot more deficits possible. But the correlat, the other side of that coin is if inflation is high. Maybe it's time to cut spending”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“For purposes of the analysis of trying to determine the income of the economy, you have to look at the income we're getting from all the government agencies, not just the treasury. We're getting income from all of them. It all spins the same. So, you know, if the, you know, put them all together.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, but you have to, the Fed bought it The Fed didn't earn any more interest from the Treasury, but if you look at interest paid to the economy, the Fed had $8 trillion at one point, I think, but $6 trillion now. That's all overnight money getting the full rate. So that's as if the Treasury had that many Treasury bills. It's like as if the Treasury exchanged their Treasury securities for one month Treasury bills or something. So it just went up immediately on $6 trillion.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I just want to go back to the point I made. So a little over a year ago, interest rates were at zero. So the interest expense from the federal government was very low. And dropping, not counting the fed, just looking at the treasury Roughly the weighted average maturity of the treasury, I don't know the number six years, seven years wouldn't only one sixth of the debt have rolled over by now. And isn't that a relatively small increase in interest expense?”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“But they're not there. They're not saying, hey, that's why we're still at 5% because the interest rate's 5%. It kind of correlates.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Would have been saying this four or five years ago. Now they're not. They're just eerily silent on this, which was their main thrust. If you look back about all this deficit fearmongering, if the deficit gets too high, all the interest is going to bury us. Well, now we're paying all the interest and they don't even talk about it.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, strange. So they do that. And so the course of Fed paying interest on reserves has a big loss. So if you don't count that loss, then the real corporate America outside the government is hugely profitable. It's at record profit levels because we're spewing out all this money. It's somebody's income. It's going to be corporate income, personal income. Know Profits. It's the old leading profit equation. The higher the deficit, the higher the profits. It's not like new MMT stuff. This is all mainstream economics. But they're denying their own economics. They're denying it from.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Well, the total corporate profits for the economy at the Fed St. Louis. If you look up corporate profits, They include the Federal Reserve Bank as a corporation that's earning profits.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Repeat Corporate profits were down a little bit. They include the Fed's profits as part of corporate profits in those numbers.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Let's say half gets spent. So if you have another $100 billion, you'll get another $50 billion in spending. Let's say 10% gets spent. So if you add $100 billion, you'll get $10 billion in spending. So you can look at the size of the deficit. You can look at the economy and you can calculate how much of it's getting spent. And that number is not constant. That will fluctuate. And you also have to look at the deficit spending of the private sector. How much are they doing? And that's gone down a little bit because of the banking scare. But you notice we went right through that. Okay, that was a liquidity issue that had nothing to do with bank earnings or anything else. Earnings are strong. Corporate earnings are up. The only reason they were reported down a little bit is because they count the Fed earnings. The Fed's losing, which is deficit spending. But if you take that out, corporate profits are up. Why? Well, the government's...”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“It's not as high because it got up to 15% of GDP. Revenues were way down. But in numbers, the spending was high. Spending's higher. But tax revenues are higher also. But it's going to military spending, social security, and whoever is receiving the interest. And infrastructure, we had a couple of infrastructure programs kick in. There weren't a lot, but it's adding something. And it's 7%. The government's spending 7% more than it's taking in. I mean, 7% of GDP more, right? So that's an extra almost two trillion. And somebody's getting it, okay? And the data tells you whoever's getting it, somebody's spending some of it. They were saving the whole thing and not spending any of it. We'd be in a depression right now. It's just a question of how much of it gets spent. So the more you pump out there, whatever percentage gets spent, the more spending there is.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“I don't follow this nearly as closely as I should, but when the deficit is huge, much bigger now than in 2019, where is that extra money gone to the economy? I know we did extra unemployment, PPP, but all those programs are behind us in 2020, 21. Where is the extra deficit compared to 2019 going?”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and if that was a dominating effect, we would have been in recession just like they all forecast. But we're not because it's not the dominating effect. There's an extra trillion and a quarter coming out of the fire hose that they're not factoring in. Oh, nobody spends any of that. It's like, okay.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Right, yeah, I guess it is the propensities to say. So savers, if Bill Gates' family office is getting all this extra money because of interest rates are at 5%, Bill's not going to be spending that much more money, but people who are borrowing at 3% when interest rates were at zero. Now they have to borrow at 8%, that can hurt their spending a lot. And you did see that, right? Adjustable rate mortgages.