Oct. 29, 2020

The deficit matters...but just not right now

Rethinking the entire economic paradigm of any country would be almost impossibly difficult. Try to do it in the midst of a dual recession and pandemic, and you’re facing unbeatable odds.

But the truth of the matter is that we’re inching closer to thinking the deficit actually doesn’t matter each day here in the U.S., especially after Congress passed enormous stimulus to keep Americans afloat with alarmingly few chirps of “who pays for it.”

Last episode, we learned about the effort to debunk the deficit myth. This time around, we’re talking about how realistic or unrealistic that mindset shift really is with Kai Ryssdal, famed radio journalist and host of Marketplace and Make Me Smart.

Listen if you want an honest conversation about inflation, a jobs guarantee, monetary vs. fiscal policy, wealth inequality...and how only some economic indicators matter in a year as unprecedented as this one.


Kinsey Grant, Morning Brew business editor and podcast host [00:00:09] Hey there,
everybody. It's me, Kinsey Grant, your host of Business Casual, and today, I'm going to
work on making good on a lifelong goal of making econ fun for everyone. Let's get into it.
[sound of a ding]
Kinsey [00:00:21] Last episode was certainly a polarizing one. You either loved it or you
hated it. And no, it was not about cilantro or Kanye West. It was about modern monetary
theory, or MMT, as we've come to affectionately know it. MMT has bred both passion and
disdain among economists and politicians alike for its particularly unorthodox approach to
how we should keep the wheels on this economy greased. And at its core, here's what
MMT espouses. Governments that issue a fiat currency shouldn't be run like a household
budget, as in the budget doesn't need to be balanced.
Kinsey [00:00:52] Since our government issues its own currency, it can just print more
money and inject that into the economy to pay for any number of programs. And that pretty
much flips our entire economic script here in the U.S. on its head. We've been trained to
seize up when we hear headlines like the federal deficit is almost twice as large now as it
was at the worst of the Great Recession in 2009. But what if that fear is misplaced? What
if the deficit doesn't matter?
Kinsey [00:01:14] And that's what we hit on in the last episode with Stephanie Kelton, who
literally wrote the book [chuckles] on MMT and the deficit. She did a great job of explaining
her entire career's work in a single podcast episode. But one big part of that conversation I
want to know more about is this: What does all this look like in practice? How does it
change our economy? Should we elect to embrace it at scale? If it's so great, how come it
hasn't become the norm? And if we spent semesters studying the deficit, what will the next
generation focus on?
Kinsey [00:01:42] So today, we are talking about the deficit with someone with a little bit
more objectivity, I think, than Stephanie Kelton, the face of MMT. I am excited to welcome
to Business Casual Kai Ryssdal, famed radio journalist, host of Marketplace and Make Me
Smart. Kai, welcome to the show.
Kai Ryssdal, host of Marketplace and Make Me Smart [00:01:58] It is great to be here.
Thanks for having me.
Kinsey [00:02:00] I am a huge fan of your work. I have to get it off my chest now.
Kai [00:02:04] Thank you.
Kinsey [00:02:04] We at Business Casual are huge fans of everything you guys do. So it's
great to sit down virtually and have this conversation with you. And we're gonna jump right
in. We've got a big one. We got a lot to handle today. Your job on Marketplace is really to
provide context. I think that's one of the strongest suits of what you guys do, is making
everything contextually make sense. So, that's what I'd like to do today. I'd love it if you
could help us understand this a little bit better. And I'm going to ask you the same first
question that I asked [chuckles] Stephanie in our last episode. Do you think the deficit to
the U.S., in the U.S., the federal budget deficit, matters?

