Stephanie Kelton Explains It All

ABC Australia has the interview Bernie 2020?

Stephanie Kelton is such a great teacher. Her explanations are so easy to understand, any adult should have no trouble getting what she is explaining.

The only thing standing in the way of more people understanding this is the little recording in their heads that will be repeating, “No, this can’t be true” as she explains for 20 minutes. If you can temporarily shut that recording off, and listen to what she says, then you will have something to think about later when you let that recording play again.

The interviewers are your standins, because they pose all those questions of how could this possibly be true. Kelton has great answers to all of their questions.

I particularly like Stephanie Kelton’s response when the interviewers asked about the problem of interest payments on US bonds growing too large. She said, just stop paying interest. She did not mean that we should default on the interest we have promised to pay. She meant stop issuing bonds that pay interest. We don’t need to borrow our own money back. The money that the government created and put into the hands of the public doesn’t need to be borrowed back so that we can use it for other purposes. Just use it for those other purposes in the first place.

We have created a system where

  1. the federal government creates money
  2. the federal government gives out the money to the public
  3. the federal government borrows the money back with the promise to pay interest
  4. the federal government spends the money on things the country needs

We don’t need the second and third steps, It was our choice to create the four step process. We can change how we operate.

Maybe it would help to see the diagram that I explained in my previous post When Will the White House and OMB Ever Learn About Sector Financial Balances?

Three Pots

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