Elon Musk konturatu da MTM egiazkoa dela (Ft. Warren Mosler)

Tony of 1Dime@1DimeOfficial

Tony

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Elon Musk Discovers MMT is True (Ft. Warren Mosler)

(https://www.youtube.com/watch?v=i3lkKd1xzoI)

Warren Mosler, The Founder of Modern Monetary Theory (MMT), comes on 1Dime Radio to talk about MMT, what Elon Musk’s DOGE (Department of Government Efficiency) gets wrong, Trump’s tariffs, inflation, and an alternative for a better tax syste

Timestamps:

00:00 Magic Money Computers?

1:08 Trump’s Tariffs

4:21 Unpacking Modern Monetary Theory (MMT)

9:10 Spending and Inflation

31:37 Taxation, Abolishing the IRS

34:32 Job Guarantee vs. Universal Basic Income

44:12 Taxes, Tariffs and Trade

Check out Warren Mosler’s work and his books such as “Soft Currency Economics” and “Seven Deadly Frauds”: https://moslereconomics.com/

Transkripzioa:

Magic Money Computers?

0:00

One of the things you told me about is, it’s crazy. What is what you call it’s insane Magic money Computers at Oh,

0:06

well I, so, so tell us about it. ’cause I never heard of that until you, you brought that up. Okay. So you may think that these, that, that the government computers like all talk to

0:14

each other, they synchronize, they, they add up what funds are going somewhere and it’s, you know, it’s coherent.

0:21

That, that, that the, you know, there’s, and that, and that the numbers, for example, that you’re presented as a senator Yeah.

0:26

Are actually the real numbers in one would think, one would think they’re, they’re not. Yeah. Okay.

0:32

I mean, they’re not totally wrong, but they’re probably off by 5% or 10% in some cases. So, I call it magic.

0:37

My computer. Any computer which can just make money out of thin air. Best magic money. So how does that work?

0:43

It just issues payments. And you said there’s something like 11 of these computers at Treasury that are, that

0:49

are sending out trillions in, in payments. They’re mostly treasury. Some are, but there’s some at HHS, some at, there’s one, one or two at states.

0:58

There’s some at, at DODI think we found now 14 magic money computers.

1:04

14. Okay. They just send money out of nothing. Tony: one of the last questions I wanted to ask you is about trump’s tariffs

1:12

because I kind of alluded to it before but he floated the idea of abolishing the

1:17

income tax and replacing with super high tariffs and now he’s already imposing High tariffs on everybody in canada.

1:23

We’ve been hit by his tariffs so i’m curious what you think about him like one is tax policy and his tariff policy because that’s

1:31

Mosler: That’s it. Well, that’s not everybody In economics, economics is the opposite of religion.

1:36

It’s better to receive than to give, you know, and it’s, I guess it’s too hard for them. I’d never send one of them to go shopping for me, that’s for sure.

1:44

They’ll come back from the grocery store saying, I’m not going to that store again. They weren’t charging enough. I’m going to go to another store.

1:50

It’s like, who are these people? Maybe they’ve never gone shopping. I don’t know. We should be holding a ticker tape parade.

1:57

You know, on 5th Avenue for China for having supported our standard of living for the last 20, 30 years, sending us free things and not

2:05

wanting anything in return, except the backstatement saying that they did it. And, you know, without them, we wouldn’t be, we wouldn’t

2:13

have our standard of living. It would be substantially lower. And instead, he’s trying to like, end it.

2:19

Kill the goose that’s laying the golden egg. And they’re fighting it. They want to keep doing it. The whole thing is like, absurd.

2:25

But that’s what’s going on. And it’s real. And it’s like. You know, the same people who can make a cell phone can’t understand

2:31

something as simple as that. You know, what are we punishing Canada for? Not charging us enough for lumber.

2:36

What kind of crime is that? We should be rewarding you for that. You know, giving, giving you like some kind of a special tourism rights when

2:46

you come to the United States, thanking you for selling us things at low prices. That’s a good thing for us, but we don’t.

2:54

President Trump put tariffs on Canada because you weren’t charging us enough. And then President Biden, you know, doubled down, added to the tariffs because

3:01

you still weren’t charging us enough. It’s like these people are, it’s madness, you know, and I, I

3:07

don’t know what else to tell you.

4:21

Tony: and for newcomers who haven’t already been following MMT for a while,

4:26

I would like you to give a kind of brief explanation about what MMT is and.

4:33

Perhaps maybe how you arrived at it, because one of my favorite things is in soft currency economics, when you talk about your sort of epiphany in Italy,

4:42

Mosler: yeah, the important thing to understand that everybody who works in the Federal Reserve knows and has always known is that the money to pay taxes.

4:52

And the money to buy government bonds comes from the government through its agent. Who, at the moment is a Federal Reserve Bank.

4:59

They actually have to spend first before there’s money out there in

5:05

the economy to pay their taxes. But when you talk to anybody outside the Fed Reserve, they’re

5:11

backwards, and policy is being driven by this backwards thinking.

5:17

Tony: Yeah. Well, I think a primer for the general audience. It’s sort of like the MMT story about how money is created, like from a

5:26

kind of technical, but more sort of overview because think it’s not at

5:32

this point that controversial to say that you don’t need to balance the budget and that you can run deficits like that’s pretty accepted, but

5:41

where people tend to really find MMT. Mind blowing or just unbelievable is the idea that taxes don’t

5:48

fund government spending. And that is, I think the interesting contribution of MMT. And also, I do also want to get you to address like what makes MMT unique as

5:58

a theory, because some people who don’t want to learn this stuff dismiss it as just like repackaged Keynesianism.