Kai [00:02:36] So what does she say? She, of course, said no, right, because her book is
called [Kinsey laughs] "The Deficit Myth."
Kinsey [00:02:40] She tried to debunk the myth that it does matter.
Kai [00:02:43] Right. Right.
Kinsey [00:02:44] I'm curious to hear if you think it is also a myth that we have to have a
balanced budget, or should we should aspire to a balanced budget?
Kai [00:02:52] Right. I don't think it's a myth, but I'm less hard and fast on that than I'm
sure Stephanie and most MMTers are. And here's why. The central challenge for MMT is
overcoming the mentality, not just among economists, but also among politicians and the
American people, that the American budget ought to be run like a household budget. And
it just shouldn't, for a whole lot of reasons that we can definitely get into.
Kai [00:03:15] But if you control your currency, then fundamentally having a deficit in and
of itself is not a crisis. Now, you will hear people say, in this moment, when we just got
news the other day or whatever it was, that $3.1 trillion in deficit spending for fiscal year 20
was the number. And that's a massive number. But that doesn't matter right now for a lot
of macroeconomic things that we can get into. But the idea that the deficit doesn't matter, I
think is maybe a stretch too far.
Kinsey [00:03:43] So when does it start mattering?
Kai [00:03:45] When interest rates start going up, when it becomes more expensive to pay
that debt, when the economy slows, when we can't cover our debts with a growing
economy and the service on the debt becomes expensive—then it becomes really a
challenge for us in that the only way a deficit doesn't matter is if you're growing the
economy faster than the debt grows and that you can keep paying for it. And we haven't
been doing that in a very long time in this economy—10, 12 years at least—and we've
been piling on debt and deficit. Remember deficit—I don't know how basic you want to get.
Kinsey [00:04:14] Let's get basic. Let's get basic. [laughs]
Kai [00:04:15] [indistinct crosstalk between Kinsey and Kai] OK. The deficit is the annual
number. The debt is all the deficits added together. They get used interchangeably, which
makes me crazy. But we haven't been able to grow the economy in a way that's going to
make the debt not be a challenge. Is it a challenge right now? No, because we're in such
bad straits with this pandemic and this virus. But the idea that the deficit doesn't really
matter at all—I just think that's a little misguided.
Kinsey [00:04:40] So I guess it's kind of prioritizing what the biggest concern should be.
And right now, the biggest concern is not the debt pile.
Kai [00:04:45] Right. That's exactly right.
Kinsey [00:04:47] But in the United States, the reality is that we're never really going
there, or I guess the reality [chuckles] that we all like to believe is that we're never going to
default on this debt. This is a pretty stable country —
Kai [00:04:58] Right.

Kinsey [00:04:58] For the most part. [laughs] That this shouldn't be a concern. Does that
thinking shift the way that we think about the debt? Do you think that the U.S. would ever
Kai [00:05:07] Well, no, because as many times as we've bumped up against the debt
ceiling—and I know this is a little bit off the topic—but as many times as we've bumped up
against the debt ceiling, Congress has finally in the end said, oh, yes, no, of course we
can't default on the debt. That's not what's going to happen. And so that's the political part
of this thing. The straight-up monetary and fiscal policy part of this thing is we physically
can't because we can just print the money if we need to. And I know Kelton hates that
"print the money phrase," and I totally understand that. But, look, we should be aware and
conscious of the debt. It should not right now be driving the entire conversation.
Kinsey [00:05:42] Why do you think that this has become such a political conversation,
though, when we think about deficit spending? It has inherently just become red and blue
in a lot of ways. Why?
Kai [00:05:54] For a couple of reasons. Number one, Republicans always like to say that
they're conscious of the debt and the deficit. And then when they get into power, they
invariably blow it up. Look at the president's tax cuts that Paul Ryan passed for him in
December of 2017. That was $1.2 trillion or more deficit-financed tax cuts over 10 years.
So example number one is straight-up politics on what happens.
Kai [00:06:17] Example number two is that the Democrats always, always—and this is a
really interesting thing about MMT—the Democrats always say, "we're going to pay for it
by." You never hear Republicans say we're gonna pay for something by raising taxes or
cutting spending elsewhere. The Democrats always do that. I don't know why. Maybe they
just feel bad. Who knows? But if they stopped saying that, if MMT went into effect, they
would have a better [indistinct]. That's part of why it's become politicized.
Kai [00:06:41] And then I have to keep going back to this original point that I made. The
American people think of the federal budget as a household budget—that it has to be
balanced because if I'm over budget in my household, I don't have any more money
coming in. And that is simply not the way the federal government budget runs. And until
we can figure that out, just in terms of explaining it better, it becomes a challenge.
Kinsey [00:07:04] Right. The explaining it better is such an important part of this
conversation, because we think about, to your point, we think about these deficits in ways
that we can best understand, and in ways that politicians want us to understand it. It is to
their advantage if we get something in super-simple terms and then we can convey that
information to a friend or a neighbor, what have you.
Kinsey [00:07:25] I think that this is a vast oversimplification on the whole, though, that
they have to be run the same way. My question is how we overcome that. Do you think it's
possible to create a narrative around the deficit that is realistic and honest, but also
understandable for the everyday person who maybe doesn't read books like "The Deficit
Myth" for fun?
Kai [00:07:46] Yeah, I think it's really hard. Look, we try on Marketplace. You see
economists both left and right in this moment saying the deficit and the debt are not the
key issue. But it's so deeply ingrained in the American psyche. We have to be financially

