Episode 221

full
Published on:

17th Jan 2025

Warren Mosler: Unraveling the Mysteries of Modern Monetary Theory

In this riveting episode, the ReSolve team converses with Warren Mosler, a prominent economist and theorist in the field of Modern Monetary Theory (MMT). The conversation is enriched by the presence of Richard Latterman, a portfolio manager at Resolve, who is keen on gaining insights on policy and economics. The discussion dives deep into the evolution of economics, the departure of MMT from classical economics, the impact of interest rates on inflation, and the intricacies of the banking system.

Topics Discussed

• Warren Mosler provides an introduction to Modern Monetary Theory and how it deviates from classical economics

• The discussion delves into the order of operations in economics, with a focus on the concept of 'spend before taxing and borrowing'

• Exploration of the role of the U.S. government in the creation of dollars and the implications of this process

• Discussion on the fear of removing the scarcity constraint or the scarcity mindset in economics

• Analysis of the impact of interest rates on inflation, challenging conventional economic wisdom

• Understanding the concept of continuous change in the price level under floating exchange rates

• The conversation delves into the complexities of the banking system and the role of regulations and compliance

• Warren Mosler shares his views on the potential impact of certain policy suggestions on the current economic system.

• The discussion concludes with Warren Mosler sharing his non-consensus views on investment and asset allocation.

This episode is a treasure trove of insights for anyone interested in understanding the nuances of Modern Monetary Theory, the impact of interest rates on inflation, and the intricacies of the banking system. Warren Mosler's insightful views challenge conventional economic wisdom and provide a fresh perspective on the evolution of economics and economic policy.

Transcript
Warren Mosler:

So the question is, what's the bid for duration of it?

2

:

And the biggest surprise, one of my

biggest surprises that I look at, cause

3

:

I never know how large the duration

bid is, is how large that bid is.

4

:

Over the years, I've seen

all these panic situations.

5

:

The Fed's going to do QT, sell long

bonds, this is going to happen now.

6

:

The long bond sells off and

then it's like, this is, you

7

:

know, going to get up to 10%.

8

:

They're not going to be able to sell them.

9

:

They're going to have failed auctions.

10

:

And all of a sudden it rallies

like a hundred basis points.

11

:

And it's like lower than it was before

because of that bid for duration.

12

:

So where is that

13

:

coming from?

14

:

Adam Butler: Welcome everyone.

15

:

Today, I'm thrilled to introduce Warren

Mosler, an economist and financial

16

:

professional, widely recognized as the

originator of modern monetary theory, MMT.

17

:

In 1982, he founded the investment

company, Illinois Income Investors,

18

:

which held the top global ranking

through:

19

:

And drawing on decades of market

experience, Warren developed

20

:

MMT in the early 1990s.

21

:

Offering groundbreaking insights into how

modern monetary systems truly function.

22

:

Now based in St.

23

:

Croix in the U.

24

:

S.

25

:

Virgin Islands, he runs

Valence Company Inc.

26

:

and continues to shape

economic policy debates.

27

:

He's best known for Mosler's Law, which

holds that no financial crisis is too

28

:

deep for a sufficient fiscal response.

29

:

His notable book, The Seven Deadly

Innocent Frauds of Economic Policy, has

30

:

it translated into multiple languages.

31

:

And his contributions earned him

an honorary doctorate from Franklin

32

:

University, Switzerland, Warren.

33

:

Thank you so much for coming on the show.

34

:

Richard Laterman: Welcome.

35

:

Warren Mosler: Good to be here.

36

:

Thank you for that introduction.

37

:

Adam Butler: It it's great.

38

:

Actually.

39

:

I was remembering when the idea

for having you come on the show

40

:

first took hold, I was sitting at.

41

:

A table with PJ Pierre here in Cayman at

an event and Jason Bach mentioned that PJ

42

:

had studied under you for some time and

I completely commandeered his evening, I

43

:

think, just pounding him with questions

and so hopefully he had some fun.

44

:

We spent quite a bit more

time together after that.

45

:

Discussing similar topics.

46

:

But anyways, that's how this came about.

47

:

Warren Mosler: Okay.

48

:

Very good.

49

:

Yep.

50

:

Yeah.

51

:

Adam Butler: I also wanted to

say Richard Latterman, portfolio

52

:

manager at Resolve is, is also on.

53

:

He requested to be on as he

often does with, with guests

54

:

who are offering insights on

policy or economics, et cetera.

55

:

So, let's get into it, Warren.

56

:

for those who have not been studying

the evolution of economics and economic

57

:

policy over the last decade or so.

58

:

Maybe, can you provide ground zero

on what modern monetary theory is?

59

:

Maybe how it departs from, what many

would think of as classical economics?

60

:

I'm

61

:

Warren Mosler: Okay.

62

:

So what I find is that much of classical

economics is, in the context of a gold

63

:

standard for some fixed exchange rate

policy, which we don't have today.

64

:

So you might look at it like this.

65

:

Translation of economics from fixed

exchange rates, floating exchange

66

:

rates, or from my own point of

view, a ground up study of floating

67

:

exchange rate context for economics,

as opposed to a fixed exchange rates.

68

:

Okay.

69

:

So you are all have traded

some foreign exchange.

70

:

So you know that if you take a

currency, you like the Hong Kong

71

:

dollar, which is fixed exchange

fixed to the dollar, and you sell the

72

:

forwards in size, the spot is fixed.

73

:

Okay.

74

:

As the forwards drop,

that's the 90 day rate.

75

:

It's the same thing.

76

:

And you're actually

driving up interest rates.

77

:

And that was the old trade when I

first started up, a really equity

78

:

hedge fund would get short stocks in

the Hong Kong market and then sell

79

:

forwards in the currency to drive

up interest rates, which would spook

80

:

the stock market, it would go down.

81

:

They'd cover the short, make a little

money and then hope that it was a bet

82

:

covering their position in the Hong Kong

dollar and it worked very successfully.

83

:

There was good leverage between those

two in terms of the percentages,

84

:

they have to move to make it work.

85

:

Okay.

86

:

Now if you try to do the same thing

with the yen, which is free exchange

87

:

rate versus a dollar, you sell forward,

you can drive the currency down, but

88

:

the rate is going to stay at zero.

89

:

If that's where the Japanese is,

you know, rate is fixed and the spot

90

:

forward are going to stay the same.

91

:

So there's something very different

going on with those two currencies.

92

:

And that's.

93

:

We've seen like fixed exchange rate

currencies blow up all the time.

94

:

I remember the Mexican peso in 1994,

the ruble in:

95

:

that blew up with the pound, you know,

so, but you'd never see that with

96

:

floating exchange rates, so that there's

something very different going on.

97

:

You'll see the currencies go up and down.

98

:

We saw the Euro depreciate 50

percent and nobody really noticed.

99

:

We saw the Australian dollar

depreciate 50%, nobody noticed.

100

:

And we've seen them go up

the same amount, sort of make

101

:

second page or third page news.

102

:

So it's, it's very different.

103

:

And so I think that distinction is

something that modern monetary theory

104

:

that I recognized back in the early

:

105

:

Monetary Theory and it later came

to be called Modern Monetary Theory

106

:

because most of today's currencies

are now floating exchange rates.

107

:

Adam Butler: Okay, so, I

actually didn't know that.

108

:

I didn't realize that the root

motivation for rethinking economics

109

:

was that it's sort of implicit in

neoclassical theory, for example.

110

:

Most of the classic neoclassical

theory I'm hearing from you, is,

111

:

is generally under the assumption

of a fixed exchange rate regime

112

:

Warren Mosler: Yeah.

113

:

Yeah.

114

:

I want to tell you how bad it is.

115

:

Okay.

116

:

You've seen all the talk now about

the neutral rate, the Fed just

117

:

trying to figure out where it is and

whatnot, but where'd they get that

118

:

idea that there is a neutral rate?

119

:

Okay.

120

:

They didn't get it from

floating exchange rates.

121

:

That's an echo from fixed exchange rates.

122

:

Under fixed exchange rates,

like I just talked about the

123

:

Hong Kong dollar, for example.

124

:

The, uh, forwards are set by the market

to reflect an interest rate, which is

125

:

the indifference level between where

somebody is willing to hold Hong Kong

126

:

dollars versus cash them in and get U.

127

:

S.

128

:

dollars at the monetary authority.

129

:

Right.

130

:

And I don't, you know, a simple gold

standard where you have convertible

131

:

currency and the government wants to

deficit spend, it's adding gold dollars.

132

:

Right.

133

:

it has to then borrow those, When it does

that, You know, why is it doing that?

134

:

Okay.

135

:

So what it doesn't want is people with

the gold certificates to cash in the

136

:

gold and deplete the gold reserves.

137

:

And there's an interest rate at which

the, uh, investors in the, or, you

138

:

know, whoever's holding the, uh, whether

they're convertible reserve balances

139

:

or actual convertible currency Is it

different between holding that currency

140

:

and cashing it in for gold and you

get a positive yield curve because

141

:

the longer the maturity you buy, the

longer you have to wait before you

142

:

can get your gold and the more odds

are something's going to go wrong.

143

:

So, if you looked at the Russian ruble,

I don't know if you were around for that

144

:

crisis in 98, but, You know, Russia, it

was convertible to dollars at 645 to one.

145

:

And there was some concern as to whether

if you had rubles, you could get dollars.

146

:

It certainly, it was certainly

overvalued in terms of any other

147

:

reason you'd want to hold them other

than eventually to convert them.

148

:

And so, you, Okay.

149

:

you saw that risk being expressed

as interest rates went up.

150

:

The Russian government was selling G

Ks to, ahh, keep people from cashing

151

:

in their rubles for dollars, and

you saw the rate go to 5%, 10%, 20%.

152

:

40%, and then they borrowed

a few billion from the IMF.

153

:

Okay.

154

:

FIFA people felt that they had a

little bit of a window and go down to

155

:

20%, and then when the IMF loans were

exhausted and cut off, it's okay, now

156

:

it goes up to 50%, a hundred percent.

157

:

And it was up to 200 percent and it was

still wasn't enough for anybody to hold

158

:

that thing rather than convert to dollars.

159

:

And interestingly, the, uh,

central bank, I think they

160

:

didn't even turn the lights off.

161

:

I think they just all got up

and left, parked back to their

162

:

desks for about three months.

163

:

And so there

164

:

Adam Butler: ah ha ha

165

:

Warren Mosler: yeah, but, but,

because they didn't know what to do.

166

:

They didn't know how to flip the

currency or didn't think to do it.

167

:

They didn't want to do it, or they're

afraid they're going to get shot.

168

:

I don't know.

169

:

It's a different kind of place.

170

:

But anyway, so to the point,

which I've sort of skipped my

171

:

mind of your original question,

172

:

Adam Butler: Yeah, I was just, I

was just saying, I didn't realize

173

:

that the, the motivation was fixed

versus, floating exchange rates.

174

:

Warren Mosler: Yeah, yeah, so.

175

:

okay.

176

:

So anyway, so that, that was,

that was the situation and I can't

177

:

remember what I started to say.

178

:

Do

179

:

Richard Laterman: Maybe we can, I'd like

to unpack this idea of the departure

180

:

from classical economics that MMT

takes and maybe unpack this idea a

181

:

little bit further by maybe going into

the, the order of operations, right?

182

:

I think Stephanie Kelton in her book

put it as a stab versus tabs, right?

183

:

Spend before taxing and borrowing, whereas

184

:

Warren Mosler: So let's start,

let's start from the beginning.

185

:

So the dollars to pay

taxes come from the U.

186

:

S.

187

:

government.

188

:

That's, you know, that's

not in any of your models.

189

:

You have G minus T where you have to

collect taxes to be able to spend.

190

:

They don't put the

causation the right way.

191

:

The formula is okay.

192

:

But the G has to come first before

the dollars are there to pay taxes.

193

:

And if you talk to anybody in the Fed,

they go, yeah, of course, we can't do a

194

:

reserve ad without a prior reserve drain.

195

:

And their job is offsetting operating

factors to make sure that, you know,

196

:

when Treasury securities settle, There's

a, and they see Fed funds going up,

197

:

indicating the reserve balances are short.

198

:

They come in and do

repo, they add reserves.

199

:

Now with QE, it's a big reserve add

in advance, so they don't have to

200

:

do it every time there's an auction.

201

:

But even on fixed exchange rates,

they're still spending first

202

:

before they're collecting taxes.

203

:

So what they do is they buy the

gold first, print, you might say,

204

:

gold certificates or credit accounts

that are convertible accounts at the

205

:

central bank first, and then those

dollars are there to pay taxes.

206

:

So, it's, it's simple analogy.

207

:

I mean, nobody thinks the football

stadium has to collect the

208

:

ticket first and then sell it.

209

:

Everybody knows they sell the ticket

first and then collect it because that's

210

:

where it comes from, from the stadium.

211

:

Now, President Obama made a statement

once that, you know, that the

212

:

money comes from the government.

213

:

He got shouted down.

214

:

He said, no, real wealth

comes from the private sector.

215

:

So what they did was they confuse

or conflate or something real

216

:

wealth with, The money, the

dollars to pay taxes, right?

217

:

And he agreed that real wealth

came from the private sector.

218

:

The government takes some of it.

219

:

And so he backed off on his

statement, but he was correct.

220

:

The dollars to pay taxes, the nominal,

the tax credits needed to comply with

221

:

tax liabilities come from the private

sector, and that's what Stephanie's

222

:

talking about with the sequence.

223

:

And every Congressman has that sequence

backwards, at least I think everyone does.

224

:

They all think they have to get dollars

by taxing what they don't get by taxing.

225

:

If they want to spend more than

that, they have to borrow it.

226

:

They're borrowing it from China and,

worried about, the grant leaving

227

:

the debt to the grandchildren

and all that kind of thing.

228

:

And you saw the Obama

administration and they wanted

229

:

to do that stimulus number one.

230

:

They did half of what they

thought they needed 'cause they

231

:

were afraid of borrowing $2

trillion instead of 1 trillion.

232

:

Secretary Clinton flew with Obama, I

believe, to China to talk to our bankers

233

:

to make sure they would buy our bonds so

that we could make sure our healthcare

234

:

system wouldn't fail or whatever it was.

235

:

And Paul Ryan was there saying,

we're going to be the next Greece.

236

:

He was a head of the Republican

Party, you know, Speaker of the House.

237

:

if we'd be on our knees at the

IMF, you know, if we ever put,

238

:

tried to borrow this much money.

239

:

And, I think Paul Krugman had a big

document in front of the president

240

:

about how interest rates would go up.

241

:

If it wasn't Paul, it was somebody

else like that, another New Keynesian.

242

:

And now we look eight years

later and, we have a COVID.

243

:

Maybe total deficit

spending, maybe 5 trillion.

244

:

I don't know.

245

:

Not a word of Greece.

246

:

Nobody was worried about China.

247

:

Nobody worried about rates.

248

:

All they worried about was whether

it or not it would cause inflation.

249

:

Now, where did that come from?

250

:

What changed in those eight years?

251

:

And I think that was, you know, the poster

child was Stephanie Kelton when she got

252

:

the job at the Senate Budget Committee.

253

:

People started looking into it.

254

:

She started talking about it.

255

:

They started reading on it.

256

:

Suddenly the, that suddenly,

but over those eight years, it

257

:

became understood that government

checks weren't going to bounce.

258

:

They might not have exactly

understood the whole thing, but they

259

:

knew the checks wouldn't bounce.

260

:

Rates wouldn't spike unless the

Federal Reserve voted higher

261

:

rates and that, the issue would be

inflation, whether they were spending

262

:

too much and driving up prices.

263

:

And they're still arguing about

whether they spent too much

264

:

and drove up prices or not.

265

:

They're not, nobody's arguing

about whether or not the

266

:

check was going to bounce.

267

:

So I'd say MMT changed that.

268

:

dialogue for the better, because

the argument is whether, what are

269

:

the ramifications of the spending,

not are the checks going to bounce.