6:04

Mosler: Does the government actually need your tax dollars? No, they come from the government. So, number one, the government puts a tax requirement on.

6:12

Number two, you go to work, let’s say, for the government, to keep it simple. They will pay you.

6:18

First, before they’ve collected any tax, they will pay you, and now you have money to pay the tax to them.

6:25

Okay, and that’s, the payment of tax income comes after they’ve spent the money. That’s why it’s called a tax return.

6:31

You’re returning those dollars to the government. That’s why it’s called revenue, because revenue means return in

6:37

Latin, or one of those languages. You go back to the Bible. It says, Render unto Caesar that which is Caesar’s.

6:43

They all know the coins come from Caesar. And when you pay your taxes, you’re returning those coins

6:49

to where they came from. Okay, this is not something new. This has been known for thousands of years. It’s only been forgotten recently in the last two or three hundred years.

6:57

And it’s just been destroying public policy. That Tony: that is, that’s really fascinating because people tend to point the opposite.

7:05

They tend to say, well, throughout history, there’s been.

7:10

Tons of empires that have fallen because they ran out of money or because of inflation.

7:15

And they think that it’s only like the only way that I guess you

7:22

could say soft currency economics. Is plausible at all is due to the fact that we’re off the gold standard.

7:30

And I guess that’s partially true, but like even David Graber seems to show how

7:35

like money was a unit of account with, without like a hard commodity value

7:41

prior to it becoming like oddity value, it was just like a unit of account. So like the, the order is opposite.

7:49

Mosler: And so the modern monetary theory isn’t a prescription for a specific.

7:54

You know, policies agenda or anything like that. It’s a description. It’s called a lens to look at what’s going on, describe it and understanding.

8:03

So if I look at Hong Kong today, that’s a fixed exchange rate convertible to dollars. Bulgaria is convertible into Euro.

8:10

We can talk about the United States in 1930 on the gold standard. I can explain that. We can talk about right now where the U. S. dollar is not convertible

8:18

into any foreign currency. So, it’s not limited to any one policy agenda.

8:26

It’s an entirely general theory that covers all monetary operations. Tony: That’s precisely one of the things I want to inquire about is the

8:34

differences between other MMT theorists regarding the prescriptions, because like

8:39

that is something I find interesting. I had Bill Mitchell on recently who does see a role for very high taxes,

8:47

but not to fund government spending, but rather to reduce inequality.

8:53

I have heard you talk before about sort of more libertarian approach

8:58

but I do want to hear it from you in terms of your tax proposals.

9:04

First thing there is to address the elephant in the room always is inflation.

9:10

People tend to think, well, okay, still, even if the government doesn’t have to,

9:17

doesn’t have to earn the money revenue to spend inflation’s a constraint.

9:22

Of course, you say that now, what makes the MMT theory of inflation

9:27

that you talk about in soft currency economics and elsewhere add to the,

9:33

what does it add to the economic discourse that the previous like Keynesian theories, for example, missed?

9:39

Mosler: They missed the first thing I told you. Which was the funds to pay taxes come from the government.

9:46

Okay? And if you don’t understand that, you don’t understand the source of the price level, you do not understand inflation.

9:53

Okay? And, and so why is that? The government puts a tax on your house, okay?

10:00

And then it’s denominated in dollars. Let’s say $10,000. You don’t even know what a dollar is.

10:06

Let’s say it was George Washington. The economy doesn’t know what 10, 000 is, but all they know is they can

10:12

only get it from the government, okay? That puts the government in a position where it has to let the

10:18

economy know what it has to do to get the money from the government. It’s the single supplier.

10:24

This is Microeconomics 101. When there’s a single supplier, they have to set the price.

10:30

It’s not a market. The market is when you have multiple suppliers competing but not one single supplier.

10:37

When you take microeconomics, they tell you about how monopoly works . It’s the easiest thing to learn.

10:44

You know, there’s one guy who’s got what you want, and you have to pay whatever he wants, or else he doesn’t have to sell it, you know, so he’s the price setter.

10:52

The next thing they teach you is about if you have a small number of suppliers called oligopoly, and they used to use like say there’s

11:00

three or four car companies. And how does that work? How do they wind up setting price for three or 400 that takes, that’s more

11:07

complicated that might take, you know, four or five hours, maybe a whole day. Okay.

11:12

The last one is competition. You have in theory, infant buyers, infinite sellers, competing

11:19

market prices are determined. And how does that work? Okay. That takes the rest of your life.

11:24

It takes advanced mathematics. It takes all kinds of things to decode those markets to figure out

11:29

how prices are determined in those markets, the whole supply and demand. Comes from having multiple buyers, multiple sellers.

11:36

How do they all interact in the marketplace? Okay. The good news for the currency is the dollar.

11:41

It’s the first one. It’s the easy one. There’s a single supplier so if the government says to earn dollars, you have to serve in the

11:50

army and pay and get 40, 000 a year, the economy has no choice.

11:58

Either somebody will serve in the army or people are going to lose their homes because there’s no other way to get the money to pay the tax.

12:04

How does that translate into what a barber can charge for a haircut or what lumber is going to cost to build a house or anything else?

12:10

So everything else kind of keys off of that. All right? If the government said, oh, we’re going to pay 20, 000 to be a soldier, then we all

12:19

have to, like, Figure out what that means. So that means everything else is going to cost half as much.

