A great explanation. Prof Bill Mitchell (in his book Reclaiming the State) refers to this limit as the productive resources, which probably amounts to the same thing. He also wisely differentiates between the real economy and the financial one. If we spend wisely, such as on the infrastructure and green investment, we not only address under-employment but also help to mitigate climate change.

@maria8809ttt

2 ай бұрын

Very true, OMF does not carry any intrinsic inflationary risk: it is the government spending itself that carries such a risk, regardless of how such spending is financed, by raising taxes, issuing debt to the private sector or issuing debt to the central bank. Indeed, all spending (private or public) is inflationary if it drives nominal aggregate spending faster than the real capacity of the economy to absorb it. That is why full employment aids productivity, that aids the increase in product availability enabling reduced inflationary pressure. More housing equals more jobs, equals more housing stock, that equals decreased price pressure. Once the stock is at the price level required and has filled optimum need, no further stimulus is required. The wages from the jobs created are spent into the economy that increases local demand and grows the economy from the ground up. Capitalists can produce goods to met that demand in the real economy. A regulated capitalist private sector, and a socialist government that stimulates the economy where required brings stability and less need of taxation.

@oneoflokis

2 ай бұрын

💯👍

I wish I'd found your channel a long time ago! The first economist I have ever found who is not only knowledgeable but explains this difficult subject in layman's terms. I've only just found it so lots to wade through. Thank you so much for taking the time.😊 Should be shown in schools!!

OMF (Overt Monetary Financing) layman's terms money printing has case studies that illustrate it can create positive effects. Various analysis show that in the 1930s Japanese finance minister Korekiyo Takahashi was able to jump start the Japanese economy by allowing the central bank to create money to fund public works. Korekiyo is famous for abandoning the gold standard in 1931 and introducing a major fiscal stimulus with central bank credit that was found to have been crucial in ending the depression quickly.

@Rob-fx2dw

2 ай бұрын

You have cherry picked. What about all of the other money printing schemes that have been done and failed miserably?

@maria8809ttt

2 ай бұрын

@@Rob-fx2dw Such as?

@Rob-fx2dw

2 ай бұрын

You cherry picked an instance of what someone has reported and have not even supplied evidence of the details of how that spending actually stimulated the economy. Then you ask me for evidence without supply any yourself. The onus is on you to supply evidence of how that mecahnism alone caused an end to the depression because you are making the claim.

@Vroomfondle1066

2 ай бұрын

@@Rob-fx2dw They never happened - there's always been something else going on with the economy of those countries which cause the problem. The money printing was an effect of those causes, not the cause itself. Weimar Germany had been bankrupted by the Triple Entente and was hamstrung by an economy stripped of productive capital goods and the gold standard. Warren Moseler has written a paper on this.

@Vroomfondle1066

2 ай бұрын

@@Rob-fx2dw You know who else makes shit up that isn't based on reality? That's right, it's purveyors of the psuedo-science of neo-classical economics - 75% ideology, 20% wishful thinking, 5% observation of the real world.

100%. Though to be honest the majority of people I hear make any other claim are those in disagreement with MMT

@WarrenPeaceOG

2 ай бұрын

Also, socialism means getting 'free stuff' from govt without limit ;-)

@Jesus-kt5dc

2 ай бұрын

​@@WarrenPeaceOGSocialism is the collective ownership of the means of production.

@mypointofview1111

2 ай бұрын

​@@WarrenPeaceOG Socialism is about those who create the profit margins for companies being paid fairly for their contribution. Capitalism is about how much the boss can screw from his workforce. Totally different approaches to the same situation

@Vroomfondle1066

2 ай бұрын

@@WarrenPeaceOG Do you mean the way the landowners get massive agricultural subsidies under Neo-Liberalism? Or the way that bond holders get massive interest flows on their gilts?

@WarrenPeaceOG

2 ай бұрын

@@Vroomfondle1066 ;-)

I'm a Yank who loves your videos; they are clear and concise.

