‘Finding the Money’ The Documentary That Has DC POWER Brokers On Edge

a new documentary is stirring the pot in DC in a major way Biden's top economic adviser Jared Bernstein is apparently uncertain about how our monetary system works along with other mainstream economists the US government can't go bankrupt because we can print our own money it obviously begs the question why exactly are we borrowing in a currency that we print ourselves I'm waiting for someone to stand up and say why do we borrow our own currency in the first place like you said they print the dollar so why why does the government even borrow well um the uh so the I mean again some of this stuff gets some of the language that the mm some of the language and concepts are just confusing mainstream economists not understanding the monetary system isn't the only reason the film is Raising eyebrows it's centered around answering the question asked time and again in DC you want Healthcare student loan debt cancellation Social Security how are you going to pay for it it seems people are interested in the answer within one day of its release finding the money Rose to number one on the documentary charts of Apple TV of course people are interested because every few years we are threatened with a looming government shutdown because Congress is in a fight over budgeting and inevitably we hear about how we have to cut the national debt and reduce the deficit the movie star Stephanie keelton has angered some of the most powerful economists and policy makers in the country by arguing convincingly that they've got it all wrong here to discuss the film's impact is director Marin pois thank you so much for joining us so let's start with a little just a little bit on that Viral clip I know we don't want to rub it in too much but I mean the question he was asked of course is why does the government borrow money if they can print their own was there anyone that you talked to for the film that had a convincing answer well no and I think that's that's the exact point is it's not about one person it's not about an aberration I think what I was trying to explore in the film was again I came across this kind of small group of heterodox economists um or Renegade economists who are making some striking uh you know assertions that the that the mainstream of the field of Economics might be missing some fundamental assumptions around the nature of money uh where money comes from and therefore the nature of the debt and what the national debt is what the federal government can afford and so these were bold assumptions and as a filmmaker as a journalist I wanted to explore them and kind of tease out the conflict there and the controversy because there is a lot of that and the mainstream will point to this smaller group referred to as modern monetary Theory as saying oh this is voodoo economics this is a crackpot Theory but they they start from the simple premise or the simple observation that the federal government is the issuer of the currency of the US dollar and has been since the Constitution Congress so starting from that basic premise U my question was could it be that mainstream economics hasn't integrated that observation into their their field into their models into how they predict and understand what the national debt is and what the federal government can afford and so I wanted to try to find out for myself you know what do mainstream economists think can they show me exactly where this Renegade or smaller heterodox Theory goes wrong um and so so you see some of that in the film and and I tried to talk to the broadest range of economists that I could um and so that includes Jared Bernstein and many others and what was so striking for me and so educational for me in that clip was to see that he hadn't been asked that question before from another journalist in the textbooks or him himself he hadn't asked that question to himself and that's what I think is the most interesting and the most educational for me was could it be that that kind of a basic question hasn't been asked or you know because I always thought okay I'll I'll I'll go to the mainstream Economist and they'll simply explain to me why this small group is wrong but but I didn't get that I didn't get a convincing explanation of someone showing me specifically where the theory goes wrong and I think that's what you see the characters in the film go through as well Stephanie Kelton in the film starts out skeptical everyone I met who's come to the theory has started out skeptical myself included right because it bucks conventional wisdom we're taught the federal government in order to spend has to go out and find the money it has to tax and it has to borrow in order to spend this Theory modern monetary theory is saying it's the other way around there's a different order that's going on here and so if we go back to look at that you know what does that mean for the bigger ramifications of what is the debt and what can the federal government afford and so you know long story short I think I Stephanie and the film and myself are starting to to be more convinced once we look into the actual operations we look at the the talk to the you know Federal Reserve and the treasury of how does the operations occur what are the what are the funding mechanisms and the order of operations of how our monetary system currently operates and when you dive into that I think you get different answers and maybe what's included in the textbooks so now the question is you know can we change can we change the textbooks right and we need to I studied public policy at Brown University we didn't touch money creation which is an essential component of a growing economy where is money entering it from the private sector from the federal government you know foreign debt would be the other option the foreign sector and really what this documentary does is fill in that blank that's not just a blank in most of the Public's minds but honestly most of the