12:26

The money’s twice as valuable. So the money is like more valuable because the government’s making it harder to get.

12:33

The more the government pays for the same thing, the easier that money is to get.

12:38

If the government said we’ll pay a million dollars a month for a soldier, that money is very easy to get. The Japanese government tells us what we have, what people have to do to get yen.

12:45

The U S government tells us what we have to do to get dollars. The market can then figure out the exchange rate based on that.

12:52

And it will price everything in all these different currencies where they’re getting their information about, you know, the core value of these currencies.

13:00

From what these other governments pay when they spend. I can give you another example, if you want,

13:07

so, my wife and I were on a tour of Pompeii just outside of Rome, we

13:13

jumped on this tour while we were walking around and the guide got to the point where he showed us the coins that he found in Pompeii.

13:20

They were just regular metal coins. They weren’t gold or anything. And he said Pompeii was a very nice place to live because the government

13:30

would collect these coins for taxes. And then they would pay people to do public services like

13:36

sanitation and public safety. So I’m a bit of a troublemaker. I said to him, well, you know, in Pompeii, they, the government had

13:44

to pay the people first before they could collect the coins for tax. He says, no, no, no, no, that’s not how it works.

13:50

They collect tax and then they pay the people. Everybody knows that. And I said, well, where did the coins come from?

13:57

And he said, well, the government made them. So I said, well, how did anybody get a coin to pay the tax?

14:03

And he says, well, they have to pay them first and then they collect the tax. I said, well, how else could it possibly work?

14:09

He grabs his head like this and he goes, no, no, no, no, no. And he ran away from me and he wouldn’t talk to me for the rest of the tour.

14:15

After they spent the money, they’d pay the people first and then they would collect the coins.

14:21

So how did 20, 000 of those coins get in the street?

14:26

And they were found in what might’ve been somebody’s pocket, but they were killed in the eruption. What might’ve been somebody’s cash box for business.

14:34

What might’ve been under somebody’s mattress, right? Cause it was all burned. How did they get there?

14:40

Those are coins that, that the government, they came from the government. We all know that they spent more than they collected.

14:46

People were willing to earn more coins in total than they needed just to pay the tax. Why?

14:52

Well, they wanted to have some coins in their pocket. They wanted to keep some coins under the mattress. The merchants wanted to be able to make change.

14:58

There’s all kinds of reasons people would earn more coins from government than the economy needed to pay the tax.

15:04

Okay, and that, those were the public debt of Pompeii. The 20, 000 coins in the street were the public debt.

15:11

Those are the coins That the government had spent on people come to work over

15:17

time since the beginning, since when they started this thing that were in excess of what was needed to pay taxes.

15:24

And they would stay in the street indefinitely until someday somebody used them to pay taxes.

15:30

Otherwise, there’s not much else they can do. You could use them to buy something from somebody else, but then they’re in his pocket, okay?

15:37

They’re just going to move from one person to another, and will also be used to pay taxes. Easily.

15:48

Tony: to spend, but rather to generate value for that currency or demand for it, rather to.

15:54

Force people to kind of use it. And that leads to the implication that the government can, doesn’t have that

16:00

tax revenue cap on how much it can spend. And the obvious question people ask always is like, how would you know, how,

16:09

how would you prevent inflation from happening, assuming you’re able to spend and the government is able to spend in this way without this monetary constraint.

16:18

Mosler: well, day one, the government has no revenues. It’s put a tax on everybody’s house.

16:23

Nobody paid anything in tax. People are wind up looking for work, so they don’t lose their house. The government starts the ball rolling by spending and hiring those people

16:32

and getting the streets clean and having public safety established. After that, taxes can get paid.

16:39

You have to understand the sequence, which is first, there’s a tax requirement, a tax liability.

16:45

Then you have people looking for work because of that requirement. And then the government hires them and then they get paid

16:50

and then the taxes get paid. Let’s say Pompey pays the police officers 10 coins a day.

16:58

And a pizza maker has to decide whether he wants to earn 10 coins a day or sell pizzas for one coin each.

17:04

Okay. If he can make 10 pizzas a day, he might decide, you know what, I can either make my 10 coins selling pizzas, or I can be a police officer and make 10 coins.

17:14

If he can get two coins for a pizza, now it’s easy. I can make 20 coins selling pizzas. I don’t want to be a police officer.

17:20

let’s say, Let’s say he can only get half a coin for a pizza, or let’s say he has to sell two pizzas to get one coin.

17:27

Now he might decide, I don’t want to have to make 20 pizzas a day. That’s too much work. I want to be a police officer.

17:34

Okay. So, but if I could sell one pizza for one coin, I’m okay. And it’s a whole marketplace of people.

17:41

We decide ultimately that, you know, 1 pizza sells for 1 coin. You can make 10 pizzas a day.

17:47

It’s about the same as working as a police man or sanitation officer. So they’re happy and so you have an equilibrium is set in and

17:54

it won’t necessarily get that price, but it’d be some price. For the populations indifferent between making pizzas and working for the

18:01

government and the dirtier the work, you know, the more likely they’d be to make pizzas even a lower price.

18:06

So they don’t have to do the work and the more that the sanitations workers

18:12

money can buy because it’s harder to get, you know, it’s really dirty work. If it’s easy work, good working conditions, it might go the other way.

18:20

Okay. So what happens if the government doubles the pay of the Policemen, instead of 10

18:29

coins a day, they pay him 20 coins a day. Okay, now they’ve made the money a lot easier to get now the same pizza maker.