270

:

The government spends first

and then securities are sold.

271

:

They don't have to worry about whether

or not the securities will be sold.

272

:

And, uh,

273

:

Adam Butler: what do you think causes

the consternation and or cognitive

274

:

dissonance that seems to be so prevalent

among, you know, as you mentioned,

275

:

Congressmen, but you also mentioned a

variety of fairly well known mainstream

276

:

economists, policymakers, et cetera.

277

:

Why do you think this is so difficult

to comprehend or to internalize?

278

:

Warren Mosler: You know

that's a good question.

279

:

You know I was hoping you could

help I find always simple that any

280

:

ten-year-old can understand it.,

281

:

like Ahh I've talked with people,

and now Congress, like uhh Senator

282

:

Blumenthal when I was running for Senate

when he was running and I didn't win.

283

:

I got 1 percent of the vote, but

I met with him for about three

284

:

hours and friends of mine, in the

mine's house and Darian up there.

285

:

And he said, yeah, this is how they

taught us in Harvard back in the sixties.

286

:

But he wouldn't go there.

287

:

And then later I met with him once after

he got in and said, well, is there anybody

288

:

else in Congress who understands this?

289

:

I said, no, he says, well,

if there is, let me know.

290

:

And then, you know, I'll

start talking about it too.

291

:

So I know him.

292

:

He personally just didn't

want to take the first step.

293

:

I can't say too much about the others,

because I don't have the personal contact.

294

:

There's Van Hollings, is

that his name, in Virginia?

295

:

Congressman.

296

:

He understood that I was up there with

a friend of mine and had my book, he'd

297

:

read it, went through it, and same thing.

298

:

He was waiting for somebody else.

299

:

So, I guess at that, I guess it's a

level of intellectual dishonesty at

300

:

that point, but at the same time,

it's a lack of political will to go

301

:

there and path of least resistance is

to get reelected, to get funded, is

302

:

to keep saying what they're saying.

303

:

so it's just tough for me to give you

a definitive answer for that question.

304

:

Adam Butler: that, do you think that once

you open the door on a conversation about

305

:

the fact that government spending is not

constrained by, by income taxes, or by the

306

:

ability of the government to exogenously

fund itself that it that people fear

307

:

that it will remove the scarcity

constraint or the scarcity mindset.

308

:

like.

309

:

Warren Mosler: Yes.

310

:

Yeah, definitely.

311

:

And, uh.

312

:

There's a couple of things on that,

you know, and I, you know, I'd

313

:

say, look, either you believe in an

informed electorate or you don't.

314

:

And they don't.

315

:

They think that if people knew

this, they'd go crazy and spend.

316

:

And my thoughts are, the evidence

tells me exactly the opposite, that

317

:

people would rather have 10 percent

unemployment than 3 percent inflation.

318

:

Okay.

319

:

And they go overboard the other way.

320

:

And I think there's a tendency

to people to like having

321

:

elevated rates of unemployment.

322

:

Five, six, 7%.

323

:

93% who are employed can hire a

plumber who come running out to do

324

:

things because it's tough out there.

325

:

You know, they can get

someone to mow the lawn.

326

:

They can, oh yeah, I got here

and I got my lawn mow for $20.

327

:

Oh really?

328

:

I paid 30.

329

:

Who'd you get it from you?

330

:

So I think that, and there's a lot

of people who are very secure in

331

:

their incomes and, and in their.

332

:

And they don't like to see inflation

and they do like to see people

333

:

coming to them for money, puts them

in a position of power and it's,

334

:

you know, it's 5 percent inflation.

335

:

That's, I mean, unemployment, that's

95 percent of the people are on the

336

:

other side of that trade and that's

human nature for them to like.

337

:

So you look at now where, you know, the

President gets, presidency gets turned

338

:

over and over 3 percent inflation.

339

:

Where did that come from?

340

:

It had nothing to do with people

not wanting stuff for free

341

:

or whatever, not wanting more

government spending or services.

342

:

They'd rather have, you know, the

inflation is what turned it over.

343

:

Even with a strong economy and

low, record low unemployment, we

344

:

saw a turnover in administration.

345

:

So I think that tells us something.

346

:

Now, it might not always be that

way, but it sure is there right now.

347

:

Richard Laterman: But the, I want to

try and understand how MMT distinguishes

348

:

between, different kinds of government

spending, because I think one of the

349

:

things that made MMT prominent over

the last several years, and correct

350

:

me if I'm wrong, is that, people were

afraid that quantitative easing, that

351

:

began in 2009 would create inflation

and, I think it was Milton Friedman

352

:

that coined, the, the difference here

between high powered money, which is

353

:

money in our pockets, and it's, it's,

it's actual money that a fiscal spending

354

:

would, would spend into the economy

versus financial money, which is the

355

:

money that quantitative easing, spent,

quote unquote into the system to, to

356

:

salvage the, uh, the health of the bank.

357

:

So, how does MMT account between the

two and, and do you see the high powered

358

:

money, the, the, the more fiscal, aspects

of, of, of money being the, the drivers

359

:

of inflation versus, monetary policy

operations like quantitative easing,

360

:

Warren Mosler: Let me first

say high powered money is a

361

:

throwback to fixed exchange rate.

362

:

That was dollars that

were convertible to gold.

363

:

That was the convertible currency

was a high powered stuff.

364

:

And banks needed it.

365

:

They couldn't, because if people

took their money out, they had to

366

:

give them convertible currency.

367

:

So the whole system was constrained by

the quantity of convertible currency,

368

:

which came from the gold reserves.

369

:

And, you know, and doing that.

370

:

So.

371

:

So, in that light, if we look

at quantitative easing, it's the

372

:

government's buying government securities.

373

:

And government securities are just dollars

in savings, but are functionally savings

374

:

accounts of the Federal Reserve Bank.

375

:

So, that's like if Bank of America

or JP Morgan went to all their

376

:

savings depositors and said, Look,

we'd rather have you in checking

377

:

accounts than savings accounts.

378

:

We're going to give you a premium

of half a percent or something to,

379

:

if you'll, you know, I want to go

in and buy your savings account.

380

:

Will you sell me your savings

account and I'll credit your checking

381

:

account with the money, we'll

shift it from savings to checking.

382

:

And you have a certain number of

people with maybe a billion dollars

383

:

who said, okay, yeah, I'll do that.

384

:

And so they had savings checking

accounts instead of savings accounts.

385

:

Would anybody have gone around

saying, oh, that's inflationary?

386

:

Okay.

387

:

So, you know, the treasury 36 trillion

in one amount to a savings accounts at

388

:

the Federal Reserve Bank, it's a bank,

just like any other bank, it's a ledger.

389

:

When the government spends, they

instruct their bank to credit the account

390

:

of your bank, okay, at their bank.

391

:

So the Federal Reserve credits J.

392

:

P.

393

:

Morgan's account at the Fed.

394

:

It's called a reserve account.

395

:

It's a Federal Reserve Bank.

396

:

It's a checking account.

397

:

It's a transaction account.

398

:

It's overnight.

399

:

And those funds are there.

400

:

And they can't go anywhere except

to somebody else's reserve account.

401

:

And when they sell treasury

securities and you buy them,

402

:

they shift those dollars from J.

403

:

P.

404

:

Morgan's reserve account to

your securities account, which

405

:

is another account at the Fed.

406

:

And it's still, you still have the money.

407

:

You had dollars in a J.

408

:

P.

409

:

Morgan account.

410

:

You now have dollars in the

savings account at the Fed.

411

:

Your wealth hasn't changed.

412

:

Nothing's changed.

413

:

Uh, you do it at market levels

where you could do it anyway.

414

:

You really don't care who is

selling you those securities.

415

:

You can buy securities anytime you want.

416

:

But the price goes up a basis

point, you know, the basis point,

417

:

lowering yields, and suddenly

people want to buy that thing.

418

:

That's what the Fed does.

419

:

It's an auction process.

420

:

And so they've just changed the

indifference levels of holding it.

421

:

And that's the difference between at

the margin, the economy's desire to hold

422

:

cash, you know, direct, to hold duration.

423

:

they give you a basis point lower

and you're less likely to hold

424

:

duration at the macro level.

425

:

And so people are holding reserves

instead of securities accounts.

426

:

It's not more than a basis point or two.

427

:

It's not a whole lot at the margin.

428

:

and so, um, why would

that change anything?

429

:

So I had this conversation with a

guy at the Bank of England, Andrew

430

:

Crockett, I was over there, maybe

25 years ago, and we were there

431

:

with someone from the Bank of Japan.

432

:

They had just announced

quantitative easing.

433

:

We're having a friendly,

just three of us chatting.

434

:

I said to the officer of the bank in

Japan, I said, like, why would you

435

:

think it's going to matter if you go

out and buy JGBs, you know, with your,

436

:

you know, you buy them from the bank,

you credit their reserve account.

437

:

So the bank has fewer

JGBs and more reserve.

438

:

So it's not like there's a line

of credit worthy borrowers just

439

:

waiting for you to have loans.

440

:

The loans create deposits.

441

:

It's got nothing to do with

the lending side of the bank.

442

:

Why, why would you expect

this to do anything?

443

:

And, Crockett looks at him and goes.

444

:

Yeah.

445

:

What do you say to that?

446

:

So he knew it wasn't a surprise to him.

447

:

And the guy says, well, you

know, that's our policy.

448

:

We'll just have to wait

and see what happens.

449

:

Well, after 30 years of buying every

JGB out there and shifting on maybe

450

:

the entire duration of Japanese, what's

called public debt to zero duration,

451

:

it didn't make any difference, right?

452

:

Like, why would it?

453

:

The burden of proof to me

is on somebody to explain.

454

:

Why do you think it would do it?

455

:

Not me to explain it,

why it won't do anything

456

:

Richard Laterman: well, it may, it

made a difference in the sense that the

457

:

Japanese government bond market ceased

to exist essentially for a while, right?

458

:

You went sometimes for days without any

trading in Japanese government bonds.

459

:

And

460

:

Warren Mosler: but, but so what?

461

:

It's not like somebody wanted

to trade and couldn't do it.

462

:

Nobody wanted to trade.

463

:

It doesn't exist overnight

when people are sleeping,

464

:

Richard Laterman: well,

people didn't want to,

465

:

Warren Mosler: if you

wake 'em up, it'll trade.

466

:

Richard Laterman: well, do you, do you

think that, a well functioning sovereign

467

:

bond market is an essential component

for, for any country to function well?

468

:

Is that a, is that a

469

:

Warren Mosler: It only, I

guess you could define it.

470

:

Well functioning economy that

way, but I sure wouldn't.

471

:

I remember when there were no

government bonds, like who cares?

472

:

We use Tel 7 days or something as

a benchmark and it doesn't matter.

473

:

It's just a reference point.

474

:

You don't need a government

bond market for anything.

475

:

And I think Japan proves that it doesn't

have any effect on the macro economy

476

:

if nobody trades JGBs, who cares?

477

:

Richard Laterman: So what do you think

would happen if, if the Fed were to

478

:

buy so much or such a large percentage

of outstanding treasuries that the

479

:

treasury market, as it stands today,

ceased to function, ceased to have the

480

:

liquidity that it has without having any

implications for the U S economy, for U S

481

:

markets, for the, for the U S government.

482

:

Warren Mosler: I don't see it.

483

:

I go one step further, suppose

the treasury just shifted to all

484

:

three month bills and then there

weren't any bonds, so who cares?

485

:

You know, save that step in between.

486

:

Why does the treasury have

to issue them in the Fed bio?

487

:

It's kind of a waste of human endeavor

with a broker or two in between.

488

:

So just have the, So, so I met

with Chairman Bernanke when he

489

:

was in between being vice chair

for four years and then chairman.

490

:

He was head of the Council of

Economic Advisors, I think.

491

:

There were just four of us.

492

:

And I wasn't here to talk about

modern monetary theory because I

493

:

wanted to get invited back, of course.

494

:

But, he made this, I asked a question.

495

:

He had just been talking about

unconventional monetary policy.

496

:

And he had written some with Vince

Reinhardt, who was head of, monetary

497

:

affairs for Greenspan and then Bernanke.

498

:

Who helped me write some of my

speeches, by the way, when you talk

499

:

to these operations guys at the Fed,

they know exactly what I'm saying.

500

:

That's their language.

501

:

And you don't have to,

you never discuss it.

502

:

It's just, it's always the starting point.

503

:

It's just assumed.

504

:

but anyway, so, and I said to him, I

said, uh, I guess he wasn't chairman.

505

:

Yeah, he was chairman of the

Council of Economic Advisors.

506

:

I said, you know, you've been writing

about unconventional monetary policy where

507

:

the Fed might buy Treasury securities.

508

:

I said, since buying, the Treasury buying

securities from the Fed is functionally

509

:

the same for the private sector, it's the

Treasury never issuing them to begin with.

510

:

Okay.

511

:

And so rather than issuing them and

selling to the Fed, having the Fed credit

512

:

the accounts, have you ever just thought

about, you know, Coordinating between

513

:

the Fed and the Treasury and just have

the Treasury stop issuing those bonds.

514

:

And he said, well, no, it is different.

515

:

When we buy from the Treasury, we add

reserves to the system that has in effect.

516

:

So it's like, okay, I didn't want

to answer the question, but clearly

517

:

he didn't understand reserve account

because it was just a nonsensical answer.

518

:

And, and he had, he was a nice guy and

smart guy, but, you know, he's like a B

519

:

student who'd studied real hard and got an

A's and he was a professor from, Princeton

520

:

and his specialty was the gold standard

to depression in:

521

:

and everything he says is exactly right.

522

:

And everything he did to my original

point was, Echoing these gold standard

523

:

things, like that was, that adds more

convertible currency under gold standard.

524

:

Okay.

525

:

But it doesn't do that under

floating exchange rates.

526

:

You know, reserves, the holder of

reserves has one option or two options.

527

:

Do nothing, hold reserves.

528

:

I guess he could spend them.

529

:

Somebody else holds the reserves, or

he can buy treasury security and shift

530

:

to a different account at the Fed.

531

:

On the gold standard,

he has another option.

532

:

He can take gold.

533

:

That option's gone.

534

:

And when you're not competing with

that option, the entire dynamics of

535

:

the monetary system is different.

536

:

It's like you're watching a different

channel on the television set.

537

:

One program doesn't relate to the other.

538

:

You can carry the language over,

but it's a different program.

539

:

They're different people

doing different things.

540

:

Adam Butler: So, just to sort of pull

a little bit further into the reserve

541

:

accounting, so in QE, effectively, the Fed

moves money from the securities account

542

:

and the checking account or the checking

account into the securities account

543

:

Warren Mosler: Okay.

544

:

So they go out and buy

545

:

Adam Butler: account.

546

:

Yeah,

547

:

Warren Mosler: They don't go directly.

548

:

They go through one of the primary

dealers and somebody sells that

549

:

primary dealer securities, right?

550

:

Let's say I sell them.

551

:

Like, I don't know.

552

:

It's the Fed buying, might be Bank of

America buying to add to their portfolio.

553

:

It makes no, makes no

difference to the economy.

554

:

If Citibank went out and bought all

these bonds, would it change anything?

555

:

No.

556

:

So anyway, the Fed goes out

and buys these things from me.

557

:

I happen to have, you know, uh,

let's say, let's say I am JP Morgan.

558

:

I have a securities, I

own treasury securities.

559

:

They don't own a lot of

them, but they own a few.

560

:

And I sell it to the Fed.

561

:

And so I had dollars in

my securities account.

562

:

The Fed pays me by crediting

my reserve account and the Fed

563

:

debits my securities account.

564

:

So they debit the securities

account, credit the reserve account.

565

:

That's it.

566

:

Debit 10 billion, credit 10 billion.

567

:

Adam Butler: right.

