Stephanie Kelton’s Appearance on All In with Chris Hayes

NEP’s Stephanie Kelton appeared on Chris Hayes’ All In on Monday evening, (10/8/13). The topic of discussion was “Why the debt ceiling isn’t your family budget” examining the fallacy of comparing the debt ceiling to a family budget.

See the full show here.

16 responses to “Stephanie Kelton’s Appearance on All In with Chris Hayes

  1. They (except Stephanie) keep talking about how it would be a disaster if the debt ceiling were “breached”, and how people don’t understand what it is, but they have it exactly backward. The problem will occur if the debt ceiling is not breached, if the government stops spending in excess of its income. If Congress does not raise the debt ceiling, the only way to avoid disaster is to breach it, to keep spending anyway.

    And it’s a totally valid and possible outcome, since Congress has passed a law mandating the spending. The President has a choice of which law to violate. There is no possibility of obeying them both, unless he issues a platinum coin.

  2. What if we got rid of the term “debt” when referring to the federal govt. Since functionally it’s very different than my or your debt. When you’re the sole issuer and can issue unlimited quantities, the very notion of borrowing or debt really doesn’t make any sense.

    • I agree Joe, though we need to replace “debt” with something that’s less misleading and charged, and also clear and readily digested by most people.

      I believe Stephanie and others have used a “savings account and checking account” analogy to paint a more meaningful picture of how treasuries and bank reserves are related, but it would be great to have an even simpler and digestible (if possible, one-word) replacement for the terms federal debt and deficit.

      That being said, I think the savings vs. checking account analogy is a very a useful way to explain the dynamics of what’s really happening and would encourage continued and regular use of this approach, since I think it can help shift basic perceptions (most people understand what’s different and what’s not different between savings and checking accounts).

    • Indeed. I’ve thought the same for quite some time.

    • Mark Robertson

      You are correct. The US government does not “borrow” its currency from anyone. The US government creates dollars out of thin air by crediting bank accounts — that is, by changing numbers. Likewise the US government destroys money (via taxes) by debiting bank accounts. Can a football scoreboard run out of points, or go “broke”? Does it need to borrow points ? Could a scoreboard ever be “in debt”? No. It’s the same with the US government.

      As for the so-called “national debt,” this is simply the amount of T-securities that have been purchased (i.e. the amount of money deposited in T-security accounts with the Fed).

      T-security accounts function just like regular savings accounts. Money in T-security accounts is on loan to the Fed, but this is trivial. It has no influence whatsoever on the federal government’s ability to spend, since the federal government creates its money from nothing. The “debt ceiling” charade is designed to brainwash the masses into accepting more poverty and austerity and inequality.

      Money only exists as digital entries in bank computers. (Notes and coins represent money, but they are not actually money). Money is purely digital. It is not physical. Hence the US government can ever “run out” of money. It has an infinite supply of dollars. The US government is not “broke,” or “in debt.” Nor does it have “bills.” Such terms only apply to users of money, not to issuers of money.

      In the above video at the 4:01 mark, Stephanie correctly says that the US government can never run out of dollars, or be unable to make a payment, or be forced into insolvency. I wish she had screamed this loudly, several times. Instead, the interviewer (Chris Hayes) switches to Scott Lilly of the Center for American Progress, who spouts inane gibberish that put me to sleep.

      The truth is so simple that any child could understand it, as long as the truth were explained simply and clearly. (Of course, economists would not have jobs if they spoke simply and clearly.)

      I’m happy that Chris Hayes understands that the US government’s budget is not like a household budget. But in his shows, why must two of his three panelists always spout gibberish? I wish he had Stephanie, Warren Mosler, and Randy Wray as panelists.

      • “I wish he had Stephanie, Warren Mosler, and Randy Wray as panelists.”

        All at once? Redundant. One on each show, rotating. And the host should let them explore their differences with the other (one) panelist. Guiding them to points of disagreement, and then letting them resolve it. Keeping them on point , but not running his own mouth, trying to be the “star” of the show.

        • Mark Robertson

          Redundant? That’s garbage.

          If one MMT proponent is included, and he or she speaks clearly as Ms. Kelton does, then this is not enough to balance the other two, who spout gibberish that makes viewers tune out completely.

          Given the garbage spewed by the corporate media, and by gratuitously contrary people such as yourself (I am quite familiar with your comments in this and other blogs), the communication of MMT truths requires constant repetition, indeed overkill.

