Transcript of this interview.
G: Hello everybody. Welcome to the Political Vigilante. My name is Graham Elwood. We have a very special Skype interview. For those of you who don’t know, if you go to Patreon.com/grahamelwood (the link is in the show notes) at the $25 level you get to do a Skype interview. You can bring up whatever subject you want to bring up. I’m here with Jeff Epstein from Citizens’ Media TV. You came to me through a (YouTube) super chat about wanting to really get into MMT or Modern Monetary Theory – is that what that stands for?
J: Yes. I call it modern money, but yes, you’re correct.
G: Okay. So this is a very unique opportunity you guys because I don’t know much about MMT. I would say I know almost nothing about it. So Jeff is going to educate me and I’m going to ask a bunch of questions. Hopefully you the viewer, if you’re as uninformed as I am, then hopefully this will help you. So first of all, Jeff, why don’t we just at least talk about how awesome it was that all these progressive candidates won last night.
J: What a day to be a progressive. I mean what a day. Forget the Supreme Court union crap for a few minutes, but yeah. I don’t even know what to say about it. It’s just so exciting. It’s the most most important day as a progressive I think since I’ve been alive.
G: I think Alexandia Ocasio-Cortez winning is so significant for many many reasons. She was endorsed and basically ran as a Democratic Socialist. That right there is huge. She went up against one of the most entrenched corporate Democrats out there who ducked her on – he didn’t want to debate her, and when he did she ate his lunch, man.
J: She destroyed him.
G: And what what that debate shows and what this election shows is you can’t fight the progressive platform. The only tactic they have and it was hard to do it because she is a Latino woman. Right. That’s what they did with Bernie. Hillary couldn’t attack Bernie’s platform, she had to say he was sexist because he said wait your turn because she was interrupting him, she had to say his things were pie-in-the-sky they were ponies. But when you get when you get someone who is not backing down, like her. She’s like, I am I want to shut ICE down.
G: And I serve the people where I grew up, in the Bronx.
J: He doesn’t even speak – in the in the debate, she said that he doesn’t even speak Spanish even though that his district is 40% Spanish-speaking. He doesn’t even live in the district. His family lives in Virginia. He said you know I do the best I can as a father as if that makes it, you know, can’t touch that issue.
G: What does that mean? You do as a father, meaning you’d rather live in some rich DC suburb than in the Bronx.
J: Right. And actually, one thing that nobody has said, and that I actually find the most amazing of all, is that: she won despite the, you know, you have to register as a Democrat nine months before the election. I think it’s nine months. She still won. So that means that she got a lot of people to register or she changed a lot of minds. Either one of those is really remarkable.
G: The great thing –
J: That she still won because of that.
G: It’s so great because New York has one of the most corrupt, outdated political systems in the country, right? When people say, “oh the system’s broken” and it is, it is. But the fact that she won in that broken corrupt system. It’s like, everybody buckle up and get involved, because you can do it. Now she was tenacious, man. She didn’t back down.
J: Yeah. She’s incredible. And she knows modern money which makes it even sweeter.
G: Well, nice segue, my friend, first of all tell us what got you involved with Citizens’ Media TV. What is it and then tell us what brought you to understand and then become an advocate for modern money theory?
J: Sure. Okay. So, first of all, I became a fan of you when I saw you on Jimmy Dore live show a while ago. You gave a rant about being foreclosed on twice. That was amazing. That was amazing.
And I just want to thank you for for doing this just being so open-minded. Especially with as many people as you reach that teaching you is really teaching everyone you reach and that’s really – that’s amazing. So thank you for allowing me to do this.
G: My pleasure. My pleasure. You got to give some credit to Jimmy Dore because I did not want to talk about that foreclosure. It was really emotionally painful. He said, “dude you need to. It’s important.” He would push me to talk about it. When I did I would get so many people coming up and telling – some people said, “Oh yeah my mom lost her house” or, “We lost our house and that sucks and I’m sorry.” So thanks for thanks for for –
J: It’s righteous anger. That’s why I like Jimmy Dore so much. It’s righteous anger.
Okay, so, I – before Bernie Sanders, I slept pretty much my life away. You know, roughly speaking. I voted Democrat and then I went back to sleep. I voted Democrat because I was told that the democrats were the good guys and that the Republicans are the bad guys, and that’s it.
Then I discovered Bernie Sanders in August of 2015. I never heard of him before. I left my high paying job in February 2016 and I worked for him full time. The campaign asked me to run with him on the ballot. I ran with him in my county in New Jersey and I lost but I got 12,000 votes. Then I was a delegate for him at the DNC.