568

:

So I guess my question is, under Basel

two or bank capitalization regulations,

569

:

is there a difference to the bank in

terms of its capital flexibility or,

570

:

you know, ability to loan or what

have you between having a billion

571

:

dollars in the securities account or a

billion dollars in the reserve account?

572

:

Warren Mosler: Yeah,

because the longer trip,

573

:

If it's a three month bill, no.

574

:

'Cause the Treasury holds zero

risk weight and so are Reserves,

575

:

so there's no difference there.

576

:

If you, if you're in a long

duration, umm as a commercial

577

:

bank under CAMELS regulation

578

:

t

579

:

CAMELS,

580

:

capital assets, management, earnings, L

is liquidity and S is interest sensitivity

581

:

So you are not allowed to have

interest rate sensitivity.

582

:

They run you through tests.

583

:

If rates go up, go down, you want

to make sure your capital, for all

584

:

practical purposes, does change.

585

:

And if it does, you're

supposed to make adjustments.

586

:

So you're, you're duration

neutral, you know, is it basically

587

:

supposed to be zero duration.

588

:

So if you have long securities

and you go to short securities,

589

:

you've changed your duration.

590

:

And that may throw off your balance.

591

:

you know, and if that's the case,

you have to make that adjustment.

592

:

So.

593

:

But otherwise the securities

are zero risk weight.

594

:

So it all depends on that.

595

:

You also have like leverage ratios and

it might affect your leverage ratios.

596

:

And that's your total

assets versus your capital.

597

:

But that doesn't change your total assets.

598

:

So I would say that particular thing

only changes your interest rate

599

:

sensitivity, your duration of your bank.

600

:

For an individual, it doesn't change,

601

:

Adam Butler: I guess my point is that

602

:

Warren Mosler: but

603

:

Adam Butler: if you're If you're the bank

and you've got a target, duration, right.

604

:

You want to hold a target

duration for your portfolio.

605

:

the Fed has just absorbed

some of your duration.

606

:

Will the bank then not

607

:

Warren Mosler: yeah, yes and no, because

you don't have to sell to the Fed.

608

:

They can just, if they don't get

anything, they'll pay a half a basis

609

:

point more and get it from somebody else,

610

:

Adam Butler: right,

611

:

Warren Mosler: basis points

more, whatever it is.

612

:

And they can affect the curve on that.

613

:

I mean, if you buy enough at any point

in the curve, the further out you

614

:

go, the more likely you are to, the

value of what we used to call a pop.

615

:

I don't know if you call it now.

616

:

There's a lot, the value of it

in 01 is a lot larger, a lot

617

:

more bonds as you go further out.

618

:

And so, the Fed buying, 20 billion

long bonds has more effect than

619

:

buying 20 billion 3 month bills.

620

:

Adam Butler: right.

621

:

Warren Mosler: Okay, and so, um.

622

:

they go out the curve and buy long

bonds, they can move that market four

623

:

or five, maybe 10 basis points if they

bought enough, maybe a half a percent.

624

:

But in the scheme of things, if you

talk to the guy in the street about

625

:

major problems in the U S and you say,

well, you know, 30 year interest rates

626

:

have gone from, you know, 425 to 475.

627

:

They'll look at you like, what we

got, that's our biggest problem.

628

:

It's like, who cares?

629

:

Right.

630

:

Half a percent of it is, but if you're in

the middle of training, it's a big deal.

631

:

So I'm not, you know, it depends on who

you're looking at, but that's, that's I

632

:

think when they started issuing 20 years,

which were a lot at the time, they put a

633

:

dent in the yield curve of maybe 15 basis

points initially before it's sorted out.

634

:

Now that falls under what?

635

:

Under fixed exchange rates, they used

to call liquidity preference, which says

636

:

there's always enough money to buy the log

in it, but there aren't necessarily enough

637

:

people who want to pay that duration.

638

:

So the question is, what's

the bid for duration of it?

639

:

And the biggest surprise, one of my

biggest surprises that I look at, cause

640

:

I never know how large the duration

bid is, is how large that bid is.

641

:

Over the years, I've seen

all these panic situations.

642

:

The Fed's going to do QT, sell long

bonds, this is going to happen now.

643

:

The long bond sells off and

then it's like, this is, you

644

:

know, going to get up to 10%.

645

:

They're not going to be able to sell them.

646

:

They're going to have failed auctions.

647

:

And all of a sudden it rallies

like a hundred basis points.

648

:

And it's like lower than it was before

because of that bid for duration.

649

:

So where is that coming from?

650

:

Well, I can only look at the

data and guess, but you've got

651

:

pension funds who buy long bonds

because it's Tuesday, right?

652

:

They look at the balances and on Tuesday,

whenever it came in, they buy it because

653

:

they've got a 60, 40 mix or some nonsense.

654

:

And you know, that money just comes

flooding in because every teacher puts

655

:

40 a week into her pension fund and the

teacher's retirement fund buys long bonds.

656

:

You know, and so, uh, and somebody

needs duration out there and I

657

:

can't tell you where it all is.

658

:

But the bid is, how does

the long get negative?

659

:

How long have we seen this long the curve?

660

:

Now, how does that happen

without a huge bid for duration?

661

:

Right?

662

:

So there's, there's a massive bid

for duration out there and it's

663

:

part of the institutional structure.

664

:

Somebody's buying it.

665

:

Insurance companies have to

buy it to match something.

666

:

Somebody's buying it to

match long term liabilities.

667

:

There's a lot more long term

liability out there than we, than

668

:

we estimate and that I estimate.

669

:

It always like, wow, where?

670

:

Well, I could rally it

a hundred faces for you.

671

:

Nobody

672

:

Richard Laterman: But we've seen in the,

673

:

Warren Mosler: behind it.

674

:

Yeah.

675

:

Richard Laterman: we've seen in the

last several months now, this, this

676

:

conversation shifting about the U.

677

:

S.

678

:

government solvency and

a possible debt crisis.

679

:

And the fact that the propensity to own U.

680

:

S.

681

:

government bonds would decrease as

inflation expectations would rise,

682

:

not to mention the weaponization

of the dollar and the appetite for

683

:

central, foreign central banks to hold.

684

:

You, you don't seem to be

concerned with, with that.

685

:

Any of those factors i'm

trying to understand what

686

:

Warren Mosler: was in charge, if I was

in charge, I'd be even less concerned

687

:

because I'd only issue three month bills.

688

:

I'd have the Fed set the rate at zero

like we had for 10 years, permanently.

689

:

They didn't have to worry

about any of that, okay?

690

:

But, yes, right now, They worry

about their own problems they created

691

:

and feel they have to continue to

create, but even then, where's the

692

:

10 year now, like 460 or something.

693

:

Okay.

694

:

That's like, just that's

at the fed funds, right?

695

:

That's a flat yield curve.

696

:

How bad can it be if it's 10

years flat, it's like, it's

697

:

not like it's even positive.

698

:

Okay, it's positive

699

:

Richard Laterman: now Is is

now closer to three and a half.

700

:

So granted it's it's

701

:

Warren Mosler: no, no.

702

:

It's like four and a quarter,

four and a half, right?

703

:

What have we got, three, three

cuts from five and a quarter?

704

:

Three or four.

705

:

Adam Butler: yeah, it's slightly,

slightly positive now, but either

706

:

way, it's not, it's basically

707

:

Warren Mosler: ten, ten basis points.

708

:

Where's the 30 year?

709

:

Now, the other thing is, you know, you get

positive convexity as you go further out.

710

:

And so the convexity adjusted

spread in the 30 year is wider than

711

:

the nominal yield by quite a bit.

712

:

And, you know, I used to do very well

when people would sell off the long

713

:

end and not, not pay any attention

to the convexity or the people

714

:

doing it aren't sensitive to it.

715

:

And the people who are sensitive to

convexity are, are a minority as we were.

716

:

And you'd have these wonderful

opportunities to buy things against the

717

:

long end, have huge, positively convex

portfolios and make a lot of relative

718

:

value, you know, out of alpha over time.

719

:

And so that's another place where the

bidder duration comes in because of all

720

:

the positive convexity at the login.

721

:

That is not something the average

person who reads the Wall Street

722

:

Journal or the watches the news

thinks about, or even the average

723

:

Adam Butler: We think about that a lot.

724

:

For sure.

725

:

Warren Mosler: Yeah.

726

:

Yeah.

727

:

Yeah.

728

:

Yeah.

729

:

So what's, what's it worth?

730

:

30 basis points of positive

convexity to long now.

731

:

So what's a zero

732

:

Richard Laterman: are the practical

limitations for the government?

733

:

forget that the zeitgeist

hasn't gotten quite there yet.

734

:

Uh, and the Overton window, the,

the, these ideas haven't quite fully

735

:

been established in the Overton.

736

:

What are the practical limitations?

737

:

Is there an upper limit to debt to

738

:

Warren Mosler: So there's two things.

739

:

There's two things.

740

:

The limit to what can be spent

is what is offered for sale.

741

:

And what is offered

for sale is a function.

742

:

Yeah.

743

:

It's a function of tax liabilities.

744

:

So you can't buy anything now

with Confederate dollars because

745

:

there's nothing offered for sale.

746

:

But if somebody put in a tax

payable in Confederate dollars,

747

:

now there'd be things for sale.

748

:

People need the dollars to pay the tax.

749

:

Yeah.

750

:

And it's a simple case of a monopoly.

751

:

They've got what you, they set the

price and they tell you what it's worth.

752

:

So, so the limit is what the

tax liability, the need to

753

:

create, that's the nominal limit

created by the tax liability.

754

:

if you just give people money, like

social security, and now they become

755

:

agents of the government, and so the

limit to what they can buy, you have to

756

:

consider not just the government, but

plus it's agents who are getting money.

757

:

Money.

758

:

They're not selling

anything to the government.

759

:

You're just getting dollars.

760

:

you know, if you exceed what is

available for them to buy and

761

:

they start paying higher prices.

762

:

They are redefining the currency

downward by paying those higher prices.

763

:

And we call that inflation.

764

:

I call it one time adjustments

in the price level.

765

:

You get a, it's always a

series of one time adjustments.

766

:

It's like, quantum.

767

:

It's not, time doesn't move smoothly.

768

:

It moves in quantum measure.

769

:

So Yeah so it's the same thing here.

770

:

It's, it's one purchase at a time.

771

:

It's moving, it's redefining the currency.

772

:

Now there's a lot of it, so it

looks continuous, but it's not.

773

:

That's, you know, what inflation would

be and properly academically defined, if

774

:

the definition were followed according to

how it's academically defined, would be

775

:

something else and it wouldn't be that.

776

:

Now, what we call inflation, you know,

fine, but that's a different matter.

777

:

so not to get off the point, so

the limits are a couple of things.

778

:

What's for sale, right?

779

:

And that's evidenced by prices.

780

:

What's, we can look around

and see what's for sale.

781

:

And if those prices are going up, it

means government and its agents are

782

:

paying more than what's offered for sale

at term prices and so prices are going up.

783

:

And a lot of that depends on institutional

structure, sort of builds a lot of

784

:

the stuffing and some of it's based on

you can casually call excess demand.

785

:

But if you spend on a price rule,

if I say, I'm going to go down the

786

:

street, and I tell you to buy every

house on that street, but don't

787

:

pay more than 500, 000 dollars.

788

:

And they're all for sale at about

between 4 50 and 5 50, you're going

789

:

to buy some of them, but you're

not going to drive up prices.

790

:

If I tell you buy them all and I

don't really care what it costs,

791

:

then you're going to drive prices.

792

:

So if you're spending on a quantity

rule instead of a price rule,

793

:

you get very different outcomes.

794

:

So the government spending policy is

critical in determining the outcomes.

795

:

It's not easy to follow, but if

you don't understand it, you're

796

:

never going to get it right, okay?

797

:

If you do understand it, you at least

understand the problem, and you can

798

:

qualify your answer based on your

understanding, which they can't even do.

799

:

Adam Butler: Well, is there a difference

between what someone might call, you

800

:

know, direct transfers, for example,

what happened during COVID, and what

801

:

some might call investment where the

government is, is, going out to tender

802

:

to companies who are going to build

roads and bridges and, and set up, you

803

:

know, childcare services, et cetera.

804

:

Warren Mosler: right.

805

:

So one is the, spending power of

government is being transferred

806

:

to somebody else and you got to

hope they do the right thing.

807

:

Otherwise, if you give them too

much money and there's not enough

808

:

for sale, they can cause prices.

809

:

The government, when it spends,

goes through contracting and

810

:

if they think the price is too

high, they don't have to pay it.

811

:

Now, if they need it, like the military,

they just go to the highest bidder.

812

:

The lowest bidder and they

go ahead and buy it anyway.

813

:

And they can, they will also drive

prices up for buying oil from Saudi

814

:

Arabia at the margin, we have to pay

the price or turn the lights off.

815

:

So don't forget at the start of this

whole thing, Ukraine thing broke out.

816

:

Saudis raised their prices up to like 120

before it turned around and came down,

817

:

and that is highly influential in what we

call the inflation indicators, which is

818

:

CPI, which is not, it's our politically

determined inflation indicator.

819

:

And I'm not arguing whether it's

good or bad, right or wrong,

820

:

but it's not the price level.

821

:

Okay.

822

:

And so that.

823

:

Oil is a big factor in that.

824

:

Most things, prices are derived from

that and, uh, right down to your

825

:

food supply and everything else.

826

:

And we had all those, supply

constraints at the same time.

827

:

And we saw the same pattern of prices

rising into the peak of oil and then

828

:

oil coming down after president Biden

cut that deal with Saudi Arabia, not to

829

:

prosecute the journalists, they killed

Khashoggi and to, make them a deal to

830

:

get us weapons and get them back from

Russia, they Left us to go to Russia

831

:

for weaponry and things like that.

832

:

After President Trump had threatened

them with those kinds of sanctions.

833

:

If they didn't raise the price of oil

during COVID because cut production

834

:

by 2 million barrels a day, which

they eventually did with Russia.

835

:

They got Russia to participate

and they raised the price.

836

:

But he was the one who insisted,

you know, when the price was

837

:

negative on the foreign trade.

838

:

But I think the physical

price was about 30 or 40.

839

:

That needed to be higher because

it was ruining our oil industry.

840

:

So this whole thing about how to get

more US oil output is simplistically

841

:

based on higher prices, you

know, we're going to get higher.

842

:

That's their method of more

production is to get prices up.

843

:

So now there's an incentive

to produce this capitalism.

844

:

So I would, I interpret the idea that we

want more drilling to mean we want higher

845

:

prices, so more drilling makes sense.

846

:

I don't know any other way they have

in mind of getting more production.

847

:

Maybe they've got something I

don't know about, but some subsidy

848

:

or something, but I think it

849

:

meets higher pressures because that's

what they did last time around.

850

:

Yeah.

851

:

Adam Butler: so that would be,

um, an example of, in a technical

852

:

sense, industrial policy, right?

853

:

The, the government

854

:

Warren Mosler: Yes.

855

:

Yes.

856

:

Adam Butler: Okay.

857

:

Okay.

858

:

Warren Mosler: Yeah.

859

:

And every, it's all

industrial policy, right?

860

:

Once you have coercive taxation,

that's a command economy.

861

:

Now, whatever the government wants,

you have to sell it or we can't

862

:

get the money to pay the tax and

it will price whatever it wants.

863

:

So the relative value is high enough so

that we sell that stuff to the government.

864

:

So we'll sell them, sell

them planes and tanks.

865

:

Cause you know, the economy can get

money doing that easier than making

866

:

cars and buses and fertilizer or

whatever, you know, so they will outbid

867

:

everybody for what they want and it

becomes, it is a command economy.

868

:

The rest of it's a market economy.

869

:

Adam Butler: the economy that

the government, where the

870

:

government is spending directly

871

:

Warren Mosler: Yeah.

872

:

Yeah.

873

:

Yeah.

874

:

Yeah.

875

:

Yeah.

876

:

Yeah.