18:36

If he can still has to make, you know, if he can go to work and earn 20 coins instead of selling his pizzas for 1 coin each and we have

18:44

to make 20 of them, you know, he’s going to go to work as police officer. He’s not going to make pizzas. Price of pizzas are going to go up.

18:51

They’ll go up to the same price. They were before where 20 they’re like 2 coins each.

18:57

He can make his 10 peaches, make same 20 coins he did before, and his indifference

19:03

levels between making peaches and being a police officer are about the same. They make the money easy to get, then prices are up.

19:12

You can’t change that. That’s fundamental to the economy. So that’s the source of the price level and the source of inflation.

19:19

Changes in what the government pays when it spends. And if there are lots of case studies, particularly in South America that

19:27

trace all the great inflations down there, Latin America to indexation.

19:34

Okay, when some price level went up, the government would give everybody more money, made it easier to get the money, more money for the same job.

19:41

So the price level would go up again. We can trace the Argentine inflation of the last few years to the same thing,

19:48

except they did it with interest rates. When they raised interest rates, the government’s giving out free money

19:54

to people who already have money. And they raised interest rates to, like, 50 percent rates.

20:00

Tony: Through the bonds, right? Just to clarify. Mosler: Well, now that’s just free money coming from the government. It’s all deficit spending.

20:06

There was no tax to pay for it. So that’s just caused prices to go up 50%. And the foreign exchange market, the peso went down 50 percent because they

20:14

just added that money for doing nothing. And so what did they do? They said, well, inflation hasn’t stopped.

20:20

So let’s raise rates to 100%. Now they’ve doubled the free money they’re paying in interest, and so

20:25

prices go up some more, they got up to 200 percent before the guy with the chainsaw came in, changed the policy, and started cutting rates.

20:34

They’ve cut rates down to 40%, and the inflation has dropped to 40%. But it all comes down to a similar thing.

20:40

It’s the money that government’s paying, what you have to do to get it, is, is

20:45

always the source of the price level. Tony: Let’s say you were a secretary of the treasury.

20:51

How would you Advise, for example, Canada, because Venezuela’s problem

20:57

is a little bit more straightforward with the oil prices and stuff. But like, let’s say Canada, we have our, our treasury and bank

21:08

don’t seem to follow MMT at all. They believe interest rate hikes are the answer.

21:16

Now, how would you advise reducing inflation? Mosler: Well, I actually did that about three or four years ago.

21:24

I met with Tiff Macklin, who’s now the head of this bank of Canada. He had me at a conference that he was holding in Canada, just north of

21:31

Toronto somewhere, and with lots of central bankers and that one such. And I went and explained how the interest rate was, the inflation

21:39

rate was causing the inflation. And they answered back and forth. And we had a very.

21:45

in depth technical discussion about what we’ve talked about. And they all pretty much agreed with the channels I was talking about.

21:52

There wasn’t any major disagreement, probably went on for an hour or two hours and, you know, very amicable and very professional.

22:02

And they were top analysts from the back of Canada, you know, multiple PhDs and these things.

22:07

And all my math checked out, the arithmetic, all the data checked out.

22:14

He became. Chairman at central bank six months later, maybe. And it was like, it never happened.

22:20

And he just went right on espousing the idea that they needed to raise rates to fight inflation, like it never happened.

22:27

So I don’t know what happened during that period of time, but I know it did not change policy.

22:33

Tony: because. Of course, there was previous Federal Reserve Chairman of the United States who kind of admit certain things that MMT theorists have been

22:42

saying, but then would go on to kind of regurgitate the same old dogmas.

22:49

Now, could that be because the real purpose of the interest rate being to

22:55

create the natural Rate of unemployment. In other, in other words, to just kind of have to give less

23:02

bargaining power for working people. Mosler: So we went, we went through that and how that natural rate was

23:09

all sourced to fixed exchange rate policy and no application whatsoever to the floating exchange rate policy of Canada and the United States.

23:18

It’s like watching a different movie channel and, you know, watching a different movie and taking the information from one and applying it to the other.

23:24

It doesn’t work that way, you know, so, that was now, look, I knew Vince Reinhardt pretty well, who’s at the Fed.

23:31

He was a right hand for Greenspan for many years and then Chairman Bernanke, he helped me write some of my speeches.

23:38

Okay, there was, we spoke the same language. And, you know, there’s like, no question about this.

23:46

What he would say is, look. The hardest part of his job was working with these people, these

23:51

political appointees who did not understand monetary operations. And, you know, they did the best they could.

23:57

And this is what we’ve got. Tony: So why do they uphold the noble lie or if we were going to call it that,

24:04

Mosler: You know, Kane said it’s better to fail conventionally than to succeed unconventionally. You know, there’s something to, there’s a lot to that.

24:12

And they just stick to this because if they do it and it doesn’t work, they can’t be blamed for it. They’re doing what the textbooks say, what they, you know, we’re taught and

24:21

not, and if they succeed unconventionally, they get rid such for it and can

24:26

lose their job even though it works. That’s just the nature of mankind. Tony: So one rebuttal I noticed that comes from the.

24:35

Libertarian von Mises type of people is that they, they always like to say

24:41

that MMT is a Trojan horse for state control, because if one takes the

24:46

assumption that the government is the monopoly price hitter, then the solution to inflation would be setting prices.