responsible. I can't buy a car if I can't afford a car. How come the United States Army and
the Pentagon could buy a tank that cost $35 million when we're running a budget deficit?
Kai [00:08:11] We just don't have the language to make people understand that we've
been doing this for generations. And that's the challenge with MMT—is that the change
would have to happen over time. We can't do it immediately. But I don't think it's realistic.
And this is why I think, frankly, MMT is probably doomed to failure in this country. I don't
think it's realistic at this moment to expect the American people to believe that the federal
government does not have to run like a household budget.
Kinsey [00:08:35] And I want to get deeper into this moment specifically and why it doesn't
make a whole lot of sense. We're going to do that in this conversation. I am confident. But,
before we get really into the weeds there, I want to make sure we cover all of our bases in
understanding some of the key tenets here of MMT as they pertain to the wider economy
Kinsey [00:08:53] The whole theory of MMT steers pretty heavily into inflation as a metric
for how much the government can spend instead of debt. So, instead of worrying about
how much we're going to owe, it's just making sure that inflation doesn't rise too quickly,
such that prices are way out of control and we end up in a hyperinflation situation. So we
put a cap on what we spend. It's inflation, not debt. Why is inflation a better metric than
debt in terms of determining how much the government can spend? Or is it?
Kai [00:09:23] Well, under the tenets of MMT, debt and deficit don't matter, as Stephanie
Kelton says. We can generate enough money. We can create enough money, as
Stephanie prefers the term, that we can cover whatever spending we need. It's only when
the capacity of the economy to absorb all that money—and right now that metric is labor, is
actual human capacity—it's only when labor is saturated [chuckles] with money that
inflation becomes a problem.
Kai [00:09:57] So MMT wants a job guarantee. So the government creates money. It funds
a job at minimum wage, let's say, for every person in this economy who wants to work.
That keeps going until everybody has a job. Everybody's got a job. Then you have
exhausted the capacity of the economy to absorb all that extra money. And that's when
inflation is gonna start ticking up, because people are going to want higher pay. They're
going to be able to pay more for goods, and inflation becomes a problem.
Kai [00:10:26] And at that point, what does the government do? Well, at that point, they
can institute some taxes to pull that cash back out of the economy. Cool things down.
Take care of inflation and then calibrate it that way. That's the general tenet of inflation as
a measure in MMT as opposed to debt and deficit, which really is a terrible measure of
economic health anyway.
Kai [00:10:51] If you look at debt and deficit only, what is that telling you? It's not telling
you how much we produce. It's not telling you what kinds of jobs we have. It's not telling
you anything about education or exports or technology or innovation. It's just telling you
how much money we owe. And while that's a good thing to know, it's not a macroeconomic
indicator that's worth really anything.
Kinsey [00:11:12] Yeah, that's such an interesting point. And one that I found particularly
compelling in speaking with Stephanie and in reading her work is there are better
indicators out there. We're just not choosing to utilize them to the best of our abilities. I'm

also glad, Kai, that you bring up the job guarantee because it is one thing in this
conversation with Stephanie that I feel like we didn't give it enough airtime. It's a really,
really [chuckles] paradigm-shifting concept here—thinking about a job guarantee. For so
long, we've operated here in the States under the assumption that a little slack in the labor
market is good, that we need a little unemployment. Why is that?
Kai [00:11:45] [chuckles] We need a little bit of unemployment so that the economy can
have a little extra room, can have some capacity when things pick up and industrial
production picks up, and we've got a labor force that's able to jump in. The catch, of
course, as we're seeing right now and have been seeing for the past number of years, is
threefold. Number one, work is changing, right? Just literally the kinds of jobs.
Kai [00:12:08] Number two, for some reason—and Janet Yellen and Jay Powell and Ben
Bernanke will tell you they don't understand it—for some reason, inflation has not picked
up as unemployment has gotten so much lower. And then fundamentally, the third thing is
there are always going to be some people who don't want work, and that's just structural
unemployment. And that's just kind of the way it is.
Kai [00:12:27] But the idea of a job guarantee—I think it's so interesting you used the
phrase paradigm shift—because this entire modern monetary theory thing is just such a
"we're going to turn the entire universe upside down and shake it and see what happens."
Kinsey [00:12:40] Yeah. [laughs]
Kai [00:12:40] That is one of many paradigms that are getting shifted, I think, is the idea of
the job guarantee and what to do about the labor market.
Kinsey [00:12:46] Why is a job guarantee controversial? Why do I use the words
paradigm shift? You know, why does it feel so foreign and alien and very, very different
from what we're used to?
Kai [00:12:55] Well, look, it gets to a couple of things, and we have to give a nod to the
political here, right?
Kinsey [00:12:59] Right.
Kai [00:12:59] There's a big government-small government conversation. Conservatives
and Republicans generally don't favor big government programs, and this would be the
biggest of any big government program. The other idea is related, which is a "look, pull
yourself up by your bootstraps, go find a damn job." [laughs] The government's not here to
give you a job, and you have to—we have to get past that mentality in order for MMT to
stick. Because without that job guarantee, it becomes really challenging to get MMT to a
place where it could actually work.
Kinsey [00:13:34] Yeah. I'm curious to hear your—when we say—the whole reason we're
doing this week of episodes, to be totally honest with you, is because I kept asking this
question on my interviews. Who pays for it? Who pays for it? Who pays for it? And
eventually it becomes clear that that's not even the question to ask right now. It doesn't
matter who pays for it. They just shuffle around money or maybe the deficit doesn't matter
in the first place. Is this why it feels so political? Because we're trying to ask who pays for it
with something like, say, military spending on one end of the spectrum versus a job
guarantee on the other end of the spectrum?