877

:

Cause you've never heard them

not get what they want, right?

878

:

They get what they want.

879

:

Adam Butler: going back to, I guess,

sort of related to quantitative

880

:

easing, but, Secretary Yellen has

been slowly but steadily reducing the

881

:

duration of, debt issuance, right?

882

:

do you, do you think this is motivated

or informed by, her in general, or, or

883

:

her policy, Associates starting to sort

of embrace the view that you've been

884

:

articulating over the last few decades and

885

:

Warren Mosler: well, if they, yeah, so

the thing is, do they have some kind of

886

:

master plan to go to a zero rate policy?

887

:

So they don't want to get

stuck with those duration.

888

:

And is that what's actually.

889

:

Chairman Powell is doing.

890

:

Is he coming up with excuses to lower

rates because he knows that lower rates

891

:

will lower inflation now that he's had it

backwards, but he doesn't want to say he's

892

:

had it backwards, but by lowering rates.

893

:

Inflation indicators come down,

so it keeps going down to zero.

894

:

You know, do they, is

that what's behind them?

895

:

So I guess there's an outside chance,

but just from the people I've met,

896

:

I think we'd be giving them too

much credit to keep the secret

897

:

like that and have a hidden agenda.

898

:

The ones I've known, it

hasn't been a lot of them.

899

:

I'm not saying I'm insider like that.

900

:

It's just, I don't think so.

901

:

I mean, for me, the level of

confidence I've run into at the

902

:

highest levels of everything has

always been severely disappointing.

903

:

And have you seen the Jared Bernstein

from finding the money that clip where

904

:

they ask him why the government's

printing money and borrowing?

905

:

And he just funnels terribly

for a minute and a half, and

906

:

then they go to something else.

907

:

Have you seen that?

908

:

Adam Butler: haven't, I

909

:

Warren Mosler: it's embarrassing,

but that's how they are.

910

:

They just don't know.

911

:

So I, you know, you can, that's why

I called the book Innocent Frauds.

912

:

You know, you can, you know,

are they innocent or are they

913

:

trying to perpetuate a fraud?

914

:

It's almost like it's more

insulting to say it's innocent.

915

:

They don't understand it.

916

:

But, and there might be some of

them like that, but I, I mean,

917

:

I've, I don't think they do.

918

:

I, you know, again, I can be wrong.

919

:

Maybe they do.

920

:

And they've read my book and

they, yeah, I don't know.

921

:

I don't know.

922

:

Richard Laterman: Remi, I would be

remiss if we didn't circle back.

923

:

Something you just said a moment

ago, which is the idea that if

924

:

we reduce interest rates, we

would help reduce inflation.

925

:

I mean, that, that, that flies in

the face of, I guess, everything I

926

:

learned in university, which maybe

was all wrong, but I, I love it.

927

:

I love if you could explain that

notion, to me, because I think

928

:

that's one of the more controversial

things I've heard, so far.

929

:

And I am trying, I am trying to

keep an open mind, but that is

930

:

definitely something that doesn't,

doesn't really square for me.

931

:

Warren Mosler: So my partner and

I were talking about this not too

932

:

long ago, you know, like back in the

eighties when we were running fixed

933

:

income, we were saying this, you know,

when they'd raise the fed funds rate

934

:

or Greenspan would raise the rate.

935

:

We'd say, okay, watch, you know, inflation

is going to start creeping up now.

936

:

He's going to take credit for

having been a good forecaster

937

:

when really he's causing this.

938

:

So it's not something I've

come to most recently.

939

:

Okay.

940

:

This has been a long time now.

941

:

I had a conversation with Paul Krugman

six, eight years, seven years ago, but

942

:

he was, he and Stephanie Kelton were

on Bloomberg going back and forth.

943

:

with written articles about

the MMT and the job guarantee.

944

:

And I said to him, like, what's

your problem with the job

945

:

guarantee, you know, with the

deficit and job guarantees as well.

946

:

If deficit spending gets high enough

for the job guarantee, then the Fed

947

:

can't raise rates to fight inflation.

948

:

Because when you raise rates, the extra

income interest, the treasury is going

949

:

to have to pay, we'll add to deficit

spending and that'll cause inflation.

950

:

And so the Fed loses that tool.

951

:

And I said, well, you know what?

952

:

I agree with you, Paul, but

I think we're already there.

953

:

Now our debt to GP was only

35 percent held by public,

954

:

but I'd already started saying that since

the early 80s when I first got into this

955

:

stuff saying that it's already happened.

956

:

Okay, and I said and so I, I agree

with you, but I think we are there.

957

:

And so I don't think he

says, well, I don't think so.

958

:

I think we raised race, we still

have that tool to fight inflation.

959

:

And we kind of ended the, we just agreed

on that and it wasn't even agreed.

960

:

We both agreed that that's

in the new Keynesian model.

961

:

And the question was whether or not we

thought that debt to GDP was high enough.

962

:

Well, after COVID, the debt to GDP went

from, held by the public, went from

963

:

35 to like 97 or so, maybe went to a

hundred and I go, okay, well, this is

964

:

like, I've seen it, the effect at 35.

965

:

It's, you know, I'm pretty sure

that it's three times the fiscal

966

:

impact now than it was back then.

967

:

And when the fed started raising

rates, I was the first one out there

968

:

saying this is going to backfire, it

doesn't work that way, other forecasts

969

:

of inflation, of, uh, going up.

970

:

I said, it's wrong.

971

:

Unemployment is going to go down,

not up, because their deficit

972

:

spending is going to go up.

973

:

And it went up to 5, 6%, of which

3 or 4 percent was interest rate.

974

:

And that's what happened.

975

:

Unemployment came down and didn't go up.

976

:

It went up because we had big immigration.

977

:

That number went up, but the

jobs have always been there.

978

:

And, uh, and it's still only 4.

979

:

2.

980

:

And GDP, I said, it's going to be strong.

981

:

It's been gag busters the whole time.

982

:

Three ish percent.

983

:

Everybody was forecasting

flat to negative.

984

:

You look at the old Fed forecast,

they're all forecasting a zero

985

:

propensity to spend interest.

986

:

That has to be in their model

because it's the same new Keynesian

987

:

model only with that, for that, You

know, assumption, would they not

988

:

be forecasting a strong economy?

989

:

They had a normal type of pension spend

interest income as they had for other

990

:

kinds of spending, they would have

shown runaway GDP and, and all that.

991

:

And inflation came down because

oil came down or inflation

992

:

indicators came down, oil came down.

993

:

The supply shocks the way, but if

you notice it's leveled off, core

994

:

inflation has started going sideways,

started creeping up, approaching the

995

:

fed funds rate, which has come down.

996

:

So the target's a little bit low

instead of five and a quarter is

997

:

four and a half or wherever it is.

998

:

And if they bring it down, then it'll

level off there, you know, I think,

999

:

but, and that's not day to day.

:

00:48:44,340 --> 00:48:47,327

That's, you know, year to year or

whatever, that's, that's longer term.

:

00:48:48,027 --> 00:48:48,407

And there's a

:

00:48:48,407 --> 00:48:49,977

lot of, uh, yeah, go

:

00:48:50,092 --> 00:48:54,042

Adam Butler: you've taken pains to, to

distinguish between, inflation indicators

:

00:48:54,112 --> 00:48:56,252

and an inflation or an inflation

:

00:48:56,357 --> 00:48:56,797

Warren Mosler: Yeah.

:

00:48:56,797 --> 00:48:57,087

Yeah.

:

00:48:57,267 --> 00:48:57,627

Yeah.

:

00:48:57,797 --> 00:49:01,525

Adam Butler: can you measure

inflation in a way that's not

:

00:49:01,835 --> 00:49:03,035

using an inflation indicator?

:

00:49:03,300 --> 00:49:06,340

Warren Mosler: Well, I

can, but nobody's using it.

:

00:49:06,350 --> 00:49:10,500

So it's kind of a waste of

time, you know, what's the

:

00:49:10,630 --> 00:49:10,910

point?

:

00:49:11,590 --> 00:49:12,780

I look at, right.

:

00:49:13,180 --> 00:49:16,190

So I, I try and define it in a way.

:

00:49:16,720 --> 00:49:21,250

So it all fits into the same, you

know, theory or explanation or model.

:

00:49:21,300 --> 00:49:22,780

So it all fits the same model.

:

00:49:23,380 --> 00:49:27,553

So I see, you know, the government has

the dollars that we need to pay taxes.

:

00:49:27,553 --> 00:49:31,658

So it's price centered, just like

monopoly, you know, economics, Micro

:

00:49:31,658 --> 00:49:33,288

one on one tells you how Monopoly works.

:

00:49:33,288 --> 00:49:34,108

That's very simple.

:

00:49:34,338 --> 00:49:37,058

And everything I see substantiates that.

:

00:49:37,098 --> 00:49:40,248

It all works through an institutional

structure, which clouds it and

:

00:49:40,248 --> 00:49:41,398

everything, but it's still there.

:

00:49:41,598 --> 00:49:44,698

You can still see it happening and

it's still a consistent explanation.

:

00:49:45,408 --> 00:49:49,518

And as we see the price level changing,

I see this as a series of one time

:

00:49:49,518 --> 00:49:54,708

changes and okay, they can call that

inflation and I have to go use the

:

00:49:54,718 --> 00:49:58,198

words or else nobody's gonna know

what I'm talking about, but, I can't

:

00:49:58,208 --> 00:50:01,583

every time I say, oh, well, the

series of one time adjustments has now

:

00:50:01,713 --> 00:50:04,163

compounded to like equivalent of a 3.

:

00:50:04,253 --> 00:50:05,583

5 percent annual rate or something.

:

00:50:05,933 --> 00:50:08,173

Yeah, I just say, okay, the

inflation indicators are going

:

00:50:08,173 --> 00:50:09,933

up at three and a half to uh,

:

00:50:10,543 --> 00:50:13,733

Adam Butler: So will the inflation

indicators eventually converge

:

00:50:13,733 --> 00:50:17,973

on the actual rate of inflation,

or are they destined to forever

:

00:50:18,523 --> 00:50:21,673

Warren Mosler: so I, now I, okay,

so to answer your question, I have

:

00:50:21,673 --> 00:50:25,098

to decide, well, what Academically

is the rate of inflation.

:

00:50:25,098 --> 00:50:25,788

Where did it come from?

:

00:50:26,898 --> 00:50:29,738

So academically it's a continuous

increase in the price level.

:

00:50:30,348 --> 00:50:35,088

So under fixed exchange rates, that would

be a continuous increase in the gold

:

00:50:35,148 --> 00:50:40,408

supply, the reserves, because that's how

you measure the inflation as a chain.

:

00:50:40,428 --> 00:50:43,778

The price level is measured

by your gold reserves.

:

00:50:43,808 --> 00:50:46,958

And if you double the gold reserves,

like San Francisco gold strike,

:

00:50:47,738 --> 00:50:53,435

government monetizes it, buys the gold,

spends it, prices, Go up, you have an

:

00:50:53,435 --> 00:50:55,855

inflation, you have the value of gold.

:

00:50:56,365 --> 00:51:00,975

The relative value of gold is fixed

at 35, whatever it was back then.

:

00:51:01,075 --> 00:51:04,945

It's decreasing now to the value of

everything else because of the new supply.

:

00:51:05,275 --> 00:51:08,425

Straight supply demand, quantity theory.

:

00:51:08,435 --> 00:51:11,325

It fits, there's nothing wrong with

quantity theory on a gold standard.

:

00:51:11,365 --> 00:51:13,135

It actually fits very nicely.

:

00:51:13,575 --> 00:51:16,430

The reason everybody's proves

that it's wrong because we're

:

00:51:16,430 --> 00:51:17,430

on a floating exchange rate.

:

00:51:17,430 --> 00:51:19,330

Well, it's the wrong context.

:

00:51:19,450 --> 00:51:20,100

Of course it's wrong.

:

00:51:20,630 --> 00:51:22,610

It's got nothing that is

not supposed to be right.

:

00:51:23,180 --> 00:51:24,790

But it is right with fixed exchange rates.

:

00:51:24,800 --> 00:51:30,217

So inflation would have been a

continuous depreciation of currency,

:

00:51:30,217 --> 00:51:32,117

which would be continuous new gold.

:

00:51:32,708 --> 00:51:38,078

Supply coming online or a devaluation

where you devalue gold continuously.

:

00:51:38,098 --> 00:51:41,608

So you get a change in relative value,

either nominally or in real terms.

:

00:51:41,958 --> 00:51:43,988

And that would have been

inflation under the gold standard.

:

00:51:44,828 --> 00:51:46,938

So what is it under

floating exchange rates?

:

00:51:46,978 --> 00:51:51,208

Well, you know, what we

have in the gold standard.

:

00:51:51,883 --> 00:51:54,483

Is an interest rate set by market forces.

:

00:51:55,343 --> 00:51:58,833

And it's generally a positive curve

because there's risk in holding gold.

:

00:51:59,583 --> 00:52:04,217

And, uh, the indifference levels of

people holding paper versus gold, you

:

00:52:04,217 --> 00:52:06,657

know, they want to get an interest rate

or they just as soon hold the gold.

:

00:52:06,927 --> 00:52:08,237

Cause that's a risk free asset.

:

00:52:08,557 --> 00:52:10,357

That's the top of the pyramid.

:

00:52:10,757 --> 00:52:14,827

There's no pyramid for floating exchange

rates, except government and other credit.

:

00:52:14,827 --> 00:52:18,977

But with gold, the pyramid is how

far away are you from the gold?

:

00:52:19,450 --> 00:52:20,880

You got the gold in your pocket.

:

00:52:21,400 --> 00:52:22,670

You got the gold in a bank vault.

:

00:52:22,710 --> 00:52:24,900

You got the gold certificate

from the government.

:

00:52:24,900 --> 00:52:25,920

You're getting further away.

:

00:52:26,260 --> 00:52:27,470

You hold a third of your bond.

:

00:52:27,480 --> 00:52:29,440

Now you're getting pretty far

away from the gold, right?

:

00:52:30,030 --> 00:52:33,677

And so you get this positive

yield curve and that interest

:

00:52:33,677 --> 00:52:39,837

rate implies a continuous rate of

change of the price level because

:

00:52:39,837 --> 00:52:41,667

it's the price of gold going up.

:

00:52:41,667 --> 00:52:44,427

You look at the forwards, they're

going to be going higher, right?

:

00:52:45,217 --> 00:52:46,077

Or lower, right?

:

00:52:46,557 --> 00:52:48,817

Discount, you know,

depending on what it is.

:

00:52:49,257 --> 00:52:53,043

Okay, so whatever gold is,

that's the price level.

:

00:52:53,053 --> 00:52:56,463

So if you look at the forward

prices, that's the price level.

:

00:52:57,063 --> 00:53:01,977

And so to translate the language to

floating exchange rate, what is inflation?

:

00:53:02,447 --> 00:53:04,217

It's a continuous change

in the price level.

:

00:53:04,217 --> 00:53:07,457

So when I look at the price level

with floating exchange rate, it's

:

00:53:07,637 --> 00:53:08,807

different from the gold standard.

:

00:53:08,897 --> 00:53:13,040

So for example, when we had that

gold strike, we fix the price of gold

:

00:53:13,040 --> 00:53:14,960

at three, $5, all the prices go up.

:

00:53:15,230 --> 00:53:16,010

That's inflation.

:

00:53:16,550 --> 00:53:16,820

Today.

:

00:53:16,825 --> 00:53:19,040

If we have gold strike and

the price of gold goes down.

:

00:53:19,765 --> 00:53:21,305

That's deflation because

we're not fixing it.

:

00:53:21,685 --> 00:53:25,005

So the exact same event, exact

same shift in relative values,

:

00:53:25,285 --> 00:53:26,735

one's inflation, one's deflation.

:

00:53:27,505 --> 00:53:28,735

So the different contexts.