24:52

So I want to give you the chance to clarify just straightforwardly

25:00

the ways in which the state should deal with inflation. Mosler: The solution, first of all, the problem is always different, but they

25:09

agree that the government set the price. They want the government to set the price of gold and then let everything

25:15

else be relative to the price of gold. And we had that years ago, the price of gold was set at 35 an ounce.

25:20

The government would buy or sell gold 35 an ounce and conduct policy. It was tight enough to make sure that there was enough

25:27

gold, which eventually failed. But, you know, for a while it worked. And under those, that scenario, everything they talk about is correct.

25:36

There is a natural rate of interest where investment equals savings, which is defined as your gold supply, you know, because they have their own set

25:45

of definitions for that set of policy. And the natural rate of interest is the one where the gold supply reserves

25:52

don’t go up or down from their neutral. The market doesn’t take away gold or give you extra gold.

25:57

It’s stable and a stable gold supply by definition. It’s stable prices and zero inflation.

26:03

So within that mathematical construct, they’re absolutely correct. . We still have the same situation where the government has to set a price.

26:10

They’re just not setting the price of gold. They have to set another price when they spend, because there’s

26:16

no other way for them to spend. There’s no, the market can’t do that. Okay. So finally electric company, the market can’t tell me what

26:23

to charge for electricity. Because there’s no substitute. I can’t look and see where it’s trading in the market because there’s

26:29

no other sellers of electricity. I have to say, all right, let’s try 10 cents a kilowatt. If they say that’s not good, we don’t want the government, the city to be

26:37

setting the price of electricity. You know, we’re talking about an indisputable fact that

26:43

there’s a single supplier. You tell me how else you can do it when there’s a single supplier.

26:48

Well, we think the market should do it. Well, market means multiple suppliers that convene with each other. We don’t have that.

26:54

Well, the only thing he could say to that is, well, I don’t like it. Which is what Robert Murphy said, Professor Murphy, in my debate with

27:00

him, that’s still online about halfway through, he said, well, everything

27:06

John Carney was a moderator, was at Breitbart now, he said, everything Mosler says is technically correct.

27:12

He says, I just don’t like it. And Carney looks at him and he goes like, okay, this debate, I guess, is over.

27:19

The Austrians have lost the debate because they agreed everything I said is correct and that they are correct within their own context of exchange rates.

27:28

But he doesn’t like it. So then he talked a little bit about, he doesn’t like government coercion with taxation.

27:34

Fine, but do you have another way to get people in the army to get you know, the government to provision itself so it can have a lease system?

27:41

He did, okay, he kind of fumbled around for different ways for a while.

27:46

The debate kind of ended on, look, these are the cards we’re dealt. We want a public sector to do certain minimum things, which he agreed,

27:54

we don’t want no public sector. Because we have fallacies of composition races to the bottom. We need a public sector.

28:00

let’s say you go to a football game and you stand up now.

28:06

People can’t sit. So, they all stand up. Okay. Now, everybody has to stand up and nobody sees any better.

28:14

So, what we do is we have collective action. You call it government, but it’s collective action.

28:19

The stadium or somebody makes a rule. You can only stand up for 10 or 15 seconds. Then you have to sit down and there aren’t too many libertarians who

28:27

say, no, let everybody stand up. And then you have to stand up the whole game or you can’t see. They’re all kind of agree that we’re all better off.

28:33

If there’s a rule that says you can only stand up during a touchdown or a home run or whatever for 15 seconds, and then you have to sit down so everybody can see.

28:42

So that’s caused. A fallacy of composition, one person stands up, you can see better.

28:47

So we should all just stand up and we can all see better. No, if we all stand up, we can’t see that. We all see the same and we can’t even sit down.

28:54

So that’s a role for government is to control these fallacies of composition.

29:00

So that we can all watch the game, right? And it happens with, pollution way back where you had no federal.

29:11

It was up to the states to regulate all their air and water, clean air and clean water.

29:16

So what you had is the states got in this race to the bottom with each other. Whoever allowed the most pollution got business to come to their

29:24

state and they needed the money. And so there was, you know, finally the rivers in Ohio started catching fire.

29:30

We wound up with federal regulation saying, okay, this doesn’t work. You know, it’s got a race to the bottom you know, setting the states

29:36

in competition to agree with each other on this particular thing. We need federal regulation for that. And so those are the areas at a minimum where you need federal regulation.

29:46

Race to the bottom, fallacy to composition. You also need, like, a common defense. I don’t think we want each state or each city to defend itself,

29:54

we all agree there’s problems with the military, but I think most people would agree to have a military Legal system.

30:01

There are people who think we should privatize the legal system where you pay for your judges or people think we already have that.

30:07

Okay. But it comes down to most people would rather not have a private legal system, private prisons, things like that.

30:14

You just don’t feel very good when you’re being accused when you’re on trial, knowing the judge is going to be providing free labor to the state.

30:21

If you can put you in jail and they can sell your labor. We’re in a position to kick back money to the judge where we’ve had massive

30:29

scandals on this to incarcerate people. So we see there’s, there are problems with certain areas and we use collective

30:38

actions to solve and, you know, Professor Murphy agreed with that. Although we might have had different things where you might have thought

30:45

more things could be private than I did. But I pretty much agree with what could be private and what could not be private.

30:51

They don’t think there should be coercive taxation. Well, then you don’t have the rest of it. They haven’t connected those dots.

30:57

Okay. And so, Professor Murphy is a smart guy. He connects the dots. He understands what you have to do to get a minimum of cooperative action.