Kai [00:14:05] Yeah. I think the who pays for it thing is fraught for the reasons I already
talked about, right?
Kinsey [00:14:08] Right.
Kai [00:14:08] The Republicans never ask it. The Democrats ask it all the time or volunteer
the answer. You're like, really? Is that the conversation we're gonna have? And I think
especially in this moment, where we're spending to rescue this economy, the idea of who
pays for it becomes all the more charged. And there's one more thing you have to say
about who's going to pay for it and the $26 trillion in national debt we have now. [Kai
whispers: We're never going to pay that off. [Kinsey laughs] It's never going to be paid off.]
Kai [00:14:36] We're gonna roll it over. We're gonna roll it over. We're gonna roll it over.
And that's OK. That's the way debt works, right? You refinance, you sell new bonds, you
pay off the old ones. That's OK. Is it going to come down over time? Is it gonna be $26
trillion forever? No. But right now, that's not the issue.
Kinsey [00:14:52] Are we kicking the ball down the field, though, for a future generation to
handle some sort of huge implosion of the system?
Kai [00:14:59] Well, look, conceivably. But I think, yes. Let me be categorical about this.
Debt will become a problem at some point. And we need fiscal responsibility under the
current system desperately. Neither political party, in or out of office, has been willing to do
that. But right now, it's not what we ought to be concentrating on.
Kinsey [00:15:27] All right. So right now, let's talk about this for a second.
Kai [00:15:31] OK.
Kinsey [00:15:31] How MMT actually happens. Let's say we get more people to buy into
this concept. People start to maybe ask this deficit question a little more meaningfully. How
does it all go down? How does the economy change? Does it happen in the snap of a
finger? Does it take generations? What does the future look like? Should this become a
more widely embraced theory?
Kai [00:15:51] So, I think it does take generations, or at least a decade or two. And here's
why. There are a lot of reasons why. First of all, we literally have to turn our economic
mechanisms on their head. We have two main ways to run this economy right now:
monetary policy, which is the province of the Federal Reserve, and fiscal policy, which is
the province of Congress and the president. That has to be, in essence, flipped on its
Kai [00:16:16] Congress has to start taking responsibility for the amount of money in the
economy, which is what monetary policy is. Jay Powell, under MMT, would use that
special keyboard, that only Fed chairman have, that let him create a gazillion dollars at the
stroke of a key. That's what he does. He creates it and he credits it to the Treasury
Department. And that's how the money is created. And that's basically his whole job. He's
done. Create a zillion dollars, Jay. That's the instruction from the Congress.
Kai [00:16:47] And that money goes out and it gets spent on whatever Congress decides
to spend it on. New buildings, nuclear weapons, tanks, schools, education, job guarantee.