academics Minds as well which is why I think mainstream economists don't have answers to these questions about mmt because it's filling a gap in the field of economics and public policy so can you tell us about just the importance of the magnitude of what's exposed in this film turning the conventional wisdom on its head and offering a in my opinion a very accessible explanation well thank you and yes I think you know the ramifications are quite large and that was why you know I had to try to take it on because it's not just an academic debate that's hidden you know in Academia that can be hashed out over there it's like this affects all of our daily lives and really the future of the planet you know when we're thinking about climate and and we're always asked you know how can we afford this climate spending um or the trillions of dollars we need you know there's no government in the world according to John Cary who has the doll you know who has the money to spend to avert climate change um and so not only that but just how can we actually budget how can the government budget more responsibly and that means looking at our real resources so I think the real ramification here is that we're budgeting for the wrong thing we're thinking that money is the real scarce resource itself that we need to budget and conserve when really there are of course limits right the government must prioritize it must still budget but if we're budgeting for money money is just the organizing tool of the real resources the real resour sources in our economy are what we need to be budgeting for and conserving for future Generations you know we hear the national debt is this terrible burden for future Generations but what are we really leaving them in terms of real wealth and real resources and that's what the government needs to be considering and budgeting for and of course that's tied to inflation and inflationary limits so the federal government has a responsibility to budget um and any new spending proposal should be analyzed for its inflationary potential and its real resource use and those are those are linked and so what I think this school is trying to bring is actually a more sophisticated or a better public debate around how can we budget more responsibly how can we ensure that we're preventing inflation and that's tied to real resources and real resource use so those are the limits we need to be thinking about but when we're budgeting in terms of money we we miss spending that may be a lot more affordable that our society can afford you know on a societal level so what's exciting to me is it could mean that certain types of spending that maybe cost a lot of dollars but don't cost a lot of resources become more affordable so so certain types of spending on on climate or on you know employing people who are currently unemployed to restore forests and wetlands and Fisheries um that's preserving and and increasing our real resource capacity the real resources that we have um and it doesn't cost Society you know to employ people who are currently unemployed and create this net benefit sure some dollars are spent but we haven't we've we've net gained as a society and and I think that translates to other aspects of our economy as well so healthc care you know what can medic is Medicare for all actually does it cost Society less overall in terms of real resource use um labor use and so if we're moving some dollars onto the federal budget that doesn't necessar you know that actually means it could be disinflationary or deflationary if we move to a system that uses less resources so Medicare for all it costs Society overall less um so I think that's really a different perspective because we're just focused on the dollars we think that's that's a that's a lot of government spending but we have to look at the societal perspective and spending overall in the economy so it's Healthcare it's you know it's it's energy it's it's our public transit system you know a public transit system that's fast free and reliable cost Society a lot less resources than the current you know car infrastructure that that we have and that we've invested in um and you can look at you know energy utilities and public provisioning of green renewable energy that can cost consumers less right and if the way we do it today with with private energy utilities they have no incentive to invest in the green renewable energy because they don't want to you know bring costs down for consumers um then that would eat into their profits right they want to keep prices going up so if if government is able to spend some dollars to provide you know good clean renewable energy we can look at how do we bring costs down for everyone and and do things more efficiently so the point is it it is a bit of a paradigm shift in how we have to think about federal government budgeting and hopefully in a more sophisticated way Stephanie's better at doing this than me but I always say do you feel better about dollars entering the economy from a huge private bank with a charter versus the federal government because it's really going to be this big entity and a lot of those guys in my view are on the same team but uh you know Stephanie has been so essential in addressing a lot of the stuff about mmt that's out there like you guys are saying we can just print money endlessly and there are no constraints can you talk about her voice and Mission yeah and so right that's kind of the misperception when I went out to go talk to Economist where does mmt go wrong and they'll say well mmt says you can print infinite amounts of money and never cause inflation so that's not what mmt says that's not an useful debate or an useful critique if you're critiquing that statement right mmt will say you can print or create as many dollars as you want um but there are consequences you will run into inflationary and real resource limits and that's what you need to be thinking about not the national debt or a debt crisis or spiking