31:05

And so we’re not in a disagreement and I’m not in I consider myself in that sense only, not politically what these people do.

31:13

I mean, I would never go to their meetings or anything, but the way I define the words libertarian, where government is there to prevent races at the bottom, to

31:20

do these essential things where the market is likely to fail and do a much worse job.

31:27

Other places the market’s more appropriate, you know, and so I’ll leave it at that.

31:33

I’ve kind of rambled on here. Tony: Well, no, that was, that was very helpful. And the big question here is the tax policy as solution, because you have

31:43

some disagreements with other MMTers and some of the points that you, but as well as other MMTers tend to make, which I think is very worth elucidating

31:51

in this conversation is that tech that corporate taxes are actually regressive. And this kind of, I think really contradicts a lot of.

32:00

Leftist common sense that people are used to, which is the idea that, well, you want to tax corporations because they make the most money.

32:10

But no, the MMTers have been pointing out that actually has a negative effect on workers and the economy as a whole.

32:15

So I want to you to maybe lay out what you think is a more better alternative tax proposal as it pertains to corporate tax, as well as

32:24

income tax and real estate because. If the government doesn’t need money to fund, how much, how high

32:32

do income taxes really need to be? I think that’s the big question.

32:37

Mosler: Anyway, so income taxes have the highest compliance costs of anything in real terms.

32:44

The number of people whose lives are tied up in income tax compliance is in the billions.

32:50

Millions and millions of people are. Tax preparers, their record keepers, all these companies that have to

32:55

keep records for income taxes. There are lawyers who do tax law. There are people writing up tax income tax legislation and

33:03

lobbyists and people making millions of dollars a year doing this. And there are corporations setting up offshore tax things, so they

33:12

can minimize their income taxes. And, you know, individuals going to psychiatry, so the problems

33:19

with their income taxes, you know, you’ve got all these. Related services that are tied up entirely on income tax with these people, these

33:28

probably 10 million people, maybe, maybe 20 million Americans could be out curing

33:34

cancer, teaching school, or, you know, doing useful work, you know, some kind of working in public transportation,

33:39

And so, and that’s kind of a free lunch because right now we’re wasting the time of those 20 million people.

33:46

And they’re all really smart people. For the most part, JP Morgan hires really smart people to do tax compliance.

33:52

Okay. And to program all their computers to handle everybody’s income tax records. So they’re not hiring enough at the bottom for this.

33:58

These are brilliant people who could be doing who knows what. So anyway and that’s what our economy is good at putting those people into.

34:06

You know, things that useful things based on, you know, market the market system.

34:11

So, so you don’t want the income tax, you don’t want transaction taxes because of all the record keeping all the sales taxes have all this record keeping.

34:19

We want to eliminate all this work, keeping records. And so the tax that has the lowest compliance cost, the lowest

34:26

record keeping is a property tax. You just put a tax on people’s house and the land and everything.

34:32

Tony: The reason I connected that before to UBI and the job guarantee is because in One point I have seen in the empty literature is that the

34:41

job guarantee is favorable to the universal basic income, partially because it is a can stabilize prices.

34:48

Whereas UBI has a risk of being inflationary precisely because if you just. Give people a lot of money.

34:55

What’s to stop that from like being equalized by like companies is raising all

35:01

the prices anyway, or price of rent too. The argument people make now is because people think like AI and automation

35:09

will make it so that there’s just simply not enough jobs for people to have a

35:14

guarantee without creating BS jobs. Mosler: we’ve already been through that.

35:20

Okay. And that’s completely wrong. We have a situation a couple of 100 years ago where everybody had to be in agriculture.

35:26

We’d all starve. Right. And today we have like, less than 1 percent of the people in agriculture

35:33

and, you know, we produce like 8, 000 calories a day per person and export food and unemployment’s, you know, 4%.

35:41

It’s not 95 percent because of all this huge productivity gain. We just have everybody in manufacturing, 50, 60%.

35:49

Now it’s like 7%. You’re confusing a productivity story with an unemployment story. It’s totally unrelated.

35:54

Unemployment comes from the government, puts a tax in place. You know, tax requirement, and then doesn’t provide the money to pay the tax.

36:02

Now you’ve got people unemployed. If they provide the people to pay the tax, you’re not having unemployment.

36:07

And of course, you have to provide money to pay the tax, and that’s safe, and that eliminates the unemployment created by the government.

36:15

Taxation by design is meant to produce unemployment. People looking for paid work, so the government can hire

36:22

them to provision itself. That’s what it’s for. The source of unemployment is taxation.

36:27

Marks did not understand that. All right. And once you understand that, once you understand that basic money story, and

36:34

you don’t take action, you don’t have tax requirements to cause people to need work. You know, what’s a tax credit worth without a tax, nothing.

36:43

The dollar’s a tax credit. There’s no tax. You don’t need a tax credit. It’s worth nothing.

36:49

Tony: So the natural rate, the ideal, or rather the ideal rate of unemployment.

36:54

Would be zero in your view, rather than having a natural rate of, let’s say, like 4 percent or whatever the central bank these days thinks it is.

37:05

Mosler: Yeah, now that all came again with fixed exchange rate policies where you have to do things to create unemployment to reduce your real wealth because your

37:12

output goes down in order to stabilize your foreign exchange reserves, whether they were gold or another currency.

37:19

If you don’t have that requirement, then stay with full employment and maximum output.

37:25

Those are just consequences of having a fixed exchange rate. Those aren’t consequences of floating exchange rate.