Take your pick. And as long as that keeps going without creating inflation, then that's fine.
Then Congress has to step in and assume the monetary policy role of removing that
money from circulation, of taxing the people to avoid inflation and taking money out of
Kai [00:17:16] That is a paradigm change above all others, because for as long as this
country has been a country, going back to Alexander Hamilton, the role has been
Congress spends and taxes. And once the central bank came across in 1913, they are in
charge of the money supply. So we would have to completely reorient that. But I think
there's a bigger challenge here with MMT in the United States.
Kai [00:17:38] This is the most important economy in the world. It's the most
interconnected economy in the world. It's the most relevant economy in the world. We
have the dollar as a reserve currency. We have an industrial base, an innovation base that
is fundamental to global economic growth. And I really don't think that what you want to do
is, overnight with the passage fundamentally of a law, which is what it would be, you pass
a law and it would take away the dual mandate from the Fed and it would give Congress
all these powers. That you cannot do that with this economy. It's a $20 trillion beast that,
look, we can't even govern now.
Kinsey [00:18:16] Right.
Kai [00:18:17] Let alone turn it upside down. So to coin a phrase from Neil Irwin at The
New York Times, I think what you want to do is try it somewhere small first. Try it like in
New Zealand. Lovely place. They beat the coronavirus. Maybe they can figure out MMT.
Kinsey [00:18:32] Maybe they can. Yeah, it's interesting to think about that there are so
many ripple effects —
Kai [00:18:36] Yeah.
Kinsey [00:18:36] With a change this meaningful and an economy this meaningful. And I
think it's a little dangerous to try and make predictions about what exactly those ripple
effects would be, because it's hard to know. [laughs] Who are we to determine how it
would look for an economy this large to totally flip everything on its head, to your point.
Kai [00:18:52] It would be pandemonium. It would be pandemonium.
Kinsey [00:18:55] Economic pandemonium.
Kai [00:18:56] That's right.
Kinsey [00:18:57] Perfect. Perfect way to describe this. [laughs] What happens then—just
before we move on—What happens to Jay Powell's job if all he has to do is strike that
special keyboard? [laughs]
Kai [00:19:06] Right. I know. I know. What happens to the Fed chair's job. I don't know. I
don't know. He gets his keyboard and he hands it to some, you know, GS-13 bureaucrat
who says, right, when Congress calls, just create a zillion dollars and he's done, right.
Because the central bank becomes much less relevant.
Kinsey [00:19:19] Yeah.

Kai [00:19:19] Right. Their job is to set interest rates at zero, print a bunch of money, and
they're out of here.
Kinsey [00:19:23] Who are we gonna make memes about if we don't have a Fed chair?
Kai [00:19:27] [laughs] That's right.
Kinsey [00:19:27] Our jobs will definitely also [indistinct]. OK. So, Kai, we have covered a
pretty decent understanding of what MMT looks like in theory here. We are going to talk
about how realistic, though, this sort of economic utopia is in just a second. But first, a
short break to hear from our sponsor. —
Kinsey [00:19:46] And now back to the conversation with Kai Ryssdal. So, Kai, as much
as we love to [chuckles] kind of opine on what this future economy might look like should
MMT really take off and the deficit become entirely obsolete, that just isn't happening.
[chuckles] And it's not going to happen overnight, as we've talked about. But what do you
think the biggest roadblocks are to achieving that shift in mindset about the deficit, that
different approach to its importance relative to the broader economy? What are the biggest
hurdles in the way?
Kai [00:20:13] Yeah, I think it's actually mind shift and mindset, exactly as you said.
Number one, among the political class, right, who'd have to be able to wrap their heads
around this and look, with no disrespect intended to the United States Congress, they're
not always adept at grasping the nuances of really difficult policy, especially kind of on the
fly. So I think that would be a challenge—convincing them that it's necessary.
Kai [00:20:38] I do think the idea of the American household and understanding how to get
this done in terms of the federal budget is a real thing. And then look—you've read as well
as I have, the comments of the economic elite piling on Stephanie Kelton and MMTers at
large with disdain, actually saying, look, I don't understand how this works. It's nonsense.
That goes from Jay Powell to Krugman to Larry Summers.
Kai [00:21:08] And I think you'd have to get some buy-in from the economic elite to try to
sell it to people to be able to make that happen. It's really, really different. It's a great
thought experiment. It's fun to mess around with. But I think the challenges are real in
terms of execution and understanding and accessibility.
Kinsey [00:21:25] Yeah. This is an interesting quote that I wanted [laughs] to pose to
Stephanie that I didn't get to, but, from The New Yorker: MMT can provoke strong
reactions. Maybe it's not for you. And you find it ridiculous or even a little scary. Or maybe
it blows your mind, like your first time trying Marmite or dropping acid.
Kai [00:21:41] Right, right.
Kinsey [00:21:41] That this could be like [indistinct] dropping acid is totally insane. Like
economic acid [Kai laughs] is so weird and fun to think about that, you know, it's like the
new school of econ and all of the like old white dudes who we have to convince to maybe
give it a try and then they'll buy into it. But, to your point, the economic elite have
absolutely not bought into this.
Kai [00:22:01] No.