interest rates as what we see in the textbook and what we see you know hearing after hearing on the hill is you know the dangers of the national debt uh and how CBO the Congressional budget office analyzes legislation it only looks at how many dollars does it add to the federal debt and projects that out over time and and fears of of a debt crisis but if if we step back and break down starting from the assumption that the federal government is the issue of the currency what is the national debt then right and and that goes back to the original question and and rather than the national debt being uh the a record of the number of dollars the federal government has borrowed it's really more accurate to say the national debt is a record of the number of dollars the federal government has created and spent into the economy and not yet taxed back so it's the dollars that we hold in our pocket and in our bank accounts um and then the government voluntarily uh offers to issue bonds uh really but the key is that it it's voluntary to switch out those dollars for interest bearing dollars which you can call treasury bonds or bills or notes and the important distinction that mmt is able to make is that that's not a financial necessity it's not what we should call a borrowing operation in order that they're not going out to find money to borrow in order to spend but it's a voluntary operation where they've already spent so that goes back to the order if you're the issue of the currency before anyone can have dollars to tax for the government to tax or or to borrow from you know where do where do those dollars come from in the first instance right and that's the important question that you know we kind of just we live in the moment today and that we see the taxing and the borrowing happening and you can kind of get confused but if you go back to the beginning maybe you can see the order a little more clearly and in the film you know we bring in a lot of historical examples and so I think that's important just to clarify the order if the government has to spend first before it can tax from you or from me what does that mean and what does that mean the national the national debt is and so it so it changes again going back to the limits the national debt um not being a record of dollars borrowed that we have to pay interest on and that future Generations owe it's it's literally the opposite it's it's the dollars we have in our pockets that is the asset the financial asset of future Generations um so again the limit to how much you can spend and the is inflation and real resource limits so not that dollar limit um so so yes so it is that that Paradigm Shift um but there's a lot of a lot of places where this can go and a lot of qu more questions than answers maybe that this all brings up like why why are we issuing bonds what is the role of interest rates um why are we paying almost a trillion dollars in interest today um eating into you know a trillion dollars is now being of new money you can call it is being created and spent given to bond holders um at 5% interest for the privilege of already having dollars they get 5% more um for for yeah the benefit of of having dollars in proportion to how many they have and that is supposed to be the Federal reserve's Tool to to lower to damp down inflation um but I think we need to question that by going back to looking at what are the operations what's actually happening on the operational level who's getting what money and those are in the end political choices yeah speaking of I mean the infl infl AR limits I'm kind of mind blown that that wasn't one of the first critiques brought up by Bernstein and and the other people that you talked to in the film I mean I'm not an expert but I have an economics degree and it's a basic fundamental you know part of Economics that if you print too much you can cause inflation and um the fact that they didn't mention that is again very confusing and seems like it would be a basic concept and I'm glad that you acknowledge that you can't just print with with Reckless abandoned without having consequences to that um what was the reaction then to this film and some of the concepts that were put out during a period where we are struggling a lot with inflation right I mean there was a lot of money pushed out by the federal government during the pandemic we hit a peak of somewhere between 9 and 10% of inflation during the biding Administration it's come back down to around 3% but people are still really struggling so I mean how open do you think people are to a monetary Theory like this when they're seeing the ramifications of that yeah exactly and I think you know that's why it's so important to tease out what does cause inflation and what were the causes of any specific inflationary episodes so going back to co the covid-19 pandemic or going back to the 70s or other you know inflationary episodes we have to look at what are the causes um because I think it's too simplistic to say dollars go up inflation goes up the the economy is more complex than that there are different sectors and so it's about and it's about spending so when we look at the government it's about what are they spending on are those resources is available if they want to spend on Healthcare if they want to spend on green energy they have to go out and see like are is the labor there you know do we have doctors and nurses to to be able to hire or is that going to drive up wages and prices or you know we have to look at sector specific spending and so what happened with the covid pandemic of course was we had an increase in government spending but that didn't necessarily mean that that was the cause of the inflation so we have to that just kind of filled out the I think the drop huge drop in private spending that we saw right after covid-19 hit um government spending was able to come in and backfill that loss of private spending so that people didn't lose their jobs didn't lose their homes this time as