tv DW News LINKTV January 7, 2022 2:00pm-2:31pm PST
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want to live beyond the corporate nineteen fires cry. that is the question of this special series of comp solution. economist stephanie kelton was in the process of burning. she's just published her book the deficit in which she- hello graphically different monetary policy can give birth to people's economic. most people
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including almost all politicians and economists think that countries should run the budgets like households and businesses they should not spend more than they earn through the taxes the collect. you are in a columnist with a different vision care talk with ts idea that thes start vernment to operate its budget the warehouse school erates its budget we hear getting public officials wlime- say b. you are responsible o them to spend more than they earn that ty should set some money aside they should save for the future pay down debt avoid of borrowing- and so forth and so on and therefore what makes sense at the indivial level mes sense at
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the public lel as well f the governnt as well and you know people hear it and it seems intuitive because the finances that were most familiar with are of course our own. yeah so when we hear people talk to us about the government's budget using language that resonates with us that rinds us of our own personal finances it seems sensible and wsay well of cose that's theay the government should operate its budget and the reality is that it get everything backwards exactly wrong the biggest difference between the federal government and everybody else ishat t government has something the rest ous don't have. a it is the issue were of all righen i say when i of us call in to book currey users so households private businesses even munical
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governments in the u state and local governments across australia canada provinces provincial government well they're all currencysers they can ando have tlive within their meanshey are revenue constraint they can run out of money they can haveills coming due that they cannot afford to pay but the currency issuer is different. and because the currency or she where is diffent you go stop his budget different from the rest of us so. it means that whever the government that is that the federal government education that is state needs more money it can basally bring more money in circulation we now they i mean so even printing anymore nowadays as computer work at the federal reserve bank. now but then you know the immediate answer you would get this that that will bleed okay that will lead to inflation because they have too much money in circulation. and the prices go hher and then people become poor. so how do
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you protect against them. well you're absolutely right to recognize that the relevant constrai on government spending i inflation maybe that's the risk that we should not running out of mon notvency being. unable to pay the bills pt that stuff aside and let's focus on what we want the want the government speing what ends in our economy. and do we have does that our economy has the capacity to safely absorb that new spending so here' what i mean. if you are in a very dressed economic statehere there are lots of idle rources unemployed people. factories operating well below their capacity idle machines you have a lot of stuff lying around nobody wants to use including labor. government can safely
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comen any way those resources it could do a big hiring program putting people to work repairing ruilding infrastructure for example.nd yes those people woulde paying eve they woulde paid in new money creed asart of that spending program. and with that new income they would turn around and spendome of that money back into the economy right so the question is how much totalpending not just government spendingut how much total spending cammy economy handle. before it runs out of room before it hits its inflation constraint well the answer is. you can continuo fely spend up to the point of full employment and no further but th's exactly the information tha you want the federal government to receipt. that its- its job enough. in fact is to create a full employment economy. and not try to do more than tha so there's
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a natural inherent check on the amount of spend. th we be done. once you get to full employment you've reached the limit the problem is really not address don't work there's always work as you just said you know the roads need to be maintained and bridges need repairs and- whatever else bomb is says the money to pay for that work. so now you're saying in that particular situation which you know. we can just make sure tt these people get paid to do the work that needs to be done. and did the money come so the guy o. is it as simple as that. yes it is. it is- well you know if you look at what's happened notust in the u. s. because obviously vernments aund the world are ramping up spending to deal with no corona virus in th economic fallout and so forth but here in the u. s. congress has moved four pieces of legislation very quickly and
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one them was pretty substantialwo point two trlion dollars it was called the chairs act now congress didn't get together lawmakers didn come together and say all right everybody we need to co up with two point two trillion dollars. that didn' ppen all they did was write a bill andhen vote for that piece of legislation and that legislation effectively ordered upwo point two trillion dollarfrom the federal reserve because that's how it works congress has the power to spend ney it does not have votes o the spending and the government's fiscal agent bythe the federal reserve. and the federal reserve makes the payments kills me order for llars on behalf of the u. s. treasu by using the computer keyboard to create digital dolls and credit the appropriate bank accounts so that's where all of that money in times of emergency likedo it
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todayut we could also do it in more normal times we could fund infstructure in exactly the same way the limit again. is the economy's cacity to safely absorb whater spending congress has authorized so today congress here it has a box office they run all their lives you know potential programs on walls first through a bunch of dogs to make sure that iact is and then there you know they're going to see whether there's enough money. to pay for it and all that you're saying this it's should have done a bunch of the shift ilation. when long may sent a bill over to this by office called the can. budget office or cbo yeah ty're least. useful feedback one could possibly get what ty ask is tl us if it will add to the deficit tell us if it