I'm so happy I made productive decisions about my finances that changed my life forever,hoping to retire next year.. Investment should always be on any creative man's heart for success in life

@wilsonrichard440

2 ай бұрын

Thanks for the advice! I'm new to financial planning and wasn't sure where to start. Any tips on finding a reliable financial adviser or resource to guide beginners?

@robertgreg6009

2 ай бұрын

As a beginner, it's essential for you to have a mentor that is verified by finra and SEC to keep you accountable. I'm guided by a widely known financial consultant Stacey Macken

@arktom7335

2 ай бұрын

Truly, investing has changed my perspective on how one can succeed in life; working multiple jobs isn't the optimal way to attain financial freedom and unfortunately, we discover this later in life. Currently earn as much as 12 grand weekly and this has improved my financial life

@Ricgibs

2 ай бұрын

YES! that's exactly her name (Stacey Macken) I watched her interview on CNN News and so many people recommended her trading skills, she's an expert and I'm just starting with her....From Brisbane Australia

@aniniels-hw5iv

2 ай бұрын

This Woman has really change the life of many people from different countries and am a testimony of her trading platform .

Old man here. Born in the 50’s, seem to recollect the public could buy local government bonds which helped build council houses etc. How about a modern version?

@Vroomfondle1066

2 ай бұрын

I think Richard proposes this idea.

Doesn't help that figures are always grossly miss reported or distorted by journalists. Modern money theory should be taught as part of Math at school so our kids know what they are subscribed to and they can't be driven to hysteria by political campaigns. Disinformation starts with education.

If the Tories can ask the BoE for more money, why didn’t they pay for the northern leg of HS2 this way. Surely, its benefits would have improved the country no end and can hardly be considered to be reckless spending.

@maria8809ttt

2 ай бұрын

Political choice.

@adenwellsmith6908

2 ай бұрын

Why shouldn't HS2 be funded from ticket sales?

@helenheenan3447

2 ай бұрын

@@maria8809ttt Absolutely correct. The Tories chose austerity, and used their supposed lack of money to justify it. They know how the economy works (well some of them do), but it's more politically convenient for them to starve services we need, like the NHS and education, so that the private sector can supposedly come in and fix them (or make a profit, as they really intend.)

@maria8809ttt

2 ай бұрын

​@@helenheenan3447Very true, the Capitalist Neoliberal Doctrine is set to aid capital accumulation and protections of that accumulation. Its real economical out comes have been well documented as detrimental. It created the build up to the Global Financhel Crisis where there was a mass private sector default, then a liquidaty crisis due to private investment removing their money until the default risk was removed and absorbed by global central banks. This doctrine needs an enlarged government to absorb risk removel.

@RogerRoving

2 ай бұрын

Quite!

Sounds like classical Keynesiasm! (And good so!)

@julianshepherd2038

2 ай бұрын

Yes and yes.

@adenwellsmith6908

2 ай бұрын

So we've had a couple of decades of major Keynsian spending because there's a deficit. The New deal was 1% of GDP in the US. We've had that in spades here. Many times 1%. Why has it failed?

@oneoflokis

2 ай бұрын

@adenwellsmith6908 Keynsianism never failed. The monetarily stopped it because it didn't suit their interests.

@abody499

2 ай бұрын

@@adenwellsmith6908 keynes didn't say print money to spend on making the s&p 500 and other market lines go up

@maria8809ttt

2 ай бұрын

Yes, parts of Keynes theories were removed and over ruled by an American delegation. What was left now favoured capital. With integral parts removed from Keynes mechanisms the model failed. In stead of reintroducing the full structure of macroeconomic movement. Capital doubled down. It failed globally, again in 2008 they doubled down again. This isn't going to end well if this carries on. Social unrest is increasing, default is increasing, private sector debt is increasing, inequality is increasing. Capital is consolidating.A perfect storm, not seen since 1929. Look what happened to the stock market September 1929, Fiat was avaliable at that time, but when that much shock hits that quickly even Fiat couldn't absorb the shock quickly enough to prevent a wipeout. This is were we are at now. We need the full theory to start to reverse the crisis build up, but that is a political issue. They shouldn't have removed the protections limiting capital power and accumulation placed by Keynes after the Great Depression. ​@@oneoflokis

Right now there is no limit to the amount of bank credit money that can be created by the private banks. The Bank of England will create reserves in response. BUT there are commercial leverage constraints. Other constraints can apply. The fundamental point here is who gets to benefit by creating the money and from the process. Right now it’s the private commercial banks who benefit, often foreign owned banks. We have given away vast amounts of seigniorage, power and control. To what end?