37:31

Tony: I want to ask your view on degrowth because there are some people in the

37:37

degrowth movement in economics, some who seem to flirt with MMT who believe

37:44

that actually we need less stuff. So that’s kind of where you’ll have in the sense that like

37:52

you need people working less. And you need, I guess, producing only what we need.

37:58

That’s their view. How do you view all that? . Mosler: I think that’s a legitimate position.

38:04

Very legitimate. You know, if you look at our interviews today, it’s probably. More than double it was when I grew up in the 1950s as a kid,

38:13

and we don’t act for anything. We had two cars for family and electrical lights. But if you look at where most of it, I shouldn’t say most because

38:21

I don’t have the data, enormous amount of our energy goes is to provide advertising on the internet.

38:28

It’s like, okay, how much of that do we really need? Now, when you look at degrowth, I depends on how you define growth.

38:35

I think people writing more songs and producing more theater. Is growth and I don’t see why we should restrict that.

38:43

Okay. But it would show up if, you know, as GP, if people were buying tickets

38:48

and going to watch this stuff. So, you know, I, like, have to get down to how they’re defining their terms and

38:55

everything, but I think at the end of the day, you know, we’d be on the same page on the degrowth, although I might call it rapid growth, but in areas that Result

39:05

in less energy consumption, rather than more that type of thing that resulted

39:10

more leisure time, rather than less. And one of the big drivers of that would be to replace the

39:16

income tax with a property tax. You know, that could free up, you know, if you’d cut the work week by 25%, still

39:23

have more stuff or goods and services. If we wanted to do that as an option.

39:28

Again, look at the real costs, the real compliance costs of all these things. Tony: So would the ideal arrangement be that to have full employment and everybody

39:38

working less, like in terms of hours Mosler: We already have it. We have full employment with 40 hour weeks, we used to have full

39:45

employment with 60 hour weeks. We’ve already done it. That’s just a political decision. Our productivity is high enough to bring that down to a 20

39:52

hour week or 15 hour week. You know, if we got rid of the inefficiencies was talking about.

39:59

Tony: having a natural rate of unemployment, it’s a political decision more than anything. And.

40:04

Mosler: Well, it’s a political decision to have an exchange rate policy that requires it. Otherwise, there is no natural rate.

40:10

The natural rate is zero without a floating exchange rate. It’s positive on a fixed exchange rate where your, your, object is to

40:18

sustain foreign exchange reserves, which I don’t know why anybody would want to do that, but they do.

40:24

Tony: So basically the theory of the wage price spiral is not valid because

40:30

some argue that the risk of a high, yeah, because what they, I just want to clarify for the audience what that is.

40:37

They think that basically if you have more employment, what will happen is people will continue to ask for higher wages, which will lead to higher prices,

40:46

which will lead to like inflation. Mosler: but if it’s driven by government wages, then it will happen.

40:54

The government’s Just, you know, when the government pays more for the same amount of work, it’s redefining its currency, lowering.

41:01

That’s what we call inflation. And if you look around the world, many of your great inflations were driven

41:06

by government indexation like that. Now that doesn’t make the country poor or worse off or anything else.

41:13

You see, it doesn’t change your wealth as a nation, but it does change the distribution of that wealth. It drives it towards people who are working for the government at

41:21

the expense of others who are not, Tony: I want to ask you about certain figures because the former treasury

41:28

secretary was Christina Freeland, and she seemed to flirt with MMT a little

41:34

bit at one point in her life, but has kind of distanced herself completely.

41:40

And at least in terms of the policy she implements, it’s more or less

41:46

like stuff that’s been done before, which is like higher Interest rates. And now we have as the new liberal party leader, who’s likely to be the new liberal

41:54

party leader anyway, is Mark Carney, who of course works for the bank of England and, and the bank of Canada very much.

42:01

You kind of die with credibility and monetary policy. I want to ask you what, if you have any insight on these people, and if I don’t,

42:11

cause you have met a lot of high profile bankers behind the scenes because.

42:16

Yeah, people are concerned about the future of Canada and the Conservative Party is offering the same kind of deficit reduction,

42:24

balanced budgets, same old dogmas. So, yeah, I kind of wanted to get your insights on some of this.

42:31

Mosler: those people have never spoken to me. Some of them may have spoken to other people about M and T, other proponents

42:37

who maybe disagree with me on things, you know, I’ll just say have it wrong.

42:43

It’s just for toss that possibility out and you know, they get out

42:48

in the weeds, you know, I’ve offered to speak with anybody. I’m here on the show here, you know, speak with anybody, but they just won’t do it.

42:56

something? I Tony: strange because we, if anything, need new ideas because I think the, the

43:03

big obstacle is that even the social Democrat party in Canada, which is the new Democrats, they always feel that you need to tax to fund all of their programs that

43:15

they want, like whether it be creating jobs, reducing homelessness, all of that. And as a result, Canadians don’t really trust their.

43:23

Solutions because they say, Oh, we’re not going to tax the work working majority or even the middle class.

43:28

We’re just going to raise taxes on the ultra rich, but people don’t trust that because if you were to actually, if you needed all that money to, you know,

43:37

quote unquote fund these programs, it would have to also be, they would also have to tax the working population too.

43:44

So as a result, people don’t trust their policy. So I think like, Okay.

43:49

People really need to hear your insights are precisely those people

43:56

Mosler: like my in laws used to say, a lot of people in jail want to get up, you know, need to get up. So, but yeah, I’m, I’m here.