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will increase the debt trajectory over the- forecast horizon. that is not the question or thos arehe questions that i would ask if i was doing. in infrastructure. i would sen my bill over to cbo and i would want to know hey i wanto spend two trillion dollars modernizing upgrading repairing america's crumbling infrastructu i haven't i haven't offset that spending there's no tax increase to quote unquote pay for it i didn't cs money out of some other area the budget. i think that i can spend two trillion er four years five hundred billion a year let'sayor the economy could safy haneat that spending that inflati wouldn't rise above the fed's 2% target that unemployment wod go down tt growth would pick up i think this is a good bill. tell me if i'm right. yeah that's what i would ask cbo. but all this leads to a growing. national debt as with
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so my other tngs i have a different way of looking at things so i just come at it from a different angle. so when it's the deficit i sayhy don't we insistn calling it a decit it's every bit as much as surplus as it is a deficit. so that's the first pointf the government runs a deficit let's say it spends a hundred doars io the u. s. economy but it oy taxes ninety dollars bk out. with a label at aovernment defic but what we forget is that the deficit is making a ten dollar deposit into some part of the economy. that ten dollars is a surplus in some other part of our economy and the reality is the national debt. i nothing more than a historical record. of all o t dolla the government spent into the economy and did not tax back. that are crently. being seen. in the- of u. s. it's part of
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our well if you're lucky enough to own some of these things the part of your wealth are your savings. you don't owe someone something you own something. it could be done today you know after the elections are going to be another government that has a different color and then wants to do other things now baby that is democts want to spend more money on. education healthcare whatever thingshat they think are necessary. but they also talk about raising taxes because they are very concerned said whatever that programs are that'll being paid for i mean you are touchin and then the results are gonna bring you some. and he always had to explain how he was going to pay for all the big things is going to do so that's thinking is still very much there the point is. what do you say to democrats now and factor in the position because you e apies. on the vine so whereas the republicans to pass their taxuts all they had to do was
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convince enough of their colleagues. to te for tax cuts one five. both for the tax ts and you're done. picked to fights ando my message t them is d't pick unnecessary fights. there is veryften ough low hanging fruit. and the low hanging fruit i the non inflationary fiscal space that's available to you. that you could sely increase spenng get wha you want with out the need to pa that spending with tax increases. whole thing harder to accomplish so but it. you will language you use i think you could say from your perspective that you don't need to raise taxes things to spend money as a government the only thing you should be concerned about is well if you're just if u're. gonnae on and then say it better than i do. is that right
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it can be as simple as that i mean it is. goi yeah i'm i'm over complicating you're absolutely right it is as simple as that so but then what i mean taxes those instruments and- what is the role of tax them. why do we pay tax. well lots of reass so wonder why andhe takesou back to the very beginning righthich is how does the government get its otherwise irinsically worthless. unit of account that called the dollar how did you t people twork and do difficul things in order to earn this intrinsically worthless unit of account wl. it so in the first itances with taxes are important because they help theovernment- make its own currency valuable to the rest of us but then once the currency is in use and everybody is working and
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thing and pay taxes and- thenis taxes do a variety of. other things are important one. the government collects tax. to reduce spending power so that i ve less income and les spendi power did not because they need t dollars but becaus they want me to ha fewer dollars. one of the reass is to make sce for so the governmentan spend ong military education and infrastructure and oer things withoutreating inflation in the economy. they get to put some in by makg sure that they i take some out right some is taken away from me. axes are important if government is concerne about distributio if you look around and you see the levels of income and wlth inequality. that look the way theyid- prior to the great depression and that concerns you and you say. i think this is not only bad for the way our econom functions but bad or the where democracy works are in and of themselveseme.
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problematic you can use the tax system to addressight and get it those concentrations not that t governmenteeds jef bezos'soney but because the government might decide that. that's too much well for any one peon-axes are useful for incentivizing a disincenve ici behavior so you might. change taxes or introduce new taxes because you nt people to- behave in ways that are less carbon intensive. right morning couragereen investments and discourage- get all other sorts of economi activities taxes are really important for lot of reasons what they aren't too. important for at was paying the bills for the federal government. so often that is not a problem to make that very clear- private that is a problem a lot of people have a lot of problems credit card bills you know college tuition whatever. it is
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the storage product that. can your m policies hello relieve. you knothere's a lotf research out there on this that shows. in fact as the economy has drifted toward greater and greater income and wealth inequality. that those folks right in the middleave become more a more reliant on debt to finance consumption because the cost of college education skyrocketed people borrow to put their kids through college government can help. make public colleges and universities tuition free at levi at the strength health care more than five hundred thousand families. filed for bankruptcy due to medical related costs that they can't pay every year medicare for all i mean you can use to student loan debt cancels you so there ar a number of ways. vernment policy could address private that you do talking your book about- you know always available employment you will not be on the board because there is a guaranteed by the federal government. that even if you get let go in whatever job you may house