I like how it’s the Americans that came up with this, says a lot.

@davidcann8788

2 ай бұрын

Bill Mitchell is Australian. Warren Mosler is American, as is Randy Wray and Stephanie Kelton. But Stephanie was at Cambridge, UK. Steve Keen is also Australian. John Harvey was born in UK but works in Texas. Martin Watts is from UK but works in Newcastle, Australia. Steven Hail is from UK, but works in Adelaide, Australia. Paulina Tcherneva is Bulgarian, works in the US, but spent time at Cambridge. Most of these people call themselves post-Keynseian, and Keynes, of course, was British. Bill Mitchell is still a Marxist of sorts. So the influences are mixed.

Yes indeed, but those constraints are moral ones, and we live in amoral times. The dominant "morality" (one uses the term advisedly) is Amercan pragmatism, which translates neatly into Oliver Cromwell's cynical dictum "Necessity knows no laws". For modern times, one needs to add: "Technical ability knows no laws". A pithier version would be "Just do it". "Mr. President, we need a further $ 95 bn to fund new wars". "Just do it".

@oneoflokis

2 ай бұрын

F wars. What about jobs and public works?

Question, Is the government accountable for reckless spending who will hold the government accountable in this case.

You can’t have infinite anything from finite resources, that’s just plain common sense 🙂

AM enjoying your videos Mr Murphy....a question ; what effect does Wide Open Borders have on our economy, do you think ?

Oh no. Homework on a Sunday.

@OghamTheBold

2 ай бұрын

That reminds me of all those local open prisons for 'the little folk' of the landless poor who are set home 'work' and not paid in fact the hardest workers are fined £66,666 for basic exams demanded by exploiters

I'm sure the banks and bond markets will have something to say about our spending...

Just a lay person but …… why won’t all the financial institutions and other investors just repose faith in MMT - at least, on a “wait and see” basis - and buy huge quantities of the bonds issued by nations like Eritrea, Zimbabwe, Ghana and Egypt (to take those random examples) ??? What could go wrong if those borrower nations demonstrated that raising such monies on the international bond markets was so as to “take a leaf out of the book” of nations such as the UK and the US and apply MMT as part of an overall plan to pump money into, say, infrastructure projects and thereby set a course for achieving full employment in the particular country concerned ? The “wait and see” aspect is simply to provide a brake on continued bond buying (in respect of the nation concerned) should it become evident that monies are being diverted ….

Yes, the Gov. can print as much money as it wants. However, the value of the total amount of money in the country will then reduce to compensate, I am talking about inflation here which reduces the value of everyone's money by a tiny amount, but all these tiny amounts add up hence the recent price increases we have had. It is a crafty way of taking money from us that the Gov. easily gets away with. I also have to mention the many businesses that have took advantage of the situation to increase their prices much more than necessary, especially energy companies, this is shameful but nothing is done about it and they are allowed to carry on with it. I wonder how many MPs and Ministers are shareholders themselves?

@RichardEnglander

2 ай бұрын

Yes, printing more money is inflation of the money supply debasing the currency value.

No your speedometer does.

Agreed. But the question is does the UK have scope for it and should it be used? I have assumed that if it was to be used sensibly then it would largely be focused on investment. Labour did want to invest £28bn on its net zero target but has now retracted that proposal. Presumably they don't see MMT as an option.