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“No, no. The economy is a net saver of $25 trillion. For every dollar borrowed in the private sector, there's a dollar saved. And then the government is a net payer of interest on $25 trillion, which is 100% of GDP. And I think the total borrowing from savings add to zero are about $40 trillion maybe in the economy. $40 trillion borrowed, $40 trillion saved. And you have different propensities for those people that maybe the borrowers get hurt more than the savers. But now there's another $25 trillion more savers. So the savers are $65 trillion and the borrowers are only $40 trillion. They're just dwarfed by this interest payment from the government. My narrative. And the data tells me that that's consistent with my narrative, that it's consistent with my narrative.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's not too bad, but they don't say, oh, that's what's supporting the economy. So, again, I was at that pension fund. I asked them, is there anybody else? They talk to everybody in the world. They're covered by the whole. Is there anybody pointing out the fact that the deficit is up to 7%, and that's what's supporting the economy? The answer is no. They're just looking at the interest rates saying these rates we expect a recession. The Fed's been forecasting a recession, what? Every two quarters ahead for the last year hasn't happened. Jerome Powell himself, Fed Chairman Powell His forecast differs from the staff. He thinks the economy is going to be okay. So that's kind of interesting. Now, maybe he follows me on Twitter or something.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“It's the largest single expense out there, and it's not getting any credit for running up the deficit and supporting the economy. Zero. I mean, have you heard any other economists point to the interest expense as one of the reasons the economy is doing well? I haven't”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“So there's winners and losers, but overall the total deficits looking at, I don't know, $1.8 trillion for the year, somebody's getting that money. And the winners are getting $1.8 trillion more than the losers are losing. It's a lot. And so car sales have gone up even though rates have gone up. I'm not calling this, but it looks like housing may have bottomed November, December. Sales starting to pick up a little bit. That's the one area that you thought would have collapsed. Housing prices are like flat year over year. I think they were up 0.7 and one index and down 0.4 and another. But basically, that's, you know, after shooting up as much as they did to just go flat, that's not much of a collapse, right? And it's because we're flooding the economy with money for interest expense and military and social security, but the interest expenses, you know, one and a half times larger than the military.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I knew I was saying it that I was not going far enough. It's not only the center, it is the entire map. What about banks, which, yes, they are regularly chartered, but when Bank, let's say JB Borgen wants to make a car loan. When interest rates are a lot higher, people are not going to want to borrow as much. And people who are borrowing money to finance their lives and their livelihood, they're going to pay a lot more, as well as by the way, very wealthy people are not exclusively savers. A lot of very wealthy people are very much in debt. They borrow a vast amount of money to finance their private equity, real estate and stuff like that. So if there's”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's a public. The currency itself is a public monopoly. So it has to be at the center. It's based on coercive taxation, which is government. And the private sector has to comply.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“The deficit got up to 15% of GDP during COVID. And then it collapsed to like four. And that's when everything went down. We had two negative quarters last year. And I know it's inventories and whatnot, but I want to just gloss over that without getting too detailed. But it was still... Increases on Social Security 8.9% or something, plus all the military spending. Okay, so we had all kinds of fiscal spending kick in to reverse that decline in the deficit and cause it to proactively go up. Yeah, they are, yeah, yeah, yeah. Military spending is all pegged to inflation. They're going to buy a certain number of bombs, no matter what they cost.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Right. But you said that so, yeah, people didn't borrow money in 2020 and 2021. I think that is because they had XX savings. Like if Bank of America put out someone had $500 in their bank account in 2019, they now have $3,000. I mean, I think people's savings account went up by a lot. But when I say boom, I was referring to 2021 that time. I personally am not a belief that we were in a boom now. But it is objectionally true that the recession fears of last year the economy is not as bad as thought.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Going the wrong way, maybe went the right way a little bit. I haven't seen any real good numbers on it. But now that the interest rate is back up and the higher income groups are just getting free money, you're seeing it start to go the other way.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“Well, it's growing, okay? And it Know we don't have like a five or six percent GDP, but we've got one or two. And you've got during COVID, people's, what we call savings was actually they didn't borrow credit cards and whatnot were run down. So debt service is extremely low. People are in a position to leverage. And a lot of this boom is by higher income people who's income has kept way up because they're getting a trillion and a quarter of interest income. So Rolls-Royce sales are sold out for the next four years at $425,000 a car. And now we're seeing people at the lower end are getting squeezed. They're not keeping up with inflation. So we've had a big shift in terms of distribution of consumption underway with these interest rate increases. With a zero rate policy, we actually saw a distribution of consumption starting to, you know, it stopped.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT
“No, but it hasn't kept up with inflation and it hasn't gotten them ahead yet. But also, look, if somebody was making $10 an hour and they go to $15, that's a 50% increase. They're still only making $15 an hour. They still have to live home. They still have nothing, right? And so when the bottom half gets a large percentage, it's not a lot of money. So just saying.”
2023-06-01 · Forward Guidance · Rate Hikes Are Inflationary, Says Warren Mosler, Godfather of Modern Monetary Theory (MMT) · IDENTIFIED FROM THE TRANSCRIPT