:

00:53:29,385 --> 00:53:33,028

So we've got to kind of, to be able

to use the same words and have it mean

:

00:53:33,028 --> 00:53:34,108

something, we've got to turn it around.

:

00:53:34,568 --> 00:53:37,508

So inflation is a continuous

change in price level.

:

00:53:37,708 --> 00:53:38,698

I see that as.

:

00:53:39,092 --> 00:53:39,902

Forward pricing.

:

00:53:40,618 --> 00:53:46,272

So if you look at spot gold at, what

is it, 2, 600, and forward gold, and

:

00:53:46,272 --> 00:53:50,722

you have a zero rate policy like Japan

and Yen, forward gold would be 2,

:

00:53:50,722 --> 00:53:55,558

600, translate to Yen, whatever that

is, and the Yen, of course, forward

:

00:53:55,558 --> 00:53:58,308

would be different from the dollar,

but that's, that's how it's equated.

:

00:53:58,308 --> 00:53:59,498

That's how those three points meet.

:

00:53:59,788 --> 00:54:02,563

But in the end gold prices

are flat, whatever they are.

:

00:54:02,563 --> 00:54:07,413

I guess it's, it would be, uh, 26,

260, 000 or something times 100, 2.

:

00:54:08,403 --> 00:54:09,833

6 million or something like that.

:

00:54:10,413 --> 00:54:11,673

So, but it's flat all the way up.

:

00:54:12,923 --> 00:54:13,483

Okay.

:

00:54:13,943 --> 00:54:14,623

And in the U.

:

00:54:14,623 --> 00:54:14,943

S.

:

00:54:15,013 --> 00:54:18,043

gold prices are, because we have

rates of four or five percent,

:

00:54:18,043 --> 00:54:22,383

they're going continuously higher

forward at a four or five percent

:

00:54:22,403 --> 00:54:23,713

rate, something like that, roughly.

:

00:54:24,463 --> 00:54:24,633

Adam Butler: So,

:

00:54:24,713 --> 00:54:26,753

Warren Mosler: they're

functioning at the interest rate.

:

00:54:26,763 --> 00:54:30,593

Adam Butler: a, is gold funded at a

substantially different rate forward

:

00:54:30,603 --> 00:54:32,593

than other assets are priced forward?

:

00:54:32,728 --> 00:54:36,458

Warren Mosler: Well, it might be, but

there's a risk on a risk adjusted basis.

:

00:54:36,488 --> 00:54:37,178

They're all the same.

:

00:54:37,518 --> 00:54:40,018

They're all discounted by the risk

free rate, which is the treasury rate.

:

00:54:40,510 --> 00:54:40,890

Adam Butler: Right.

:

00:54:40,965 --> 00:54:41,175

Warren Mosler: Okay.

:

00:54:41,175 --> 00:54:46,055

So, so the funding rate is, is let's

say the sulfur curve, the Euro dollars

:

00:54:46,825 --> 00:54:50,265

treasury, they're all pretty close,

plus or minus a risk adjustment.

:

00:54:51,035 --> 00:54:51,935

You know, for, okay.

:

00:54:52,035 --> 00:54:52,405

Okay.

:

00:54:52,405 --> 00:54:53,990

And so our storage costs.

:

00:54:54,520 --> 00:54:56,230

You know, if they're high

storage costs of changes.

:

00:54:56,240 --> 00:55:00,660

So assuming no storage costs and no

risk adjustment and the yield curve.

:

00:55:00,690 --> 00:55:05,460

So, and what that rate is, is the

price of what you would have to pay

:

00:55:05,480 --> 00:55:09,730

for gold right now, as an agent,

you know, what today's agents have

:

00:55:09,730 --> 00:55:11,340

to pay to buy for forward delivery.

:

00:55:12,070 --> 00:55:14,670

So if you want to buy gold a year

from now, you have to pay a 5%.

:

00:55:15,727 --> 00:55:19,940

And it's fair value because the seller

of gold wants a 5 percent premium.

:

00:55:20,040 --> 00:55:22,940

Otherwise he can get the price today

and put in the bank at 5%, right?

:

00:55:22,940 --> 00:55:24,390

So four and a half percent.

:

00:55:24,900 --> 00:55:28,030

So it's indifference levels

are 5 percent higher.

:

00:55:28,030 --> 00:55:31,930

So the, the term, I call that

the term structure of prices.

:

00:55:32,773 --> 00:55:33,303

Okay.

:

00:55:33,383 --> 00:55:37,363

And the term structure of prices are

the prices faced by today's agents.

:

00:55:37,364 --> 00:55:40,293

It was today's flat yield

curve, 10 years at 460.

:

00:55:40,893 --> 00:55:45,618

You could say that the term structure

of prices appreciates continuously

:

00:55:46,212 --> 00:55:47,832

compounded at 4.5

:

00:55:47,832 --> 00:55:52,992

percent rate for 10 years.

:

00:55:53,022 --> 00:55:57,622

So I would say the rate of inflation over

the next ten years, academically defined

:

00:55:57,622 --> 00:55:58,722

as the term structure prices as 4.5

:

00:55:58,722 --> 00:55:58,972

percent.

:

00:55:59,082 --> 00:56:02,882

Now whether that means anything or not,

that doesn't mean the spot price of gold

:

00:56:02,882 --> 00:56:06,412

is going to go up continuously or the

price of is going to go up continuously,

:

00:56:06,922 --> 00:56:08,692

but it also doesn't mean that it's not.

:

00:56:09,292 --> 00:56:10,942

So here's a question for you.

:

00:56:10,992 --> 00:56:19,157

Do the Forward prices that are much higher

now, you know, what's 5 percent compounded

:

00:56:19,177 --> 00:56:24,197

continuously for 10 years, 70 percent

higher or something, 80 percent higher.

:

00:56:24,587 --> 00:56:27,647

Does that influence where the

price of spot price of gold is

:

00:56:27,647 --> 00:56:28,677

going to be 10 years from now?

:

00:56:28,907 --> 00:56:29,717

I think it does.

:

00:56:30,727 --> 00:56:33,447

People decided to mine

gold, know their costs.

:

00:56:33,497 --> 00:56:34,827

They know what they'll pay for people.

:

00:56:35,337 --> 00:56:35,647

They.

:

00:56:36,072 --> 00:56:39,172

Any kind of forward planning

is done based on those rates.

:

00:56:39,948 --> 00:56:43,138

It probably does, but I don't have

the hundreds of millions of dollars

:

00:56:43,138 --> 00:56:47,248

to hire PhDs like the Fed does to do

that correlation, but you think it

:

00:56:47,258 --> 00:56:51,058

might be useful for them since every

time they change the rate, they're

:

00:56:51,068 --> 00:56:52,868

changing the term structure of prices.

:

00:56:53,258 --> 00:56:56,628

They are changing the academic

definition of inflation, you

:

00:56:56,628 --> 00:56:57,978

know, directly one to one.

:

00:56:58,713 --> 00:57:02,133

Adam Butler: So by, in play, by

implication as as long rates or

:

00:57:02,133 --> 00:57:07,533

whatever, as rates rise as the term

structure steepens, then the, the

:

00:57:07,533 --> 00:57:11,733

expectation would be that, that, that

is a, in general, maybe over the long

:

00:57:11,733 --> 00:57:17,093

term on average, an indicator of the

price, expected price, appreciation

:

00:57:17,093 --> 00:57:18,863

of the gold over that, over that time

:

00:57:18,878 --> 00:57:20,768

Warren Mosler: say it's,

I'd say it's an influence.

:

00:57:21,568 --> 00:57:25,288

I don't know how strong an influence

and look, central banks own 35

:

00:57:25,328 --> 00:57:26,388

percent of the world's gold.

:

00:57:26,668 --> 00:57:29,258

They decide to sell it as going down

no matter what the forward price is.

:

00:57:30,193 --> 00:57:31,733

So things can change the relative value.

:

00:57:32,143 --> 00:57:36,403

But, so when I see the inflation

indicators gravitating towards

:

00:57:36,403 --> 00:57:40,393

the fed funds rate over a 50 year

period of time, you know, every,

:

00:57:40,433 --> 00:57:41,813

there are plenty of resets in there.

:

00:57:41,863 --> 00:57:45,733

Every time there's a reset because

of oil price shock or something,

:

00:57:45,733 --> 00:57:46,863

it starts doing it again.

:

00:57:47,343 --> 00:57:49,903

Every time there's a break,

it starts doing it again.

:

00:57:50,517 --> 00:57:53,737

It makes me think, you know, there might

be something there that I don't have

:

00:57:53,737 --> 00:57:56,475

the resources to, you to affirm or deny,

:

00:57:57,030 --> 00:57:59,880

Adam Butler: but that's kind of

the best we can get to quantify

:

00:58:00,605 --> 00:58:01,025

Warren Mosler: right now.

:

00:58:01,025 --> 00:58:01,315

That's

:

00:58:01,600 --> 00:58:02,860

Adam Butler: expected inflation rate.

:

00:58:03,275 --> 00:58:04,245

Warren Mosler: yeah,

that's kind of the wind.

:

00:58:04,800 --> 00:58:05,620

Adam Butler: currency regime.

:

00:58:06,305 --> 00:58:08,765

Warren Mosler: that's kind of the

gentle wind blowing behind the boat,

:

00:58:08,935 --> 00:58:11,435

you know, that you have to sail against.

:

00:58:12,310 --> 00:58:14,210

You know, and I've noticed

that now part of it is because

:

00:58:14,210 --> 00:58:15,380

it's all deficit spending.

:

00:58:16,270 --> 00:58:19,020

So when you're deficit spending for

interest, if you, that's different

:

00:58:19,310 --> 00:58:23,643

than if they raise taxes to pay for

it, we have balanced budget, then I

:

00:58:23,643 --> 00:58:25,213

think everything's going to collapse.

:

00:58:25,223 --> 00:58:28,713

But when you're just deficit spending

to pay interest, isn't that like

:

00:58:28,713 --> 00:58:30,413

a stock dividend for an equity?

:

00:58:31,253 --> 00:58:35,523

Or split, you know, a 5 percent stock

split or something or stock dividend.

:

00:58:35,953 --> 00:58:37,853

What does that do to

the value of the stock?

:

00:58:39,013 --> 00:58:40,203

Adam Butler: So, would you classify

:

00:58:40,223 --> 00:58:41,463

Warren Mosler: natural demand for it.

:

00:58:42,383 --> 00:58:45,143

Adam Butler: would you classify the

owners of treasury securities then,

:

00:58:45,373 --> 00:58:49,373

to the extent that they own those

securities are agents of the government?

:

00:58:50,073 --> 00:58:53,183

Warren Mosler: I haven't done that,

but I'd say that when they start

:

00:58:53,183 --> 00:58:59,573

spending, yeah, I'd say P, S, The

interest they get is, yeah, I guess

:

00:58:59,573 --> 00:59:02,713

you could, I guess it depends on what

the further purpose of the analysis is.

:

00:59:03,073 --> 00:59:06,333

I don't know if I'd make the general

case because they're not doing anything.

:

00:59:06,353 --> 00:59:08,683

You're just sitting there with

reserve balances at the Fed.

:

00:59:09,193 --> 00:59:11,343

So they're not acting as

agent, doing anything.

:

00:59:11,953 --> 00:59:14,973

When they bought them, all they did

was shift their duration of their

:

00:59:15,323 --> 00:59:16,573

federal liabilities, so they didn't

:

00:59:17,533 --> 00:59:20,233

Adam Butler: But to the extent the

private sector is receiving income

:

00:59:20,233 --> 00:59:22,913

from these securities that could be

:

00:59:23,143 --> 00:59:27,823

Warren Mosler: yeah, so they are agents

in that sense, as getting dollars

:

00:59:27,823 --> 00:59:30,003

that the Fed didn't have to give them.

:

00:59:30,063 --> 00:59:31,773

And they're not, they're

not selling anything.

:

00:59:31,774 --> 00:59:31,793

Okay.

:

00:59:32,493 --> 00:59:34,843

So yeah, to that extent,

they become agents,

:

00:59:36,163 --> 00:59:37,013

And as agents,

:

00:59:37,113 --> 00:59:39,623

Adam Butler: as what the Fed, or

sorry, what the government did

:

00:59:39,623 --> 00:59:43,533

when it deposited funds directly

in everybody's, accounts during

:

00:59:43,963 --> 00:59:44,853

Warren Mosler: Yeah, yeah.

:

00:59:44,993 --> 00:59:45,613

So it's like 1.

:

00:59:45,613 --> 00:59:47,403

2 trillion of stimulus checks.

:

00:59:47,923 --> 00:59:51,543

And the interesting thing is they only pay

it to people who already have money and

:

00:59:51,543 --> 00:59:52,893

it's proportionate to how much you have.

:

00:59:53,493 --> 00:59:58,617

So what kind of a con, what kind of

Congress would actively vote to pay 1.

:

00:59:58,617 --> 00:59:59,627

2 trillion to the government?

:

01:00:01,177 --> 01:00:04,727

In money to people who already have

money in proportion that they are,

:

01:00:05,167 --> 01:00:08,717

you know, how much they already

have in order to fight inflation.

:

01:00:08,727 --> 01:00:12,807

I mean, what kind of an obscenely

regressive, idiotic policy is that?

:

01:00:13,217 --> 01:00:17,367

Nobody who heard it that way and

recognized it could possibly vote on,

:

01:00:17,367 --> 01:00:21,147

I don't think, unless they somehow

thought, I don't know, it just seems

:

01:00:21,147 --> 01:00:25,207

so far fetched that anyone who was

properly presented with it would actually

:

01:00:25,207 --> 01:00:27,207

do it, but that's what they're doing.

:

01:00:27,817 --> 01:00:29,487

That's what they've been

doing for a long time.

:

01:00:30,107 --> 01:00:32,567

So you asked me, are they aware

that that's what they were doing?

:

01:00:33,142 --> 01:00:36,272

Doing this, it couldn't

be more regressive plan.

:

01:00:36,272 --> 01:00:40,242

I mean, if Elon Musk and Donald

Trump have a plan to help the high

:

01:00:40,242 --> 01:00:42,912

end, why do they want to race?

:

01:00:43,907 --> 01:00:47,647

Adam Butler: Well, yeah, so I think

this gets, gets interestingly to one

:

01:00:47,647 --> 01:00:48,837

of the hearts of the matter, right?

:

01:00:48,837 --> 01:00:50,867

Which is that so you've got this 1.

:

01:00:50,867 --> 01:00:51,207

2 trillion.

:

01:00:51,597 --> 01:00:53,313

And, you've got this 1.

:

01:00:53,313 --> 01:00:57,773

2 trillion a year going out to

asset owners, treasury owners.

:

01:00:57,913 --> 01:01:04,128

And, um, you could, if you were to

reset rates or have a very different

:

01:01:04,128 --> 01:01:07,778

structure to how the government

is funded, you could take that 1.

:

01:01:07,778 --> 01:01:14,158

2 trillion dollars and use it to

invest in, you know, bridges, nurses,

:

01:01:14,298 --> 01:01:15,548

Warren Mosler: yeah, well, yeah.

:

01:01:15,548 --> 01:01:18,583

The first thing you can do, first

thing you can do is stop paying, right?

:

01:01:19,073 --> 01:01:20,123

That alone would stop.

:

01:01:20,123 --> 01:01:22,073

Stop the distribution aspect.

:

01:01:22,713 --> 01:01:25,563

Now, if you did that, the budget

deficit would drop to, oh, not

:

01:01:25,563 --> 01:01:28,913

the first day, but it would drop

to one or 2% of GDP, which would

:

01:01:28,913 --> 01:01:31,253

probably cause a lot of slack, right?

:

01:01:31,253 --> 01:01:32,573

Fiscal unemployment.

:

01:01:32,723 --> 01:01:37,343

Now you could redeploy those resources

into something more useful, right?

:

01:01:38,023 --> 01:01:40,693

And, uh, probably useful

by almost anybody's.