Kinsey [00:22:01] Is that because, you know, Jay Powell is out of a job?
Kai [00:22:05] Well, Jay Powell doesn't need to work, right. He's worth, you know, 50, 60,
$70 million, whatever. [Kinsey laughs]
Kinsey [00:22:10] The metaphorical Jay Powell. [laughs]
Kai [00:22:11] Metaphorically. Yeah, I know. I get it. Well, look, so you made a really good
point in passing, and I'm not even sure you realize. Maybe you did. It's a bunch of old
white guys who are opposed to this because the system that they operate in and have
thrived in is the system that we have that would be upended. So one hates to think ill of
Krugman and Summers and Jay Powell, but there's a little bit of self-interest in there. I
think the other thing, though, is fear of the unknown. I don't think they are willing to do a
pilot project with the American economy and the risks that it entails. And the way they are
demonstrating that unwillingness is to shoot this down.
Kinsey [00:22:54] Yeah. Yeah. And that makes perfect sense.
Kai [00:22:56] Yeah.
Kinsey [00:22:56] That's why we should maybe try it with a smaller country, to your earlier
point. When we think about the ways the economy would change—we know that it would
change—but in the ways that the government is spending money, this I think is important
to also draw in the old white dudes [chuckles] idea. That a lot of the propositions that
Stephanie and her peers in the MMT sphere are making is that we could create a more
equitable economy, one that maybe works for more people. We have bigger social safety
net kind of programs, and that would be really, really meaningful. That would have a lot of
tentacles throughout the economy beyond just a jobs guarantee.
Kai [00:23:28] Yeah, for sure. You know, it's interesting. One of the things the Federal
Reserve is interested in doing right now—and I was on a panel about this number of
weeks ago, and it's being led by Raphael Bostic at the Atlanta Fed, the first African-
American Fed president, ever, regional Fed president—is to figure out ways that the Fed
can make this economy more inclusive.
Kai [00:23:46] And I think a jobs guarantee under MMT is maybe the best thing about that.
Right. Is that it can get anybody who wants a job, a job at minimum wage or better. And
that lifts everybody. It would lift Black women. It would lift Latinx men. It would lift
everybody and provide that equal footing. And I think that's a really attractive thing for a lot
of people on the left, you know, who have been trying to figure out a way to make this
happen, have been resource-constrained because they always say, well, we're gonna pay
for it by X, Y, Z, or the Republicans say we're gonna pay for it. And I think that's something
that really would work in their favor, I think, if they could figure out a way to make that
selling point.
Kinsey [00:24:30] Yeah. And especially right now, you think about the ways that this
recession has impacted groups of people in —
Kai [00:24:36] Oh sure.
Kinsey [00:24:37] Unbelievably unfair, quote unquote, unfair ways.

Kai [00:24:40] Yeah.
Kinsey [00:24:40] Women, and people of color especially, have been really hard hit by this
recession. And to think that these kinds of programs would be able to lift these people up
and help them get to a better point in their personal lives and in the economy on the whole.
We need women [chuckles] in the economy. We need people of color working in the
economy. I guess I'm having trouble understanding why this has to be so political. Like, it
seems pretty shady to say, hey, you know, I don't like it when women have jobs and are
guaranteed an income. [laughs]
Kai [00:25:06] Do you read the news?
Kinsey [00:25:07] Yeah. [laughs]
Kai [00:25:08] You know, that's what's going on. But look, it's [sighs]—the biggest
challenge in this economy right now—the biggest social challenge in this economy right
now—is wealth and income inequality. Bar none. All the gains—in the market, in the
economy, in jobs, in wages—have gone to the top tier. And that's like 10% of
population—maybe. 80, 90% of this population has been stuck. And if we can figure out a
way, with MMT, to raise them all, then that would seem to me to be a point for the left.
Kinsey [00:25:45] I guess that's just like illustrative of, you know—I had no intention of
talking about [laughs] wealth inequality in this episode. But I think that this is exactly a
perfect point to illustrate just how much this could impact our economy in so many different
ways. We talk about the changing responsibilities of Congress versus the Fed, and then
you go down to individual people. This could impact individual people in really meaningful
Kai [00:26:09] Yeah. So, look, I think there's—and I know you don't wanna get too political
and we won't, and I'll let you get back to whatever you want to talk about a second, but
[Kinsey laughs] there are benefits to the left for this. They get to fund all these projects and
not worry about how to spend it. They get to raise people up out of terrible jobs that are
paying seven bucks an hour or less.
Kai [00:26:29] There are attractive parts on the right too, right? If you are a small
government Republican conservative, with whatever capitalization of letters you want to
put on there, you can say, look, we're not going have any taxes in this economy unless we
really need to. And we're gonna, yes, fine. You on the left, you can have your jobs
guaranteed. Us on the right, we're cutting taxes. Boom. And then let's see how goes.
Kinsey [00:26:55] I feel like maybe MMTers should hire [laughter] you to consult their PR.
Kai [00:27:00] Yeah, right.
Kinsey [00:27:00] This sounds so great. But I also wonder what the private sector attitude
is toward all of this. We've got the left. The right. What about the non-government entities,
the businesses? What do you think they think of all of this?
Kai [00:27:10] My sense is that businesses would, generally speaking, not hate this.
Wages would probably go up, so they'd have to pay a little bit more, but they would be
able to concentrate on what they want to do. And just as one example. Private business