44:02

I’m 75 years old. I don’t know how much longer I’m going to be around. I’ve got like stage four prostate cancer, so if they want to know about

44:09

it, they better hurry up and find me. Tony: indeed. Yeah, the one of the last questions I wanted to ask you is about trump’s tariffs

44:17

because I kind of alluded to it before but he floated the idea of abolishing the

44:22

income tax and replacing with super high tariffs and now he’s already imposing High tariffs on everybody in canada.

44:28

We’ve been hit by his tariffs so i’m curious what you think about him like one is tax policy and his tariff policy because that’s

44:36

Mosler: that’s it. Well, that’s not everybody backed off on these tax policies over border arrangements.

44:42

So clearly he wasn’t serious about using them to raise money, or he would have left them on. He would have said, yeah, the tariffs are there because we need the money.

44:49

And so I’m going to leave them on, but he took them off. They’re gone. So.

44:54

I don’t know. You can’t take him at his word, you know, the same way you might somebody else.

45:00

Tony: I’m more meaning like, what do you think of the actual idea itself? Like, assuming he was serious to pull through.

45:05

Mosler: I’ve got this book, The 7 Deadly Innocent Frauds. Maybe you’ve read that one. It takes about an hour and it’s free online.

45:12

MoslerEconomics. com. And chapter 5 is about trade and he’s got it completely backwards.

45:20

We should be holding a ticker tape parade. You know, on 5th Avenue for China for having supported our standard

45:26

of living for the last 20, 30 years, sending us free things and not wanting anything in return, except the backstatement saying that they did it.

45:34

And, you know, without them, we wouldn’t be, we wouldn’t have our standard of living. It would be substantially lower.

45:40

And instead, he’s trying to like, end it. Kill the goose that’s laying the golden egg.

45:46

And they’re fighting it. They want to keep doing it. The whole thing is like, absurd. But that’s what’s going on.

45:52

And it’s real. And it’s like. You know, the same people who can make a cell phone can’t understand something as simple as that.

45:58

You know, what are we punishing Canada for? Not charging us enough for lumber. What kind of crime is that? We should be rewarding you for that.

46:05

You know, giving, giving you like some kind of a special tourism rights when

46:11

you come to the United States, thanking you for selling us things at low prices. That’s a good thing for us, but we don’t.

46:19

President Trump put tariffs on Canada because you weren’t charging us enough. And then President Biden, you know, doubled down, added to the tariffs because

46:26

you still weren’t charging us enough. It’s like these people are, it’s madness, you know, and I, I

46:32

don’t know what else to tell you. Chapter five in the book outlines it very clearly, and it couldn’t be simpler.

46:37

In economics, economics is the opposite of religion. It’s better to receive than to give, you know, and it’s, I

46:43

guess it’s too hard for them. I’d never send one of them to go shopping for me, that’s for sure. They’ll come back from the grocery store saying, I’m not going to that store again.

46:52

They weren’t charging enough. I’m going to go to another store. It’s like, who are these people? Maybe they’ve never gone shopping.

46:58

I don’t know. Tony: Well, I guess the last question is, and this is kind of, because this is just

47:05

a point of confusion, is that, given all of this, what is very perplexing to me,

47:10

and probably a lot of people listening to this, is, I mean, we’ve talked about why various taxes are kind of, Unnecessary and too high, but especially corporate taxes.

47:21

I mean, if you, if you like take a Marxist understanding of like ruling class in the ruling ideas, I mean, why would governments that are

47:32

supposed to reflect the interest of. the dominant capitalist property owning class.

47:38

Why would they even keep high corporate taxes? Because the Republicans still keep corporate taxes.

47:44

They lower them, but they still keep them. I find it interesting though, China is very low corporate taxes.

47:50

So Mosler: They’re not working in their own best interest. That’s what I call it. Innocent fraud. You don’t know whether it’s innocence or fraud.

47:56

Innocence is more damning because you’re saying that it’s too hard for them. They can’t figure this out.

48:02

Tony: Yeah, that’s perplexing. I almost hardly believe that’s the kind of the thing. I think that’s the part that

48:07

I, Mosler: I agree. You know, especially in our age of technical understanding.

48:14

Tony: so it’s like a Copernican Revolution sort of thing where it

48:20

really is an understanding problem. Mosler: That was before I was born, so can’t speak to that.

48:25

Tony: Anyway thank you for being here. I don’t want to eat up too much of your time, but yeah, I hope this has been helpful for people who.

48:33

Want to learn more about this, but I would highly suggest Warren Mosler’s work because it’s short, it’s, it’s quite, I wouldn’t say it’s easy to

48:40

understand, but it’s very easy to read because it’s not very long. Seven innocent frauds is I think like 40 something pages.

48:48

Then soft currency economics is like less than a hundred. Mosler: Yeah, maybe 10 or 15.

48:54

Tony: So I’d recommend checking those out. And yeah, thank you for being here. Mosler: Okay, take care.

49:00

Thanks. My only hope is that when enough people become pessimists, then, out of

49:06

despair, somebody maybe does something. But you know why I also like to be a pessimist?

49:11

Because it’s the only way to have a nice life. If you are an optimist, then always bad things happen, and

49:18

you are always disappointed. When you are a pessimist, then you look around, okay, there are bad,

49:24

but from time to time something nice happens, and you are happy. As a pessimist, you are a little bit glad all the time, no?

49:30

You are listening to One Dime Radio. Become a patron at patreon. com slash one dime to support the show and get access to extra content.

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