:

01:01:41,387 --> 01:01:46,840

You know, estimation certainly come

up with a lot better ways to deploy 1.

:

01:01:46,880 --> 01:01:47,460

2 trillion.

:

01:01:47,460 --> 01:01:48,850

It's not that you need that money.

:

01:01:49,630 --> 01:01:52,720

It's, you know, it's interesting when

people talk about money moving and

:

01:01:52,720 --> 01:01:56,717

this money could do that, you know,

all it is, is debits and credits.

:

01:01:56,717 --> 01:01:56,947

Right.

:

01:01:57,327 --> 01:02:01,057

So it's, and in this information

age, it's just dots going on and off,

:

01:02:01,717 --> 01:02:05,747

you know, on some computer screen or

on the, you know, pluses and zeros

:

01:02:05,747 --> 01:02:09,037

and ones on a computer until we get

quantum, but it's still zeros and ones.

:

01:02:09,857 --> 01:02:10,307

And.

:

01:02:11,107 --> 01:02:14,427

If anybody looks at their TV screen and

they watch a football game, they see

:

01:02:14,427 --> 01:02:18,267

people moving across the screen, but

there's nothing moving on that screen.

:

01:02:18,277 --> 01:02:19,137

You get very close.

:

01:02:19,147 --> 01:02:20,507

It's just dots going on and off.

:

01:02:21,157 --> 01:02:22,267

It's got the appearance of motion.

:

01:02:22,267 --> 01:02:24,397

Well, you know, dots don't move.

:

01:02:24,697 --> 01:02:27,387

It's just accounts going

up and accounts going down.

:

01:02:27,497 --> 01:02:30,827

And then, you know, you don't need

the energy from one dot to light

:

01:02:30,827 --> 01:02:33,817

up the next dot, or else the person

can't move across the screen.

:

01:02:34,327 --> 01:02:34,417

Adam Butler: Okay.

:

01:02:35,107 --> 01:02:35,417

Bye guys.

:

01:02:35,787 --> 01:02:37,227

Warren Mosler: That's a scorekeeper.

:

01:02:37,227 --> 01:02:39,787

The scorekeeper doesn't need revenue

to be able to credit your account.

:

01:02:40,627 --> 01:02:43,917

They just credit it and debit their

own account for accounting purposes.

:

01:02:43,917 --> 01:02:46,087

Accounting is just,

after the record keeping.

:

01:02:46,557 --> 01:02:47,217

They account for it.

:

01:02:47,217 --> 01:02:50,057

They keep records of it by making

an entry, but it doesn't come

:

01:02:50,057 --> 01:02:52,247

from the account they, they debit.

:

01:02:52,287 --> 01:02:55,097

That's just the, when they credit

your account, that's just an entry.

:

01:02:55,737 --> 01:02:56,767

So they know what they did.

:

01:02:56,807 --> 01:02:58,687

It's a record of what

happened during the day.

:

01:02:59,507 --> 01:03:02,427

And so if you look at it, the

government spends 7 trillion.

:

01:03:02,837 --> 01:03:03,327

What does it do?

:

01:03:03,327 --> 01:03:06,317

It credits reserve accounts of

all the commercial banks, mostly

:

01:03:06,317 --> 01:03:07,787

on behalf of their clients.

:

01:03:08,520 --> 01:03:10,750

then debits those accounts for 5 trillion.

:

01:03:12,740 --> 01:03:15,210

Taxes get paid, mostly client accounts.

:

01:03:15,970 --> 01:03:22,260

The remaining 2 trillion, by and large,

decide to shift those dollars, to, from

:

01:03:22,260 --> 01:03:24,640

reserve accounts to securities accounts.

:

01:03:25,420 --> 01:03:25,750

Okay.

:

01:03:25,750 --> 01:03:28,070

And so the 2 trillion winds

up in treasury securities.

:

01:03:28,970 --> 01:03:34,288

Now, formally, formally, formally,

36 trillion is either cash

:

01:03:34,299 --> 01:03:36,099

reserves or treasury securities.

:

01:03:36,579 --> 01:03:42,689

They're all Fed liabilities because the

Fed controls the composition between those

:

01:03:42,699 --> 01:03:48,509

three places and they do it reactively

generally to what the economy needs.

:

01:03:48,509 --> 01:03:50,919

That's what they call

offsetting operating factors.

:

01:03:51,349 --> 01:03:55,249

So that, Their interest rate targets

are met with a zero rate target.

:

01:03:55,279 --> 01:03:57,899

They just have to keep excess

reserves and supply cash on demand.

:

01:03:58,649 --> 01:04:01,429

So simplest thing, you don't

need interbank trading.

:

01:04:01,429 --> 01:04:02,779

You don't need anything else.

:

01:04:03,529 --> 01:04:05,109

You don't need any treasury securities.

:

01:04:05,129 --> 01:04:08,429

All those people trading treasuries

can go out and cure cancer,

:

01:04:08,429 --> 01:04:09,649

do something useful, right?

:

01:04:10,634 --> 01:04:13,874

And if you look at that real compliance

costs for all these policies, how

:

01:04:13,874 --> 01:04:17,594

many people are doing things that are

functionally digging a hole and filling it

:

01:04:17,594 --> 01:04:21,800

in for massive salaries too often, right?

:

01:04:21,930 --> 01:04:24,029

Uh, and well earned because

it's a tough thing to do, but

:

01:04:24,029 --> 01:04:25,090

it doesn't need to happen.

:

01:04:25,740 --> 01:04:31,230

I think we're losing 25 percent to 30

percent of GDP in real compliance costs.

:

01:04:31,260 --> 01:04:34,690

People's time that would

be spent otherwise.

:

01:04:35,080 --> 01:04:39,050

And if you look at that time being spent

on, I'll just say public education,

:

01:04:39,050 --> 01:04:41,334

public health and transportation.

:

01:04:41,954 --> 01:04:43,804

Public transportation,

just for three things.

:

01:04:44,470 --> 01:04:48,577

that enhances the standard of living

for the lowest income earners the most.

:

01:04:49,407 --> 01:04:51,397

People at the top already

have those three things.

:

01:04:51,507 --> 01:04:52,817

They're not going to get enhanced.

:

01:04:53,567 --> 01:04:56,467

And so what you've done is increased

the real standard of living of

:

01:04:56,814 --> 01:05:00,274

that group, which might, whatever

percent it is, by maybe 50%.

:

01:05:00,361 --> 01:05:01,823

Adam Butler: of people say, We

:

01:05:01,854 --> 01:05:05,204

Warren Mosler: So we're sitting at

potentially increase, a 50 percent

:

01:05:05,244 --> 01:05:07,194

increase in the real standard of living of

:

01:05:07,302 --> 01:05:08,033

Adam Butler: to have

:

01:05:08,304 --> 01:05:12,500

Warren Mosler: the lowest 50 percent

of income earners just by not

:

01:05:12,570 --> 01:05:14,270

squandering real compliance costs.

:

01:05:15,010 --> 01:05:18,430

Without taking anything from anybody, you

know, just, people who've been digging

:

01:05:18,430 --> 01:05:21,540

holes and filling it in are suddenly

doing something useful to somebody.

:

01:05:22,570 --> 01:05:24,470

And, it's not going to happen.

:

01:05:24,470 --> 01:05:25,260

It's getting worse.

:

01:05:25,300 --> 01:05:26,029

It's not getting better.

:

01:05:26,945 --> 01:05:29,595

Adam Butler: Well, and also you've got

a, you know, the reason why there's

:

01:05:29,595 --> 01:05:34,765

regulations and compliance is because

some subset of actors are bad actors.

:

01:05:34,925 --> 01:05:35,925

And, um,

:

01:05:36,290 --> 01:05:36,670

Warren Mosler: Yeah.

:

01:05:37,395 --> 01:05:38,545

Adam Butler: you know, if you,

:

01:05:39,320 --> 01:05:39,540

Warren Mosler: Yeah.

:

01:05:39,620 --> 01:05:42,910

Well, you need bank regulation,

but you don't need them to

:

01:05:42,910 --> 01:05:44,310

lend against financial assets.

:

01:05:45,100 --> 01:05:45,529

Okay.

:

01:05:45,855 --> 01:05:49,765

Richard Laterman: But given the way the

system is structured today, this is the

:

01:05:49,765 --> 01:05:53,705

part where I continue to struggle given

where we are today with the system.

:

01:05:54,365 --> 01:06:01,195

Any, I mean, if we were to take on some

of the policy, suggestions that you're.

:

01:06:02,410 --> 01:06:03,910

The system would collapse as it

:

01:06:03,990 --> 01:06:04,430

Warren Mosler: Well, wait a minute.

:

01:06:04,480 --> 01:06:05,620

Let's look at the zero rate policy.

:

01:06:06,020 --> 01:06:07,310

We've already done that for 10 years.

:

01:06:07,350 --> 01:06:08,080

Nothing left.

:

01:06:09,070 --> 01:06:09,890

Then we backed off.

:

01:06:10,540 --> 01:06:13,550

That was already changing the

income distribution numbers

:

01:06:13,550 --> 01:06:14,490

and the Gini coefficient.

:

01:06:14,740 --> 01:06:17,100

They're already starting to

change and moderate a little

:

01:06:17,100 --> 01:06:18,260

bit with the zero rate policy.

:

01:06:18,760 --> 01:06:20,910

Richard Laterman: Wait, but

zero rate policy created

:

01:06:20,920 --> 01:06:23,460

more, income inequality, not

:

01:06:23,520 --> 01:06:24,000

Warren Mosler: No, it didn't.

:

01:06:24,130 --> 01:06:24,580

No, it didn't.

:

01:06:25,600 --> 01:06:26,810

No, check the numbers.

:

01:06:27,100 --> 01:06:29,660

I mean, it's a narrative

because asset prices went up.

:

01:06:29,670 --> 01:06:30,360

But look at Japan.

:

01:06:30,820 --> 01:06:33,029

They didn't have any asset price

problem with 30 years of it.

:

01:06:33,350 --> 01:06:35,029

And so those went up for other reasons.

:

01:06:35,630 --> 01:06:37,150

So to, to, so we did

:

01:06:37,295 --> 01:06:40,912

Adam Butler: Yeah, that is the, um,

what do you think the difference is?

:

01:06:41,277 --> 01:06:46,157

is between how things evolved

in, most Western democracies

:

01:06:46,157 --> 01:06:47,727

and what happened in Japan.

:

01:06:47,727 --> 01:06:52,607

Because I'm with Richard that, you

know, most of my investing life, I

:

01:06:52,607 --> 01:06:58,277

have been either strongly or mostly

of the opinion that that very low

:

01:06:58,277 --> 01:07:02,202

rates accelerate asset bubbles.

:

01:07:02,372 --> 01:07:05,302

I mean, for real estate, it seemed

clear and the IMF just published

:

01:07:05,302 --> 01:07:10,682

a very, I think, a strong case for

the elasticity response of, of real

:

01:07:10,682 --> 01:07:12,452

estate prices to interest rates.

:

01:07:12,572 --> 01:07:16,462

But I think it's less clear

in other, in other dimensions.

:

01:07:16,462 --> 01:07:18,692

But why, why haven't we seen that?

:

01:07:18,942 --> 01:07:19,942

Did we see that in Japan?

:

01:07:19,952 --> 01:07:21,242

We haven't seen it here.

:

01:07:21,997 --> 01:07:24,937

Warren Mosler: So about 25 years

ago, I was talking to a guy in

:

01:07:24,937 --> 01:07:26,647

Australia, a real estate guy.

:

01:07:26,677 --> 01:07:29,340

I, I had been down here in, it

must have been the late nineties.

:

01:07:29,940 --> 01:07:30,960

I was there in 87.

:

01:07:31,200 --> 01:07:33,510

Anyway, I said, how's

the real estate market?

:

01:07:33,720 --> 01:07:36,940

He said, well, he said, it's,

it's pretty strong right now.

:

01:07:36,940 --> 01:07:38,830

He said, mortgage rates are 17.5%,

:

01:07:39,300 --> 01:07:41,670

but I think if they put 'em

up to 18, it's gonna collapse.

:

01:07:42,090 --> 01:07:43,140

I said, okay, thanks.

:

01:07:43,835 --> 01:07:45,815

My next call, I talked

to somebody in Japan.

:

01:07:45,825 --> 01:07:46,535

How's the real estate market?

:

01:07:47,525 --> 01:07:48,995

Well, it's still really slow.

:

01:07:48,995 --> 01:07:50,175

We're at three and a half percent.

:

01:07:50,185 --> 01:07:52,935

I think if we take it down

three, it's going to get cold.

:

01:07:52,995 --> 01:07:57,265

You know, look, we had a stronger

housing market in the late seventies

:

01:07:57,265 --> 01:08:01,635

with 15 percent mortgage rates than we've

had here, even with three and a half.

:

01:08:02,325 --> 01:08:05,215

You know, if you look at it,

particularly per capita, I started off

:

01:08:05,245 --> 01:08:07,865

in,:

:

01:08:08,335 --> 01:08:09,235

We'd had 2.

:

01:08:09,845 --> 01:08:12,895

6 million housing starts

with 8 percent mortgage rates

:

01:08:13,075 --> 01:08:14,395

and only 200 million people.

:

01:08:15,325 --> 01:08:20,515

Okay, so that's almost double the

population today, 340, and 2 million is

:

01:08:20,515 --> 01:08:23,205

an unsustainable bubble with lower rates.

:

01:08:23,665 --> 01:08:27,645

You know, it's not, yes, the rates

have some effect in the short term

:

01:08:27,645 --> 01:08:31,665

at the margin, but fundamentally, I

don't think that's driving things.

:

01:08:32,010 --> 01:08:33,740

Yeah.

:

01:08:33,920 --> 01:08:37,090

Richard Laterman: But how do you

think about the, the price of

:

01:08:37,090 --> 01:08:40,690

real estate versus medium income,

which makes real estate completely

:

01:08:40,729 --> 01:08:42,930

unaffordable to the average, citizen?

:

01:08:43,250 --> 01:08:44,250

How do you square that?

:

01:08:45,460 --> 01:08:45,729

Warren Mosler: Okay.

:

01:08:45,740 --> 01:08:48,040

So we had this question you were

going to ask me that you never did

:

01:08:48,720 --> 01:08:50,740

about that started in the:

:

01:08:50,819 --> 01:08:51,440

How, how did that happen?

:

01:08:52,325 --> 01:08:52,694

Adam Butler: yeah.

:

01:08:52,890 --> 01:08:56,340

Warren Mosler: So what there's an old

principle of mainstream economics,

:

01:08:56,340 --> 01:08:59,859

just like the new Keynesians have it

in their model that rate increases

:

01:08:59,859 --> 01:09:01,020

are going to cause inflation.

:

01:09:01,300 --> 01:09:03,899

Now, when I asked Paul about that

a couple of years ago, I said, it

:

01:09:04,809 --> 01:09:08,750

doesn't look like it's causing, he

said, he goes, well, I never said that.

:

01:09:08,760 --> 01:09:09,990

No, I think rates are still going to.

:

01:09:11,115 --> 01:09:12,684

You know, it's still going

to slow the economy down.

:

01:09:12,995 --> 01:09:14,555

He still was forecasting a collapse.

:

01:09:15,055 --> 01:09:17,412

Anyway, we have game theory, right?

:

01:09:18,091 --> 01:09:21,162

So if you look at the labor

market, it's a disparity of power.

:

01:09:21,892 --> 01:09:23,381

People have to work to eat.

:

01:09:24,051 --> 01:09:25,662

Which they have to work

or they're in trouble.

:

01:09:25,812 --> 01:09:28,992

Even if you're the last guy to be hired,

the fact that everybody else has a job

:

01:09:28,992 --> 01:09:30,272

doesn't help you if you don't get one.

:

01:09:30,812 --> 01:09:33,532

So you're not in a better bargaining

position because everybody else has a

:

01:09:33,532 --> 01:09:35,612

job as an individual, the micro level.

