Finding the Money beautifully explains the principles of Modern Monetary Theory (MMT), while demonstrating how wrong mainstream economists are on matters affecting every American.*
The film has been showing to great acclaim at festivals, universities and other forums. It had a brief run in theaters and is now available to stream on Apple TV, YouTube and other sites.
But the mainstream media has ignored the film. There are only four reviews on Rotten Tomatoes, none by a major media entity, and not enough to give it a “fresh” or “rotten” rating. (Although all four reviews are positive, so I guess it’s 100% Fresh!) The day it opened, May 3, there was no review in the NY Times or any other major newspaper.
The star is Stephanie Kelton, a professor at Stony Brook University, whom the film follows around the country teaching MMT. There are also other MMT leaders, including its founder, Warren Mosler.
This is the first in a series of posts based on the film and my reading about MMT.
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Debt hysteria is pumped up by politicians from both parties and the mainstream media. Every President for the last seven decades warns “we are running out of money,” “just like a household, we have to balance our books,” or “our grandchildren will be burdened by this debt.” The terrifying “National Debt Clock” ticks up menacingly.
On the “burden to our grandchildren,” I ask first,
The Debt hawks use charts like this one to show how scary the debt is, and how great it was when we had a surplus in the late nineties.
No one looks at this and says, “Wait a minute. Basic principles of accounting say every debit (an obligation to pay) must be matched by a credit (a right to receive payment).” The chart above focuses only on one side of the equation — the governments’ deficits and surpluses. Where’s the credit to match the debits on the chart? To whom does the US Government owe the money?
The answer is primarily to (1) itself; (2) us — the non-government or private sector; and (3) other countries (the foreign sector). These are the major holders of US Debt as of 2022:
The Federal Reserve: $5.9 trillion (19%)
Agencies and trusts (social security trust fund, etc.): $6.9 trillion (22%)
Foreign entities: $7.3 trillion (23%)
Private individuals and entities in the U.S. (households, mutual funds, etc.): $11.7 trillion (37%)
The US Government, through the Federal Reserve and Government agencies, owns 41% (19% plus 22%) of the National Debt. That includes money that gets paid out to us in the form of social security, military retirement benefits, civil service retirement benefits. and other payments.
The other largest owners are private individuals and entities, including mutual and other funds. Although wealthy people own a high percentage of US Treasuries, non-wealthy people own them directly or indirectly, e.g., as beneficiaries of a pension fund.
As for the feared “China Debt,” which politicians (and not only Republicans) say is “killing us,” as of September 2023, it was 3.0 percent of the National Debt (less than Japan’s 3.4 percent) (the blue and orange sections):
But also, where did the debt to China come from? Did US Presidents go hat in hand to China, saying please lend us hundreds of billions of dollars?
No. China sold products to people in the United States, like:
- Smartphones.
- Digital automation systems.
- Toys and scale models.
- Video game consoles and console parts.
- Media transmission systems.
- Lithium batteries.
- Display monitors.
- Pre-dosed medications.
We pay China in US dollars, which are non-interest bearing. Understandably, they prefer to have their money grow, so they buy US Treasury Bonds, one of the most, or the most safe asset in the world.**
Finally, on the “burden to our grandchildren argument,” Economist Abba Lerner wrote this in 1948:
A variant of the false analogy is the declaration that national debt puts an unfair burden on our children, who are thereby made to pay for our extravagances. Very few economists need to be reminded that if our children or grandchildren repay some of the national debt these payments will be made to our children or grandchildren and to nobody else. Taking them altogether they will no more be impoverished by making the repayments than they will be enriched by receiving them.
This and much more is laid out very clearly in Finding the Money
Watch it. It may change your life.
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*One of these is Jared Bernstein, Chairman of Biden’s Council of Economic Advisors, who in a short, but painful section utterly fails to explain what is meant by money, debt and US Treasuries. Unfortunately, this has been “weaponized” by some on the right against the Biden administration. I would have left it out because this year political realities outweigh even making the point the short segment shows.
** It’s still extremely safe, but a bit less so because idiot Republicans play chicken with the Debt Ceiling.