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there's always work that you can apply for that you can actually do when you get a- mimum wage and you you will justet. i like the idea of universal basic services and that's what fdr wasalking about everyone should have the right. ta job a a living wage to althcare to education to a secure retirement right theseasic this ould bef basics. that should be afforded to all of us but in terms of the job guarantee your right t a job howould that work. well it works like a public auction in the labor market if you n't have job and you can't findne anywhere else in the economy. you can walk into o the u. s. known as- american in jobenters you walk into one of these things and you say. i don't have a job and i wt one and they are at the ready on the shelf. r. numbe of jobs that the cmunity has already decided. it once it values and
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it dean. that right stevie's are the things that we want done in our communi you get to look through that. and you ge to match up. your interest ur skills the time to walk part time do you want full time do you like to work outors do you likeo work with your hands youant to.ounow there a jobs thet the read and the worker is matched to a job and you walk i unemployed and you walk out with theob. so this system replaces unemployment benefits anymore you know there is something in economics we- refer to as frictional unemployment. it's somebody loses a jobut it expects to be quickly re red to find employment somewhere else maybe they nee six weeks twelve weeks fifteen weeks to lo interviews andot but ty'll find a job. they dot want to ente public service employment they want to. search for new private sector work. the unemployment insurance program should remain there and they shoulde able to- take
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unemployme benefits while they continue to see job in the private sector nothing wrong with that. and that can operate in suld alongside the public option in the labor market for people who either didn't weren'tuccessfulooking for a job and then eventuallynd up in public service employment or those who just say. you know i want this kind of tailored community worknd'm going to go direcy into the public service. john program so the standard politicians and you know people like me and you know that we have a hard time sort of. starting to understand what you're saying. but why do end up interacting with athat also political animals.n a sense they play in washington beltway polical theater. and for me ice just back there is an expectation. that u mmhm.
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don't ups t- merit thank you are there in part. to safeguard androtect certain ideas and- so i don't knowo much that it's that they disagree with the operation but the but maybe that they don't like where they see. theoncludes that how how a better derstandg might open the oodgates to more pressure lawmaks to use the budget in ways that. better serve the public good. so i will read you th quote wch i kind of was missing in your book which i'm sure you know it. this one hundred forty seven it's wel does not do not uerstand ourn banking banking and monetary system for if they did it i believe that would be a revolution beforeomorrow peop don't think the public can handle. a clear honest
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conversation about where money comes from because- you know ther. i think is important in some sse for policakers to cmunicate with voters about money in ways that reinforce the idea that money that fiction word to.ecause if disintegrate how would they evern a sense tell voters no i mean the way that that politicians today. communicate with voters as ey say you know my constient comes to town hall and yells at me because i'm not bringing in enough of farm subsidies are doing infrastructure or whatever for right bringing that bring home and my condition all i ate i identifies with you i wish i we've got this national debt.
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and if those excuses were taken away from them. then whawould they say they would have to say. those are my values i don't share those values i don't want to vote for that because i don' believe the government should guarantee health care so i can hide behind. these myths and mis misunderstandings abo there's not enough money that deficit the debt it's thereet out of jail free card in a sense if we take the coastal for fourth. in the resolution read would be because- that. if that would be more money people would not have been unemployed. hungry people would have beene unemployed this is what i mean when i say it's gratuitous suffing the way that our govement has run the budget. policy theay that it has ud and mise the per of the public purse has led to decades
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of gratuitous suffering. it seems like there's a perfect storm building for you it is already buildin up that people realize that the how does a need for big change that's why the sound the scams she would come so far. but even now- you know with with the divine and rising yes from the north and west side all those ideas will come go with him to sell based and opportunity for change now we have this virus. is this. the more you've been wting for. i hope so because i'm tired of waiting. it's here-o i mean look if we a. not going to do in this moment what we can do to. we almost forty million people just in this country have lost jobs there is i think anxpectation that many indtries will come bac
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orill come back only as a you know shaws of their former selves my of these job losses are permanent. what are we gog to do are we going to n policy the way rebrand policy in the wake of the financial crisis whe we drag out a recovery or the course of a decade where most of the jobs that come back come bac of lower quality than the jobs that were st that's what happened last time so we replace these jobs with even don't deal with the inherent problems and- vulnerabilies in ter of addressing income and wealth inequality health care supplies i mean. this is an opportunity it rlly is with the pieces are falli apart and we have i think two options we can pick up the pieces and try to ressemble themo look lik they look before wean pick up the pieces and put them together in new and differe ways. that protect us and push us toward a
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future where people have better more secure more stable employment and we improve lives going forward that's what i hope will do it. thank you stephanie thank you very vision ank you for your work. thank you for having. hello my name's. information it is a problem. six this solution state and see. can't solutions is presented by the world business academy on behalf of chest capital. the nineteen corporate response tracker just cap is tracking the best practices of corporations serving the needs
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ggccccc'''''' host: welcome t“global 30.” profiting from poverty -- how slumlords in nairobi exploit those most in need. quality pays off -- how indinous peoe in mexo are using top ality coffee to fend off the competition. and atomic power? no, thanks. why germany is turning its back on nuclear energy. chernobyl and fukushima -- the worst two nuclear disasters in history. radioactive waste can remain hazardous for thousands of
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