@OghamTheBold

2 ай бұрын

Without Green net zero targets wouldn't MMT be what was suggested first a limitless if slightly 'extinctiony' road to fabulous riches for some and existentially ghastly for the poors

@lonevoice

2 ай бұрын

@@OghamTheBold As Richard says MMT has to be used very carefully and a lid needs to be kept on inflation. He mentioned Stephanie Kelton. She was a key member of Biden's economic task force when he came into power. They used MMT for some significant investment. They seem to have inflation largely under control and most of what they do have is supply sided.

@229andymon

2 ай бұрын

Not sure what the difference is between MMT and good old fashioned Keynesian pump priming?

@julianshepherd2038

2 ай бұрын

Investment in green workers and infrastructure gives us a reliable source, not dependent on various dodgy regimes to sell to us.

@OghamTheBold

2 ай бұрын

@@lonevoice Investors push back expectations of interest rate cuts around the world as Fed's battle with price pressures complicates other central banks’ loosening plans

Printing money is inflation of the money supply debasing the currency which will inevitably cause inflation.

@markwelch3564

2 ай бұрын

Only if you give it to people who already have money, as then they will use the extra capital to outbid others for assets, pushing prices up Use the new money on infrastructure investment, and the money doesn't affect existing asset prices. If it does, it brings asset prices _down_ - for example, if you use the money to build houses, you increase the supply which makes housing less scarce How you use new money makes a big difference. Trussonomics will cause instability, but infrastructure investment won't

@RichardEnglander

2 ай бұрын

@@markwelch3564 no, not 'only', literally. If you create more money then you are inflating the money supply, inflation can happen if the money supply grows faster than the economic output under otherwise normal economic circumstances. Take for example Mansa Musa who caused huge inflation on his journey to Mecca, he didn't give it to the rich, he overpaid for everything and just gave gold away. I'm afraid that what you have there is an ideological position, it isn't valid. If you want to make a case then go for it.

@markwelch3564

2 ай бұрын

@@RichardEnglander prices go up if you have more money budding for the same assets If you create assets with the money, you're creating assets in balance with new money This assumes that tax policy is also being used as a balance to prevent inflationary bidding behaviour on existing assets

The problem that Gary Stevenson points out though is that the money created didn't go into the economy it went to enrich the already super rich whi sequester it or e8 buy up assets like Housing thus putting them out of reach if ordinary people. There may be no technical limit on the amount created but perhaps you might address this third limit: the gifting to the super Rich? In addition to the 2 limits you have outlined. How do we deal with this? Do you agree with Gary's analysis? How about a head to head with him? Thanks for what you are doing it's really informative.

@maria8809ttt

2 ай бұрын

Private banks should not have the ability to increase the money supply/liability. Deregulation was gifted by the government, reregulation of the private sector banks and market mechanisms is also in the governments power concerning it's currency in the UK. This was enacted in the US after the Great Depression by Roosevelt.

@maria8809ttt

2 ай бұрын

Glass Steagall

@adenwellsmith6908

2 ай бұрын

Mass migration causes a housing crisis.

@johnharvey1786

2 ай бұрын

Gary states that money just handed out without control, as with Covid support, always ends up with the super rich and it doesn’t benefit ordinary people. The super rich then simply increase their own assets and this money doesn’t help ordinary people. Share buy backs are a typical example of this. Given the state of the country this seems to be true. MMT argues that if this money is used to provide infrastructure or new businesses that creates genuine long term employment, benefits the country and adds to the countries GDP then that’s a better way for this money to be spent. However there is still a risk with any such injection of money if not properly targeted and controlled it can still have inflationary effects.

@markwelch3564

2 ай бұрын

This is what Richard said - you can print money to create jobs and build infrastructure The covid bailouts printed money, but effectively gave it all to supermarket owners and landlords, who used it to push prices up on property and shares This is the difference - building infrastructure expands the economy, while giving it to the already wealthy just gives the wealthy more power to push up the prices of existing assets

As someone who earned a degree in economics more than 50 years ago, I wish the federal government here in the U.S. would quit listening to economists spouting their silly theories. The economies of the real world have far more moving parts than any economics model can handle, so the outcomes of those models are likely to be wrong at least some of the time. The Fed seems to be wrong most of the time. Moreover, I often find myself wondering why, if economics is “scientific,” there are so many schools of economic thought.