:

01:09:36,301 --> 01:09:36,591

Yeah.

:

01:09:36,631 --> 01:09:39,922

Business only hires if they feel like

it that day, they decide to wait a week.

:

01:09:39,922 --> 01:09:41,892

They wait, you know, nothing

bad's going to happen.

:

01:09:42,152 --> 01:09:43,511

They have to like the return on equity.

:

01:09:44,836 --> 01:09:47,107

So, and I'm not saying they don't

have times where they have to

:

01:09:47,107 --> 01:09:50,367

hire people, but overall, it's

a massive disparity of power.

:

01:09:50,367 --> 01:09:55,247

So elementary game theory will tell you

that real wages will stagnate at some kind

:

01:09:55,247 --> 01:10:00,020

of subsistence level, which, you know,

vary from society and we have others.

:

01:10:00,410 --> 01:10:03,940

Support unless there's some kind

of support for labor and up until

:

01:10:03,940 --> 01:10:07,880

the early 80s, we had support

through labor unions, which were,

:

01:10:08,547 --> 01:10:10,057

you know, pretty ugly way to do it.

:

01:10:10,277 --> 01:10:15,157

I think, I mean, you have to support

it and a large group of people is

:

01:10:15,157 --> 01:10:16,687

better off, but it's very uneven.

:

01:10:16,697 --> 01:10:21,557

And for whatever reason, the corruption

of labor unions is staggering.

:

01:10:21,847 --> 01:10:24,762

I don't know why that happens, but

there's something else in this.

:

01:10:24,772 --> 01:10:27,322

It doesn't have to be that way, but it is.

:

01:10:27,352 --> 01:10:29,892

And so I'm not against

labor unions per se, but I'm

:

01:10:29,892 --> 01:10:31,982

certainly against what happened.

:

01:10:32,502 --> 01:10:32,612

Adam Butler: the

:

01:10:32,812 --> 01:10:36,232

Warren Mosler: You know, yeah,

that was there and that may

:

01:10:36,232 --> 01:10:36,862

or may not still be there.

:

01:10:36,872 --> 01:10:39,212

So anyway, so I don't, I don't want

to get off in that argument, but.

:

01:10:39,732 --> 01:10:44,902

After the 80s, it all fell apart with

competition, international competition,

:

01:10:44,902 --> 01:10:52,992

Reagan breaking the uh, and everything

else, but it was uh, largely, we had

:

01:10:53,242 --> 01:10:56,112

all got to believe everything, you

know, the automakers would get together.

:

01:10:56,652 --> 01:11:01,062

The unions would strike one,

they'd agree on something to give

:

01:11:01,062 --> 01:11:02,732

raises in line with productivity.

:

01:11:03,062 --> 01:11:05,242

And the others would fall into

line and just raise prices.

:

01:11:05,882 --> 01:11:07,722

That was the path of least

resistance for business.

:

01:11:07,722 --> 01:11:10,392

And business always follows

the path of least resistance.

:

01:11:10,562 --> 01:11:11,192

They want to make money.

:

01:11:11,202 --> 01:11:12,617

That's pretty clear.

:

01:11:13,157 --> 01:11:15,847

And that went away with

foreign competition.

:

01:11:15,857 --> 01:11:19,037

So the only reason labor had power

was because business had power.

:

01:11:19,057 --> 01:11:22,017

Without big, business doesn't

have any pricing power.

:

01:11:22,017 --> 01:11:22,987

Labor doesn't have any power.

:

01:11:22,987 --> 01:11:25,087

They can just, they'll

just shut the firms down.

:

01:11:25,087 --> 01:11:28,077

There's nothing the firm can do about

it and they lose their leverage.

:

01:11:28,537 --> 01:11:29,327

And that went away.

:

01:11:29,847 --> 01:11:33,577

And predictably, those lines

diverge where the productivity

:

01:11:33,797 --> 01:11:35,387

line and earnings line diverge.

:

01:11:35,397 --> 01:11:39,647

Now, part of that is that line, I

don't think includes benefits, or

:

01:11:39,827 --> 01:11:42,517

so you got to double check to make

sure that benefits are in there.

:

01:11:42,517 --> 01:11:45,864

But even with that, it is, if you

look at the real standard of living,

:

01:11:45,904 --> 01:11:50,344

what's happened is, you know, one wage

earner, the husband typically could

:

01:11:50,344 --> 01:11:55,345

earn enough at a medium factory job

or at a, you know, Supermarket job to

:

01:11:55,345 --> 01:11:58,675

support the wife and have two cars and

the television set and the kids went

:

01:11:58,675 --> 01:12:03,265

to school and they were dressed nice

and had plenty to eat, went to college.

:

01:12:03,845 --> 01:12:08,684

And today, husband and wife

working is struggling with that.

:

01:12:09,025 --> 01:12:13,492

And, and, you know, at least

on the surface is, you know,

:

01:12:13,492 --> 01:12:14,362

in some ways, worse off.

:

01:12:15,427 --> 01:12:18,867

And so you could call it a 50 percent

decrease in the standard of living.

:

01:12:18,887 --> 01:12:20,737

Two people have to do

the job instead of one.

:

01:12:21,227 --> 01:12:23,157

And the anxiety level now is much higher.

:

01:12:23,937 --> 01:12:27,067

And so our prescription

drugs are a lot higher.

:

01:12:27,877 --> 01:12:30,697

And, you know, everything

else that goes with that.

:

01:12:30,767 --> 01:12:33,290

And, if you look at all the

miracles of the Internet.

:

01:12:33,640 --> 01:12:37,010

What it's doing and companies

like Google and Facebook, they

:

01:12:37,010 --> 01:12:38,280

just replaced Madison Avenue.

:

01:12:38,280 --> 01:12:40,610

It's all just the

advertising agency thing.

:

01:12:41,400 --> 01:12:44,760

That's the real strength of that, which

is, you know, what it is, what it is.

:

01:12:45,309 --> 01:12:48,170

We're spending enormous amounts

of energy on advertising.

:

01:12:48,170 --> 01:12:51,370

If you look at how much it's all

consuming and all the data centers and

:

01:12:51,370 --> 01:12:54,070

all the AI, what's it, what's it all for?

:

01:12:54,070 --> 01:12:56,000

Why are they doing this

to sell advertising?

:

01:12:57,005 --> 01:12:57,195

Adam Butler: Mm

:

01:12:57,240 --> 01:12:59,300

Warren Mosler: Which is, you know,

what's making the system run.

:

01:12:59,970 --> 01:13:00,930

It's really interesting.

:

01:13:01,700 --> 01:13:05,180

If you banned internet advertising,

you know, all of a sudden

:

01:13:05,180 --> 01:13:07,920

our energy consumption and

everything else goes way down.

:

01:13:07,940 --> 01:13:12,290

We've met all our goals for the next

hundred years on emissions control.

:

01:13:13,410 --> 01:13:14,510

And what have we lost?

:

01:13:14,630 --> 01:13:16,309

All these people trying to sell us things.

:

01:13:17,210 --> 01:13:19,870

Adam Butler: So I want to, I want

to pull on one of the threads

:

01:13:20,180 --> 01:13:20,950

Warren Mosler: Back to the wages.

:

01:13:20,960 --> 01:13:24,460

So that comes from what you're

talking about, what you're seeing.

:

01:13:24,925 --> 01:13:28,985

The people struggling, a lot of

it is from this disparity of power

:

01:13:29,295 --> 01:13:30,945

where there's no longer any support.

:

01:13:31,465 --> 01:13:33,895

We won't even, the minimum wage

is only seven and a half bucks.

:

01:13:33,895 --> 01:13:35,745

We're not even like doing that.

:

01:13:35,815 --> 01:13:38,845

At least that used to be sort of

a little bit of minimum support.

:

01:13:38,845 --> 01:13:43,555

So if nobody recognizes that cause,

then nobody recognizes, recognizes

:

01:13:43,625 --> 01:13:47,325

the need for minimum support,

as an institutional necessity.

:

01:13:48,095 --> 01:13:49,245

And so it doesn't happen.

:

01:13:50,000 --> 01:13:53,290

And labor gets crushed and our

disparities of income go up.

:

01:13:53,580 --> 01:13:56,530

Minimum wage in Australia is,

I don't know, 20 or 30 an hour.

:

01:13:57,514 --> 01:13:59,734

So other people do things

about this that we don't.

:

01:14:00,695 --> 01:14:05,335

Adam Butler: But is the job

guarantee not a potential policy,

:

01:14:05,375 --> 01:14:07,125

like labor supported policy?

:

01:14:07,315 --> 01:14:09,265

And would that not shift

the power dynamics?

:

01:14:10,330 --> 01:14:11,530

Warren Mosler: not a seven

and a half dollars an hour.

:

01:14:11,870 --> 01:14:14,350

So the concept is that you have

to do it from the bottom up.

:

01:14:14,934 --> 01:14:16,575

Because of this disparity in power.

:

01:14:16,575 --> 01:14:20,375

Once you understand that, yes, now you can

introduce everything from the bottom up.

:

01:14:20,375 --> 01:14:24,845

So now the job guarantee is 15 or 20 an

hour, because you want that to be the

:

01:14:24,855 --> 01:14:29,565

minimum wage, everything will adjust,

and you're going to keep fiscal policy

:

01:14:29,765 --> 01:14:31,855

tight enough so that there are people.

:

01:14:32,300 --> 01:14:34,110

Looking for the job guarantee job.

:

01:14:34,440 --> 01:14:37,750

If you don't suddenly have nobody

in the job guarantee and you've got

:

01:14:37,750 --> 01:14:39,970

inflation going, okay, you failed.

:

01:14:40,380 --> 01:14:43,559

But if you keep fiscal policy tight

enough, so they're one or 2 percent

:

01:14:43,559 --> 01:14:47,330

of the people in the job guarantee,

it's turning over regularly and

:

01:14:47,340 --> 01:14:48,500

you're introducing other benefits.

:

01:14:48,880 --> 01:14:50,670

It comes with childcare, it

comes with healthcare, it

:

01:14:50,970 --> 01:14:51,920

comes with whatever you want.

:

01:14:52,180 --> 01:14:54,540

Now, everybody else has to

provide those to be competitive.

:

01:14:55,059 --> 01:14:58,897

So you're using market forces

to introduce benefits from the

:

01:14:58,897 --> 01:15:00,627

bottom up instead of the top down.

:

01:15:01,367 --> 01:15:05,577

And so if you want that as public

policy, that's the way to do it.

:

01:15:06,457 --> 01:15:09,537

Now, a lot of people, like I

started earlier, don't want

:

01:15:09,547 --> 01:15:10,757

to see that as public policy.

:

01:15:10,757 --> 01:15:14,997

They want to see somebody desperate so

that they will come to cut their lawn

:

01:15:15,187 --> 01:15:17,547

for 20, you know, or beg for their money.

:

01:15:17,577 --> 01:15:21,327

They want to see that happen and

they'll complain if it's not like that.

:

01:15:21,877 --> 01:15:25,477

Oh, I remember when I could call up a

repairman and he was there in an hour.

:

01:15:25,887 --> 01:15:26,757

Those were the good old days.

:

01:15:26,757 --> 01:15:27,017

Yeah.

:

01:15:27,727 --> 01:15:30,487

15 percent unemployment turned

into the oil crisis or something.

:

01:15:30,487 --> 01:15:32,587

You had people showing up really quickly.

:

01:15:33,177 --> 01:15:38,307

So it depends on how selfish the person

passing judgment on the economy is.

:

01:15:39,507 --> 01:15:42,797

Richard Laterman: Now, do these policies

all apply to other, sovereign nations

:

01:15:42,817 --> 01:15:46,807

that have control over their own currency,

putting the EU aside because they're a

:

01:15:46,932 --> 01:15:47,372

Warren Mosler: Yes.

:

01:15:47,372 --> 01:15:47,692

Yes.

:

01:15:47,707 --> 01:15:48,097

Richard Laterman: union.

:

01:15:48,467 --> 01:15:49,977

Do they apply, or is there

:

01:15:50,272 --> 01:15:56,112

Warren Mosler: They apply, they

apply to the EMU, to the Eurozone

:

01:15:56,112 --> 01:15:59,432

also, but at the level of the

ECB and the European Parliament.

:

01:16:00,027 --> 01:16:00,997

They don't bounce checks.

:

01:16:01,257 --> 01:16:05,097

European Parliament, ECB had their

trillion euro day, you know, when

:

01:16:05,097 --> 01:16:07,847

they spent that money, look the

next day to see where it was.

:

01:16:07,847 --> 01:16:08,917

And they couldn't even find it.

:

01:16:08,917 --> 01:16:11,267

Accounting, they're just crediting

accounts, just like the Fed.

:

01:16:12,007 --> 01:16:13,557

Richard Laterman: Well they

don't have a fiscal union.

:

01:16:13,847 --> 01:16:15,097

They don't have a fiscal union, right?

:

01:16:15,097 --> 01:16:18,437

So, so, so they have this Frankenstein

system where there's a monetary

:

01:16:18,437 --> 01:16:19,647

union without a fiscal union.

:

01:16:19,647 --> 01:16:19,797

And

:

01:16:19,902 --> 01:16:20,722

Warren Mosler: Yes and no.

:

01:16:21,592 --> 01:16:22,402

They have a rule.

:

01:16:22,422 --> 01:16:24,922

They have this policy where we'll

do what it takes to prevent default,

:

01:16:24,942 --> 01:16:28,962

which means they can run any debt to

GDP they want as long as the European

:

01:16:28,962 --> 01:16:32,342

Central Bank approves it and allows

them to keep funding themselves.

:

01:16:32,742 --> 01:16:33,812

So they sort of have it.

:

01:16:34,182 --> 01:16:37,842

See, here the states have to run balanced

budgets because they're quote, you

:

01:16:37,842 --> 01:16:39,302

know, presumed to be off on their own.

:

01:16:39,302 --> 01:16:43,612

So the central government runs a 100

percent deficit, 120 deficit in Europe.

:

01:16:44,067 --> 01:16:45,847

Central government doesn't

do it, so the states do it.

:

01:16:45,857 --> 01:16:47,717

Somewhere in the public

sector, they have to do it.

:

01:16:48,287 --> 01:16:50,147

Or else, oh, this is what I missed back.

:

01:16:50,637 --> 01:16:53,997

You know, that's where the net

financial assets come from, okay?

:

01:16:53,997 --> 01:16:58,027

The public debt, whether it's state

level, guaranteed by the ECB, or at

:

01:16:58,027 --> 01:17:03,447

the federal level, here, is the equity

behind the entire credit structure.

:

01:17:03,477 --> 01:17:07,817

That's the net financial assets of the

economy that are there to support credit.

:

01:17:08,717 --> 01:17:13,057

And when that, and it's, it's in real

terms, you need so much of that in

:

01:17:13,067 --> 01:17:17,127

real terms to support, you know, an

equity, just like Apple needs so many

:

01:17:17,137 --> 01:17:19,217

dollars in real terms to have a cushion.

:

01:17:19,767 --> 01:17:22,707

and if you don't sustain that,

then everything collapses.

:

01:17:23,637 --> 01:17:28,407

So in:

was higher than the rate of deficit

:

01:17:28,407 --> 01:17:32,947

spending, you had like 12 percent

inflation and 6 percent deficit spending,

:

01:17:33,867 --> 01:17:37,367

the real public debt was collapsing

at 6 percent a year, which is crazy.

:

01:17:38,057 --> 01:17:42,067

The equity behind that at the macro

level, the credit structure collapsed.

:

01:17:42,137 --> 01:17:45,427

And we had the worst collapse we've had,

you know, one of the worst collapses

:

01:17:45,427 --> 01:17:47,127

we've had in 08 was the same thing.

:

01:17:47,927 --> 01:17:49,587

We had the deficit down to 1%.