isn't necessarily great as huge infrastructure projects. The interstate highway system. Yes,
they do the actual building and they get contracted. But that's not their core skills. If you've
got a construction company, you can build a bunch of things.
Kai [00:27:39] But if the government comes to you and says, we need a 14-lane highway
from Chicago to Kansas City, and here's a gazillion dollars, that's something you can dig
your teeth into. And that would seem to me to be a really attractive thing for companies to
be able to take advantage of. This government spending is not all going to go to the jobs
guarantee. It's not all going to go to the Pentagon. It will be for larger projects that only the
government can finance, but private companies execute.
Kai [00:28:06] Is it sector-dependent? Sure. Construction, fine. Aviation? Sure. Whatever.
Banks, you know, they'd figure out a way to get their slice of it. But it seems to me that it
would be an attractive thing for everybody. But again, the challenges—and I hate to keep
coming back to this—part of the reason debt and deficit gets so much attention in this
economy is because the Wall Street banks and private industry say, oh, man, well, look at
the government debt. We can't do this, and, holy cow, it's going to crowd out private
spending, and we don't want that. So that's a bit of a challenge too.
Kinsey [00:28:35] Will it actually crowd out private spending?
Kai [00:28:38] No, I don't actually believe it will. I think if MMT goes into effect, there will be
massive government spending on things the government's going to do. Private spending is
going to be able to concentrate on what private industry wants to do.
Kinsey [00:28:49] Yeah. We see time and again that there's certain things private industry
does a whole hell of a lot better than [chuckles] the government.
Kai [00:28:55] Right.
Kinsey [00:28:55] But also that private industry has benefited from government spending
in the last —
Kai [00:28:59] Sure.
Kinsey [00:28:59] Six months. You think about this enormous stimulus package and PPP
loans and small business loans. This has been insane and in a lot of ways, has gotten
through—or gotten some small businesses through—what has been ostensibly the worst
time ever.
Kai [00:29:13] Yeah.
Kinsey [00:29:14] Full stop. [laughs]
Kai [00:29:15] Full stop.
Kinsey [00:29:16] This could be another boom.
Kai [00:29:18] Yeah.
Kinsey [00:29:18] Theoretically.