@adenwellsmith6908

2 ай бұрын

Have you seen the video of Biden's economist talking?

@helenheenan3447

2 ай бұрын

Have you read or listened to Stephanie Kelton?

@davidcann8788

2 ай бұрын

MMT is economics for the real world. It doesn't make silly assumptions like most of the economics you are describing.

@adenwellsmith6908

2 ай бұрын

@@davidcann8788 The problem is the numpties are using MMT to say spend spend spend and dump the debt on the young, asset strip the workers.

Full employment is undesirable,

Full employment can never be achieved because so many jobs are detrimental to the environment. At some time we will have to acknowledge another way than continued growth and over production.

@maria8809ttt

2 ай бұрын

Full employment can always be achieved. Environmental employment that looks after our planet can create work as a public good. We need to think about our perception of what work is, the hours, the purpose etc. Remembering government has no need of profit.

Not sure I concur on this one. Sounds like smoke and mirrors to me. MMT provides the levers for a country’s fiscal responsibility to be at the whim of the political force in power in a particular moment. Providing incentives to a population hedged on the debt repayment of their children and the preposterous notion we can forever grow an economy is one of two things - an intellectual argument between academics with little or no skin in the game or something far worse.

@abody499

2 ай бұрын

that isn't what he said though. watch again if that's what u genuinely believe

@stephenjenkins1323

2 ай бұрын

Mmmm - who sets the limits then? That’s the reality. And kids do pay the tab but he doesn’t say this because it’s too unpalatable. It’s a trick of MMT to change the goal posts and “limits” to whatever is of that particular moment. But fiscal responsibility is out the window if you spend assets you don’t have. Inflation is a tax on a population that targets the poor. Increase money supply it will cause inflation and if you need proof of MMT failings look at covid measures - largest transfer of wealth from poor to rich and from young to old. All borrowed money hoovered up into the bank accounts of the wealthiest

@abody499

2 ай бұрын

last response I dont trust this is a good faith exchange. it is on my part. spending (funneling) billions on (to friends) useless equipment and technology - which u rightly point out was "hoovered up" - is not what he is advocating. The point is to invest in the infrastructure that supports a functioning economy and society. For that reason, it's not a valid point that "kids do pay the tab" because it's the "kids" who benefit the most from the infrastructure built off the back of the investment. he says all of this across his series of videos. to then come into the comments and make those points is - to say the least - not in good faith.

@stephenjenkins1323

2 ай бұрын

I’m not sure I understand your definition of good faith. Regardless I’m pretty sure we are well down the MMT experiment and in 20 years time I’ll be under the ground and this spiral of debt and spending using MMT levers and limits will have worked or it won’t. Maybe the kids really will benefit from the wonders of MMT and fiat money and the great societal foundations it will lay. My argument is this is academic thought experiment and no one really knows its validity. There is so much wrong with the system due to complexities that are over engineered and in reality make little or no sense the MMT argument simply adds further nonsense to the blurred concepts of debt, repayment, interest and assets. But don’t lie to yourself - you are betting your kids future not yours - which is reckless if you ask me as it’s not yours to wager. Then again if it pays off you will be a visionary but when it fails you will simply change the limits and rules and “explain” your terrible error away as you are an idealistic academic with nothing really in the game

"The government could, as a consequence, try and spend that money into the economy. But - and this is an enormous but - it won't if it's wise if there is nothing for it to spend that money on. In other words, if there is already full employment, or we are already at our physical limits with regard to the capacity of the economy and the environment to expand without causing harm, like climate change. So, of course, there are limits on what the government can do, however much money it can create and MMT - modern monetary theory - recognizes that fact and says the government can spend until it reaches the limits of full employment, and I would add, the limits of environmental change, or rather the limits that environmental change impose upon us." So, MMT says that if govt prints "too much" money then spends it then inflation will result. Govt has just printed a few hundred billion and spent it - the covid QE. We have had a burst of inflation. But from all the other things you say that inflation has nothing to do with govt money printing nor the expansion of the money supply. It seems more than a little odd to be insisting upon MMT as being a truth about the world then also insisting that the thing MMT predicts is down to an entirely different cause. Oh Yes. Even, Oh Yes?

