Associate @ Mckinsey & Co. || All views are personal and do not reflect any associated entity.
"Why does the govt borrow money that it prints itself?"* __ It's actually a question that is critical to climate, economic development, national security, social security, etc. and yet the common wisdom that most believe, taught by Econ 101, is drastically incorrect. The clip below is quite shocking. “We don’t have the money,” Kerry says about public investment in climate change. (Source: FT) "Social Security will not be able to pay full benefits in 2035 if Congress doesn’t act" (Source: CNN) -- similar headlines based on the latest govt report. All this is rhetoric gets repeated ad nauseam. Obama following the GFC bailout said that the US govt didn't have enough money to properly support working class families through the crisis. All this is driven by a misunderstanding of what money is; and hence of national debt, fiscal & monetary policy, debt crises, etc. This new documentary out below (available on major streaming platforms) corrects this multi-decade, mainstream economist led myth. Modern Monetary Theory (MMT) economists have been at this for decades and have gotten major macro calls right, incl. most recently when they were the only people over the last few decades talking about how higher interest rates FUEL inflation, not temper it. Now suddenly JP Morgan and others are on that bandwagon. (https://lnkd.in/gP236cM6) There are lots of great resources out there to learn from, incl. about 20,000+ words I have written on this topic over the past few years. https://lnkd.in/g7aPN559 https://lnkd.in/gV-drSGz https://lnkd.in/ghEcYvQe https://lnkd.in/giZJNdvW *This relates to countries borrowing in their own currency (typically Global North countries), not Global South countries that have to borrow in US$
I highly recommend watching the film Finding the Money (now available to stream in the US, details here: https://lnkd.in/g9MNCSGZ). In this clip is Jared Bernstein, the Chair of the Council of Economic Advisers, the main agency advising Biden on economic policy. There is a lot of misinformation on our monetary system & this film dispels a huge number of myths. If you’ve seen it, let me know what you think in the comments. I thought it was brilliant. #findingthemoney #mmt
I see Debt on the Fed's balance sheet. Had "Printed Money" really existed, it would have been on it as well.
Senior lawyer
7moThe other relevant point here is that, according to the Bank of England itself, at present 90% of money in existence was not created by central banks, but was created by commercial banks via the loans they extend. This for me is key as in effect they determine where money goes, and does not go, which is key to the climate change discussion as absent regulatory or government intervention money will continue to flow to where it is most profitable. This is a major problem.