Kai [00:29:20] This whole conversation is theoretical.
Kinsey [00:29:21] All theoretical. [laughs]
Kai [00:29:23] Modern monetary theory. That theory part of that name—that's a real thing,
man, because —
Kinsey [00:29:28] Yeah.
Kai [00:29:29] Yeah. And that's another part of the challenge, right, is that this is also high
concept. And it's you want to do what with the what? And you can't really practice it, you
know, I mean, even like nuclear physics, you get into a lab and you can smash neutrons
together and see what happens. You're not going to be able to do that with this economy
and keep things going.
Kinsey [00:29:50] All right. This brings me to a really big question that I want to ask. We're
going to do it. But really quickly, a short break here from our sponsor. — And now back to
the conversation with Kai Ryssdal. So Kai, I said I had a big question for you just before
the break. That big question is what if all of this is totally upside down and wrong? [Kai
laughs] What if we begin to implement MMT in practice, beyond just the theory part of the
MMT? And then we realize, like, oh, shit, [laughter] we messed up. This isn't going to work.
We have increased the deficit exponentially and now we don't know what to do because it
didn't work the way we wanted it to.
Kai [00:30:26] So let me put it back on you.
Kinsey [00:30:29] OK. [laughs]
Kai [00:30:29] What part of MMT do we roll out first? Because it's part and parcel. It's a
package. It's a theory that you need all the parts working together. You have to have the
job guarantee. You have to have the money creation. You have to have Congress being
willing to tax to take the money out at the top end. You have to have all of those things, or
it doesn't really work. And I don't know how you say, oh, we're going to dip our little toe in
here and say, oh, yeah, it's fine. And then we'll jump in. That's not the way that works. You
can't have Congress get Jay Powell on the phone and say, Jay, we need $4 trillion by
tomorrow afternoon. And he goes to his keyboard and creates that. And then go, hmm,
that doesn't work. [Kinsey laughs]
Kinsey [00:31:14] Well, maybe this goes back to the point of, you know, this is part of why
it is unrealistic to expect that this will ever be the future of the economy, because it's so
many moving parts that have to all happen with perfect timing. And as we have seen time
and again, that is rarely what actually happens in D.C. Nothing is perfect [indistinct].
Kai [00:31:32] Yeah, look. So the American economy is a $20 trillion beast, right? It is
really difficult to turn and navigate in the best of times. And that's why, I mean, to go back
to the whole let's try it in a smaller place. Let's try it in New Zealand. Let's try it in
Madagascar. I don't know where you want to try it. Just not in a $20 trillion economy that's
the lynchpin of so much in the global economy.

Kinsey [00:31:53] So when we think, you know, the different entities of the economy and
then how they might fare in an MMT future, what about state and local budgets? They
have to be balanced, right?
Kai [00:32:03] Yeah. [Kinsey laughs] Yeah. No, they do have to be balanced. And so MMT
cannot apply to state and local governments because they cannot create their own
currency, right?
Kinsey [00:32:10] Right.
Kai [00:32:11] MMT only applies if you can create your own dollars. And New York doesn't
have its own. California doesn't have its own. So they are dependent on the largesse, in
this case, of the federal government. But look, if Congress can create trillions and trillions
of dollars, they can direct that spending to state and local programs. Those entities will still
have their balanced budget challenges and they will have to live within their means much
more than the federal government does. But I think, assuming the shift happens, once the
rapture happens, [laughs] then I don't know how much changes for them in terms of how
their economies would work.
Kinsey [00:32:47] Right. You have to think about with this economic rapture—this money
isn't just going into thin air. It's actually going to people —
Kai [00:32:52] Right.
Kinsey [00:32:53] And people who live in states and states that are made up of local
economies, which are made up of people. So as we try to kind of put a bow around all this,
Kai, give it to me straight: Do you think that in 10 years I would still be asking the same
kind of question—does the deficit matter? In 10 years, will the deficit matter?
Kai [00:33:10] Well, so look, in 10 years, the deficit's going to be $50 trillion, not $26
trillion. But that's a whole different thing. The deficit will matter as long as politicians tell the
American people that it matters. And that, as I think I've made clear, I think it's a disservice
to this economy. But I think it will matter in terms of this conversation, because MMT will
still be exactly the T part of that name. It will still be a theory.
Kinsey [00:33:38] All right. Well, Kai, this has been incredible and so much fun to dig into
all of this with you. And before I let you go, I just have one last big question for you. It's
been a crazy year. You guys have covered a ton of really interesting stuff at Marketplace
and with all of your programs that you guys do. What has been the most unexpected 2020
story for you so far?
Kai [00:33:59] Honestly, it's the inability of the Congress of the United States to see the
actual harm that's being done out there right now. I'm amazed every single day that we
don't have a relief package yet. And we won't until after the election and then until certainly
November the 4th, maybe January 21st. Who knows?
Kinsey [00:34:18] Yeah.
Kai [00:34:18] It's stunning. It's stunning to me.
Kinsey [00:34:20] Stunning stuff all around. All right, Kai. Thank you so, so much. This
was a real pleasure. I loved talking about all this with you. Nerding out on economic

Armageddon and [laughing] dropping econ [indistinct]. Just another day in the office
[laughs] here at Business Casual. Thank you so much for your transparency and insight
and your time. I appreciate it.
Kai [00:34:39] Happy to do it.
Kinsey [00:34:48] Thank you so much for listening to this episode of Business Casual.
This week's episodes were created because someone recommended a book to me. I read
that book and here we are, two fantastic episodes and guests later. Suffice to say, I take
your recommendations seriously. So share them with me.
Kinsey [00:35:04] I want to hear what you want to hear. Email me at
Kinsey@morningbrew.com. That's Kinsey@morningbrew.com. And I'll see you next time.
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