@adenwellsmith6908

2 ай бұрын

Murphey still thinks printed money has value and can be turned into goods and services.

@maria8809ttt

2 ай бұрын

TQE went into holding the over inflated market value, not the real economy. They could have used permanent base expansion. It's all political choice. Permanent Base Expansion is not inflationary.

@abody499

2 ай бұрын

that's not what he said. watch all the videos referred to again if u genuinely believe he said that

@adenwellsmith6908

2 ай бұрын

@@abody499 What tim has posted is correct. Print money you get inflation. The left think that the government can print and exchange the money for services and goods. Simple test. Pay government workers in vouchers. No need to tax or fine. Now do you see the problem? Who would accept vouchers? Next the left think that you can print to pay ANY debt. Well for fixed rate debts, you can. But you get inflation and you screw your creditors. But for inflation linked debt, like pensions it doesn't work. The other myth. Governments are not households. The problem here is that services and goods are real things. To pay for those you need to give money value which means taxation or fines. Taxation and fines are limited because short of invading another country, you are limited as to how much you can extract out of taxpayers with no services because the money is going on the debts. ie. You need austerity to pay debts.

Brilliant.

Statement of the obvious.

Murphy's comment "the government as consequence spend that money into the economy could but and this is an enormous but it won't if it is wise if there is nothing for it to spend that money on. In other words if there is already full employment or we are already at out physical limits with regard to the capacity of the economy and the environment to expand without causing harm like climate change". Yet in all that imagined scenario he completely avoids considering what way those limits can be ascertained and avoids any mention of how the capacity of the economy would be measured since the capacity of industry is always more than an ideal. There is no imagined limit to industry's capacity if prices are ignored but in the real world prices are a reality and there is never nothing to spend more money on in an ideal scenario that never has existed. One has to ask what the cost is in bringing idle capacity into operation yet Murphy and MMt ignores this reality. So does Billy Mitchell his fellow MMt economist. There is no amount of idle resources but most of them are simply idle because it has been determined they are in comparison to much later more productive capital inefficient and out of date so have rightly been cast aside. Bringing that idle capacity into operation with government money would just add inefficiencies to the economy and lower effective GDP.

Rubbish, there is NO need for full employment, why build an economic model based on 18th-century ideas. Government spending should be for the public good, infrastructure, utilities, health and education, and it should be spent until demand is met. If you want to provide people with a feel-good factor many suggest is provided by "work" then a UBI is a much better and far cheaper option. Let people decide how they spend their time without the worry of not paying the bills which is much, much better than the ever-expanding Ministry of Employment that MMT requires. We don't need armies of grass cutters with nail scissors which is what the end result of MMT-style full employment create

@maria8809ttt

2 ай бұрын

UBI isn't the answer, the payments would have to be really low. I can't see capital taking a lesser cut from productivity profit. The more UBI that is required, will mean further capital profit reduction or UBI level reduction. UBI is just something to help quell the parts of the workforce that will be surplus to requirement, as tech becomes increasingly capable of reducing cost.

It's nonsense to believe any government will spend responsibly if they're given the opportunity to print and spend.

@julianshepherd2038

2 ай бұрын

All governments with their own currency can do that. They almost never do that. Google hyperinflation Germany.

@lkyuvsad

2 ай бұрын

@@julianshepherd2038 simplistic neoliberal view instantly contradicted by a cursory look out of the window.

@WarrenPeaceOG

2 ай бұрын

@@lkyuvsad 🪃🪃🪃🪃🪃🪃💥🍻

Politicians say that governments can create money without limits. Politicians are not known for honesty.

@davidthompson797

2 ай бұрын

They dont say that though, do they?, they say we cant afford this and we have to cut back on that, and we have to have austerity, they say "there is no such thing as government money, only tax-payer money" which is the complete opposite of the truth. Your second sentence though is still correct.