:

01:17:49,647 --> 01:17:51,852

We had inflation running at five or six.

:

01:17:51,872 --> 01:17:54,582

And the real number might've

been the inflation indicators.

:

01:17:54,902 --> 01:17:55,742

Well, I tripled, right?

:

01:17:55,742 --> 01:17:58,162

It went up to 150, 160.

:

01:17:58,322 --> 01:18:01,572

And so, we had a real total collapse

and the real public debt and

:

01:18:01,572 --> 01:18:02,602

the whole thing just collapsed.

:

01:18:02,602 --> 01:18:06,302

There was no equity, no sufficient equity

behind the credit structure to support it.

:

01:18:06,672 --> 01:18:09,562

We had a big credit expansion

and it just collapsed.

:

01:18:10,142 --> 01:18:14,722

Same thing in:

real debt deficit went down.

:

01:18:15,182 --> 01:18:16,762

we had another oil pop back then.

:

01:18:17,222 --> 01:18:19,872

And, you know, you have a

leveraged economy because of

:

01:18:20,277 --> 01:18:22,067

housing, Y2K, and everything else.

:

01:18:22,337 --> 01:18:25,957

Budget went into surplus, plus

the inflation, so that the real

:

01:18:25,957 --> 01:18:27,447

public debt was collapsing.

:

01:18:28,367 --> 01:18:29,597

And it's just everything caved in.

:

01:18:30,037 --> 01:18:33,337

And every single time we've had a

cave in, it's been the consequence

:

01:18:33,337 --> 01:18:35,037

of a collapse in real public debt.

:

01:18:35,517 --> 01:18:38,137

Three years ago, with Fed's

tightening, everybody sees a collapse.

:

01:18:38,137 --> 01:18:39,457

I go, what are you, what

are you talking about?

:

01:18:39,457 --> 01:18:42,047

We got a 6 percent increase

in the real public debt.

:

01:18:42,067 --> 01:18:44,597

Not well, it's 3 percent

real, 6 percent nominal.

:

01:18:45,307 --> 01:18:50,117

I said, show me one time in history

where that's ever not led to strong

:

01:18:50,117 --> 01:18:53,767

growth and nobody could come up with

one, but they still didn't look at it.

:

01:18:53,877 --> 01:18:56,967

They thought this other thing, the

high rate hikes would be more powerful.

:

01:18:58,117 --> 01:18:58,467

It wasn't.

:

01:18:59,067 --> 01:18:59,987

They could have been right.

:

01:18:59,997 --> 01:19:01,817

I mean, I didn't know

what was going to happen.

:

01:19:01,817 --> 01:19:05,177

I'm just knowing, looking

at what I was looking at.

:

01:19:05,997 --> 01:19:09,687

Adam Butler: Yeah, well, I know you said

that you've got a dinner to go to and

:

01:19:09,916 --> 01:19:10,627

Warren Mosler: Oh, what time is it?

:

01:19:10,707 --> 01:19:11,717

Oh, 5 30.

:

01:19:11,727 --> 01:19:11,987

Adam Butler: 530

:

01:19:12,377 --> 01:19:12,627

Warren Mosler: Thank you.

:

01:19:12,757 --> 01:19:13,087

Thank you.

:

01:19:13,087 --> 01:19:14,166

I was having too much fun here.

:

01:19:14,797 --> 01:19:16,497

Adam Butler: yeah, me too.

:

01:19:16,567 --> 01:19:19,837

and I, and I wanted to, to save time

to ask you if you have any sort of

:

01:19:20,267 --> 01:19:25,817

investment, views or, you know, asset

allocation views or what have you, the

:

01:19:25,817 --> 01:19:30,467

reality is you've given us a very detailed

framework and explained it very well over

:

01:19:30,477 --> 01:19:32,067

the, over the course of the discussion.

:

01:19:32,407 --> 01:19:35,927

Do you want to leave us with, with

anything, that might be non consensus?

:

01:19:36,027 --> 01:19:36,047

Um,

:

01:19:36,837 --> 01:19:42,031

Warren Mosler: it's not, not, this is

not a market play, but the tips now

:

01:19:42,031 --> 01:19:43,877

at 30 years of two and a half percent.

:

01:19:44,767 --> 01:19:49,107

Why is the government paying

two and a half percent over CPI?

:

01:19:49,795 --> 01:19:51,525

When it sells bonds, what are you doing?

:

01:19:52,135 --> 01:19:55,620

You know, if there is a spike in

ZPI, you're gonna have to pay it.

:

01:19:56,380 --> 01:19:57,800

Which will increase deficit spending.

:

01:19:57,800 --> 01:19:58,990

They won't raise tax to pay for it.

:

01:19:58,990 --> 01:20:02,960

And if it's, and if it's large

enough, that'll create more problems.

:

01:20:02,990 --> 01:20:04,790

You're going to have

Argentina on your hands.

:

01:20:04,900 --> 01:20:08,580

It's like, that's how they all started

with this indexation nonsense and,

:

01:20:09,070 --> 01:20:13,114

linking their Mexico, linking the peso,

you know, the test of bonos, linking

:

01:20:13,114 --> 01:20:16,544

it to US dollar and Russian rubles,

you know, linking it to the US dollar.

:

01:20:17,384 --> 01:20:20,934

Things, you know, you make promises

you can't keep and you get this, let's

:

01:20:20,934 --> 01:20:24,234

call it hyperinflation, which is an

exaggeration, but you know, compounding

:

01:20:24,234 --> 01:20:26,924

inflation, unvirtuous cycle on the upside.

:

01:20:26,924 --> 01:20:32,523

And you can have a currency, an inflation

that people would call hyperinflation, 10,

:

01:20:32,604 --> 01:20:37,514

15, 20 percent of the currency collapse

going down, you know, based on it.

:

01:20:37,914 --> 01:20:38,924

So why are you doing this?

:

01:20:38,924 --> 01:20:41,234

You don't, you're not doing it because

you've already spent the money.

:

01:20:41,664 --> 01:20:45,454

It's just a reserve trade and the Fed

will say, well, you know, it gives us

:

01:20:45,464 --> 01:20:46,824

information as to what the market's.

:

01:20:47,824 --> 01:20:48,794

What do you need that information for?

:

01:20:49,344 --> 01:20:50,174

It's like, this is nuts.

:

01:20:50,534 --> 01:20:51,443

Sell a billion or something.

:

01:20:51,464 --> 01:20:53,624

Don't sell, I think 10

percent of the public debt.

:

01:20:54,034 --> 01:20:55,504

Approaching 10 percent is tips now.

:

01:20:55,744 --> 01:20:56,294

It's growing.

:

01:20:56,894 --> 01:20:57,264

Right?

:

01:20:57,324 --> 01:21:01,804

So, and as an investor, not

knowing anything, to be able

:

01:21:01,804 --> 01:21:03,154

to get a real return of 2.

:

01:21:03,154 --> 01:21:05,604

5%, it's a chicken's way out.

:

01:21:05,874 --> 01:21:07,384

You're not going to get

that in anything else.

:

01:21:08,134 --> 01:21:12,784

You know, you look at the Argentine stock

market, it's gone up 77, 000%, but in

:

01:21:12,854 --> 01:21:18,124

realtors, it's down 10, right, whatever,

down 5, you know, over the last 10 years.

:

01:21:18,744 --> 01:21:24,414

So, yes, the stock market will go

up huge, nominally, if you get a big

:

01:21:24,424 --> 01:21:26,814

boom, but it will go up in real terms.

:

01:21:27,294 --> 01:21:27,954

I don't know.

:

01:21:28,414 --> 01:21:29,504

Richard Laterman: Now

they have Javier Millet

:

01:21:29,794 --> 01:21:29,894

Warren Mosler: it?

:

01:21:30,504 --> 01:21:33,154

Richard Laterman: cutting deficit

and, and strengthening the

:

01:21:33,154 --> 01:21:34,574

currency, lowering inflation.

:

01:21:34,584 --> 01:21:35,784

The stock market is up.

:

01:21:35,794 --> 01:21:37,044

I'm originally from Brazil.

:

01:21:37,044 --> 01:21:38,443

So a lot of my

:

01:21:38,499 --> 01:21:38,759

Warren Mosler: Yeah.

:

01:21:39,484 --> 01:21:42,714

Richard Laterman: uh, around these

policies are underpinned by being a

:

01:21:42,714 --> 01:21:46,494

child of the eighties, having lived

through what was called hyperinflation

:

01:21:46,504 --> 01:21:47,904

back in Brazil, back in those days.

:

01:21:48,179 --> 01:21:48,439

Warren Mosler: Yeah.

:

01:21:48,479 --> 01:21:48,749

Yeah.

:

01:21:49,344 --> 01:21:52,874

Richard Laterman: I, I am faced with, uh,

some cognitive dissonance of my own in,

:

01:21:52,884 --> 01:21:56,854

in, in, in trying to embrace some of the

ideas that you're espousing here today.

:

01:21:56,854 --> 01:21:58,684

But I, I appreciate you giving it a try.

:

01:21:59,699 --> 01:21:59,949

Warren Mosler: Yeah.

:

01:21:59,959 --> 01:22:04,075

So, um, I was in Argentina two years

ago, met with the central bank.

:

01:22:04,075 --> 01:22:05,545

There was, I forget the

guy, there was a young guy.

:

01:22:05,955 --> 01:22:07,085

There were only a couple of us there.

:

01:22:07,085 --> 01:22:10,395

And I did a presentation on

the Peso, which is online.

:

01:22:10,475 --> 01:22:11,625

You can have the link if you want.

:

01:22:12,225 --> 01:22:18,512

And, uh, someone was saying, And

inflation was 30 or 35 and the

:

01:22:18,512 --> 01:22:19,902

interest rate was 30 or something.

:

01:22:20,642 --> 01:22:21,832

I'm sorry, it's the other way around.

:

01:22:21,872 --> 01:22:25,312

Inflation was 30 or 35 and the

interest rate was 40 or whatever.

:

01:22:26,002 --> 01:22:29,291

And the IMF was making them

keep the interest rate above the

:

01:22:29,291 --> 01:22:30,662

inflation rate to have a real rate.

:

01:22:31,352 --> 01:22:33,232

And I was saying, this

is causing inflation.

:

01:22:33,232 --> 01:22:35,662

It was going up because

of that from lower levels.

:

01:22:36,419 --> 01:22:39,689

And for the reasons we've talked

about over there, it's worse because

:

01:22:39,689 --> 01:22:42,779

at 40 percent interest, which is

where they are now, by the way,

:

01:22:42,779 --> 01:22:43,859

they've only come down to 40.

:

01:22:43,889 --> 01:22:45,159

They haven't come down

to anything reasonable.

:

01:22:46,189 --> 01:22:49,679

They're looking at 15 percent

of GDP in interest expense.

:

01:22:50,318 --> 01:22:51,369

That's a pretty high number.

:

01:22:51,989 --> 01:22:55,409

So anyway, I said, and he agreed,

but they had the IMF deal and there's

:

01:22:55,409 --> 01:23:00,549

nothing he could do, and he quoted the

Sergeant Wallace thing from:

:

01:23:00,759 --> 01:23:04,029

pretty much the same thing, the new

Keynesian model, which is what Krugman

:

01:23:04,029 --> 01:23:05,239

said when I talked to him way back.

:

01:23:05,239 --> 01:23:08,119

So they, they agreed with this,

but they couldn't, didn't want to,

:

01:23:08,259 --> 01:23:09,379

weren't in a position to do anything.

:

01:23:10,129 --> 01:23:12,839

So since I left, you know,

inflation went to 40.

:

01:23:13,479 --> 01:23:15,469

So they went to 50, inflation went to 50.

:

01:23:15,469 --> 01:23:16,349

So they went to 60.

:

01:23:16,629 --> 01:23:19,249

They went all the way up to

200 before the chainsaw hit.

:

01:23:19,249 --> 01:23:19,499

Right.

:

01:23:20,219 --> 01:23:20,679

Yeah.

:

01:23:21,407 --> 01:23:24,897

Inflation didn't come down after they cut

rates, or if it's came down a little bit

:

01:23:25,587 --> 01:23:27,697

and after they cut rates, it came down.

:

01:23:27,697 --> 01:23:32,057

So this, they cut rates to 40 or 35

or 40, depending on what rate you look

:

01:23:32,057 --> 01:23:33,857

at and inflation somewhere around 35.

:

01:23:34,687 --> 01:23:36,916

I don't think they got much

lower than that unless they

:

01:23:36,916 --> 01:23:38,117

keep covering the rates down.

:

01:23:38,497 --> 01:23:41,317

Now that report and the whole meeting is.

:

01:23:41,942 --> 01:23:44,622

Was on the desk of the central bank,

the head of it, and he understood it.

:

01:23:45,092 --> 01:23:49,192

There's no pushback with him or his staff.

:

01:23:49,192 --> 01:23:50,302

So they were, it was in front of him.

:

01:23:50,382 --> 01:23:54,102

So maybe it did get through to

somebody who's not doing anything.

:

01:23:55,142 --> 01:23:56,702

you know, now it doesn't have a job now.

:

01:23:56,732 --> 01:23:58,282

Maybe it got through to

the people in power now.

:

01:23:58,291 --> 01:24:01,492

Maybe somehow it got, you

know, it got passed along.

:

01:24:01,541 --> 01:24:01,912

I don't know.

:

01:24:02,672 --> 01:24:03,502

So I'll just.

:

01:24:04,052 --> 01:24:04,791

Leave you with that.

:

01:24:04,802 --> 01:24:08,932

So watch to see how much of that you

think is attributable to the interest

:

01:24:08,932 --> 01:24:12,532

rate, how much of the cutting soup

kitchens, which is half a percent of

:

01:24:12,882 --> 01:24:18,032

GDP or something, and how much is to

just making a 25 percent cut in the

:

01:24:18,032 --> 01:24:21,822

deficit by cutting rates, the low hanging

fruit is cutting the interest rate,

:

01:24:22,602 --> 01:24:26,482

whether they keep doing it or whether

the correlation holds up, I don't know.

:

01:24:26,732 --> 01:24:28,612

But that I'd say, keep an eye on that.

:

01:24:29,617 --> 01:24:30,117

Adam Butler: Awesome.

:

01:24:30,397 --> 01:24:30,777

Wow.

:

01:24:31,174 --> 01:24:31,564

All right.

:

01:24:31,564 --> 01:24:33,154

Well, we'll let you get to your dinner.

:

01:24:33,193 --> 01:24:34,174

Thank you very

:

01:24:34,369 --> 01:24:35,638

Warren Mosler: Okay,

:

01:24:35,734 --> 01:24:35,874

Richard Laterman: on,

:

01:24:35,894 --> 01:24:36,454

Adam Butler: patience with us

:

01:24:36,599 --> 01:24:40,109

Warren Mosler: and if you have any follow

up questions, just email or send them or

:

01:24:40,109 --> 01:24:41,068

if you want to do it again, let me know.

:

01:24:41,934 --> 01:24:42,534

Adam Butler: phenomenal.

:

01:24:42,794 --> 01:24:43,414

Thank you very much.

:

01:24:43,568 --> 01:24:43,979

Warren Mosler: Thanks guys.

:

01:24:44,409 --> 01:24:44,969

See you.

:

01:24:44,969 --> 01:24:45,279

I'm on my way.

Next Episode All Episodes Previous Episode

Listen for free

Show artwork for Resolve Riffs Investment Podcast

About the Podcast

Resolve Riffs Investment Podcast
Welcome to ReSolve Riffs Investment Podcast, hosted by the team at ReSolve Global*, where evidence inspires confidence.
These podcasts will dig deep to uncover investment truths and life hacks you won’t find in the mainstream media, covering topics that appeal to left-brained robots, right-brained poets and everyone in between. In this show we interview deep thinkers in the world of quantitative finance such as Larry Swedroe, Meb Faber and many more, all with the goal of helping you reach excellence. Welcome to the journey.


*ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.