          Right-wing elitists austerians know this, and they practice it. As George W. Bush put it, “You have to keep repeating things to catapult the propaganda.” (Bush speech at the Athena Performing Arts Center in Rochester NY, 24 May 2005)

          • “not enough to balance the other two”

            I said the other one panelist, not two. And their “gibberish” is what people believe, that government is just like a household. It doesn’t make the audience tune out, it reinforces their views. Yes, MMT needs repetition, but not in a vacuum. It needs exposure first.

            I’m sorry you think I’m gratuitously contrary. I’m trying to be constructive. I’d like to see MMT advocates emphasize tactics and arguments that are persuasive to non-Progressives. There are not enough Progressives to carry the day, so arguments based only on ideology will never win a majority. But just ignore me if you like.

  3. Well done Stephanie! I think you used your limited time very effectively, addressing not only the immediate situation, but laying the foundation for what could be a broader MMT-based discussion of what’s really involved here.

    Did you get a sense that Hayes and his team might be open to a more expansive discussion with you that lays out MMT principles and their implications (e.g., the benefits of mobilizing the unemployed to do much needed socially beneficial work, etc.). ..and/or that they might be interested in using some of the graphics you’ve put together to convey basic MMT principles?

    It would be great if, in addition to covering the debt ceiling high drama, All In or some other show would see this as an opportunity to help educate viewers on the implications of the MMT-based perspective Hayes seemed to accept as valid and important. I haven’t watched any of the cable news shows for months, but my recollection is that Hayes is among the more wonky hosts, relatively willing and able to dive into the weeds and emerge with some clarity. Perhaps with some help from you he can lay out an alternative MMT-based perspective that begins to shift the public (starting with his viewers) away from a focus on austerity (“we’re out of money” as Obama has put it) to one focused on investing in broadly available prosperity. I’d like to think that Hayes and/or Maddow would welcome on an opportunity to do that (even as they cover the day-to-day theatrics).

  4. Dr. Kelton,

    Great clip. Glad you made the point about the users and the issuer. Unfortunately, you have to keep repeating and repeating it, but eventually the penny will drop. Making that distinction (over and over and over again) also helps the public understand instinctively that there are two sides to the ledger.

    I am getting fed up with Chris Hayes’ dipstick short clips. This is a momentous subject right now. Why isn’t he doing longer pieces where the guests can talk and Hayes can shut up and listen. That format succeeds brilliantly on Al-Jazeera and the BBC. Oh. I know. US adults are stupider. So we get news formats like All In to accommodate them.

    • Because of time constraints on TV, and the host has a list of topics he wants to cover, most hosts can’t let the guests talk as much as they want (in the case of politicians who want to make campaign speeches and not answer the question) or need to (in the case of people like Stephanie or Warren).

      But this guy, just as she gets to the important point, the clincher, he talks over her!! It’s very irritating. And he knows some MMT, so he knows that what she is about to say is crucial to the audience’s understanding, but his oversized ego forces him to hog the air time.

      Compare this, and other interviews of MMTers by “professional” media hosts to Stephanie’s podcasts. I think she does a much better job as host.

      • financial matters

        Yes, definitely. Enjoyed her interviewing Randy Wray very much. Very insightful and intelligent questions that were thoughtfully answered. You’d think there would be a market for that sort of thing.

  5. Yes Prof Kelton did a great job. And I think GolferJohn is on the right track. The problem will be any sort of Grand Compromise (or Betrayal): if Prez Obama and Dems cave-in and cut budgets. We need to break right on through to the other side–break the debt limit. And if Treasury misses a payment, start buying Treasuries by the truckload. Safest assets in the world.

    • Dr Wray, Treasuries would skyrocket , correct ? Not merely for the fear factor, but also scarcity ?

  6. Great representation and exposure Professor Kelton. Right or wrong, the marketing of ideas and concepts is all important in the Western world.

    Unfortunately you were not afforded the time to flesh out more details. Nonetheless, Kudos !

  7. I’ve started to specifically describe wealth to people in its hierarchical form to try to bypass the misunderstanding of financial assets as real wealth to the federal government and its’ availability/abundance by using a inverted-pyramid type diagram

    Financial Assets – Infinite, Renewable
    Labor and Technology – Finite, Renewable
    Real Assets – Finite, Nonrenewable

    Fundamentally, the whole pyramid is constrained by the availability of real asset foundation and balanced by the distribution of the supporting assets (labor <= financial) to keep it from crashing down

    I liked Dr. Kelton's segment. It was the longest, most comprehensive and cohesive explanation made and I'm glad Chris did not interrupt when she was making critical points. Cheers and keep up the good fight!