compared to 2008 um and then the FED itself and central banks around the world have done great great analysis to show you know what what are the causes of this inflation what are the sectors where we see the inflation occurring and you know in the US it started with with computer chips and shutting down car factories and then the rise in used car prices because all of a sudden you know you have the shortage of cars and that was the first thing to hit the CPI or the inflation index and that's a very specific cause right and so how do you address that inflationary pressure well you have to look at the supply of computer chips and that's actually exactly what the Biden Administration did with the chips and Sciences act they passed a bill to spend new money to address the capacity in this bottleneck this Supply you know this kind of friction overheating we see in coming from computer chips so they said we need to actually produce some computer chips here at home for strategic reasons today they mostly all come from Taiwan so they they've invested now to produce more here so that we don't hopefully hit that inflationary bottleneck again and so that's the counterintuitive way that we need to understand inflation is sometimes it takes additional spending if it's a supply constraint um you know and then with the rest of the pandemic we did see other Supply shocks and so there's a lot going on there but then you get into oil or energy with you know the war in Ukraine we saw a big oil price shock uh how do you address something like that or something similar that happened in the 1970s well you have to address the energy sector you know the again the FED we've given all the power to or you know we've given the all the responsibility for dealing with inflation to the Federal Reserve and they only have one tool they only have the interest rate and so that's all they can do is raise the interest rate to fight inflation even if their own models their own economists are telling them this is not going to be effective in this type of inflation and maybe is never effective for for any type of inflation they just don't have the empirical evidence and and you can ask them as well you know show me the published papers that show that raising the interest rate is going to lower inflation so so yes so there's a lot there's a lot to discuss but it's the main point is it's very important to look at what are the causes of the inflation what are the the Myriad tools and policies that we can put in place to address that specific inflation because otherwise you're not getting to the root of the problem and we got to get to the root of the problem and I think what mmt does is it centers inflation risk takes it more seriously says we need to be planning and and preventing inflation before we spend as well as employing tools after inflation pops up to prevent it and they centering that in their Theory it's not an afterthought you know it's the center and something that's been essential among mmers that I think has given them a lot of credentials at a time when everyone was questioning them and I would say people were questioning the mmt community because you know it it does question the status quo in a major way the tool of adjusting uh interest rates to manage the unemployed population has largely been used to keep wages down and since nairu which is the policy at the Federal Reserve where they set this magic number that they think you know unemployment should be at to curb inflation Drome Powell's admitted on the floor of Congress that they're getting it wrong and they don't have evidence to back it up and the relationship's not strong as it used to be 50 years ago but since nairo was enacted in the 70s that is really when we saw wages start to depart from productivity and so in part this has been used as a tool to keep wages low that really benefits corporations So when you say that actually isn't necessary uh to keep people unemployed and we can free up Capital we talk all about how's gridlock in Congress and that's why not a lot gets done but they're really leaving this power of the purse on the table by not moving in the direction that mmt lays out of here are the real constraints of inflation we've predicted recessions before based on this economic thinking do you think you know the film is going to help people start take it seriously because it's kind of undeniable even if you're not an economist to watch the film and change your opinion so yeah I think the the basis here is that we we are allowed to question um e economics because I think a lot of these bigger questions actually are political questions around who gets what resources and that's what economics comes down to it's not really these natural inevitabilities that the rich are going to get richer and the poor are going to get poorer we've created this thing we call the economy humans create this thing we call money it's an organizing tool for the real resources we have and if we look at it that way we realize that these are fundamentally public policy decisions political choices that I think as voters in an economy we all need to have some basic understanding of in order to vote for what we want or the public interest that we want to prioritize and so I hope that that's where it brings this debate and it brings it to you know a little bit more sophisticated and more serious debate around what can we really afford and what could we prioritize in terms of future Generations leaving them the real resources and the planet and and a and a functioning economy that benefits us all uh would be the Hope Marin Poes thank you so much for joining us today we're going to be back with more Rising after this [Music]

Channel: The Hill

Views: 95,966

Keywords: Rising, Progressive, Progressive Politics, Democrats, Democratic Party, Republicans, GOP, Republican Party, Finding The Money, Economy, US Economy, Politics, Jared Bernstein

Id: s6QccvybP6I

Length: 21min 55sec (1315 seconds)

Published: Fri May 10 2024