At the DNC it was just a whole bunch of suffering. We weren’t there to make a difference. So I decided that I was going to make something of it. What I decided to do was to livestream an average of eight hours every single day and it was a seven day experience – or Sunday through – or Saturday through Thursday. I livestreamed an average of eight hours a day and I showed the world what it was like to be a Bernie Sanders delegate and how badly we were treated.
J: And how nothing we were. It was, it was amazing. It was an amazing experience. That was the first major thing – me and a handful of other delegates and some other people on the outside across the street. We all livestreamed. We reached we reached well over a million people. It was a really amazing thing. I have to thank Adryenn Ashley who definitely helped make that possible. So that became Citizens’ Media TV. That was the first big thing for Citizens’ Media TV.
We’re just a big hard-left progressive media organization and we’re on Facebook and Twitter. I did do investigative journalism for a year. I make a tiny bit of money by livestreaming public meetings. Otherwise we just share progressive stuff.
The last thing I wanted to say is that I just #dementered. I just won my first elected position. I did a write-in campaign. I canvassed a few houses the day before. I got six votes nobody else got any votes and I am now a Democratic County Committeeman.
G: Oh nice. Good for you. Awesome.
J: I can’t imagine what’s going to happen, because they know who I am and what I’m about, but. So that’s about me.
G: Nice. Alright so then when did you first learn about modern money theory? Get us into the history of what brought you to this.
J: It’s actually not that long. I tend to deep dive into things. I really don’t like touching on lots of subjects a little bit. I like picking a subject and diving as deep as I can. (You know, Bernie Sanders. I left and I worked for him full time.) I found out about modern money – I like to call it modern money because the word theory just gets people in a tizzy. But it’s no different than the theory of relativity.
So modern money. In February I was talking with a friend, his name is Geoff Ginter. He’s a prominent video guy on Real Progressives, which I’m now part of. He’s an amazing guy. He lives near me. We were talking on the phone about some progressive thing and then he says, you really got to understand how money works. I never – not that I didn’t care about it, it just was never in my consciousness. Why do I – what’s that – that means nothing to me. And so he spoke to me on the phone for –
G: Which by the way, I would say has got to be by design. We’re all just sort of – None of this has taught in schools. We’re all just taught this very basic – “banks have the money and they loan it and then we have a job and we buy things –”
J: Yeah. You’re not smart enough to yet and discuss this subject. Even Economists are learning on outdated textbooks which we’ll talk about later. So Geoff took me by the hand and we jumped off a cliff and he deep dived me into MMT. Into modern money. It just completely changed me.
Just like exactly the same profoundness as what Bernie Sanders taught us which is money in politics is the root of all evil. He really showed us how and why that’s true. MMT, modern money, shows us why we can actually get all the things that we, all progressives, preach about. It shows us that we’re actually really messing up how we preach about it and we’re sabotaging ourselves. So in February, I did a deep dive and now my life completely changed. Now a big part of my life is teaching modern money to other people. So that’s why I’m here.
G: okay so let’s get into it. What is it?
J: All right so there’s two –
G: Talk to me like I’m six years old because I’m not – I was a film major, I did not have an economics degree or anything like that, so.
J: You – yeah, and that’s the trick. You are completely capable of handling this. The only, the hardest part, the mindbenders, is that we have to discard all the misinformation that we’ve been taught our whole lives – I
J: – and then relearn the basics amount of money it’s so it is a mind bender – it’s a serious mind bender, which is why this is going to take a little while –
J: – but it is a mindbender because we have been miseducated our entire lives, not because it’s a difficult concept.
G: Ah. Got it. Okay.
J: It’s so conflicting. It’s so conflicting. Okay.
G: So we’ve also told the world is flat and then some guy gets on a boat and is telling us the world is round and we’re all going to fight. We people have a hard time understanding it.
J: Right. You have to discard what you know that’s wrong before you can start understanding what is right.
J: So there’s two stages of learning. One is getting through those mindbenders. Then two, is once you’re through those mindbenders then you can learn all the deeper stuff. That takes a lot of time but it’s not mindbenders, you know what I mean? It takes time and patience but once you get through that initial wall, then you’re good.
J: I can teach stage one. I can’t teach stage two. I don’t have a deep enough knowledge. I’m not pretending that an economist or anything. I’ve only known this for a few months – February, March, …, June, whatever, four or five months now. But I’m really good at teaching stage one of getting it through the initial mindbenders.
So I don’t have a deep enough knowledge and I can’t handle debate, I can’t handle skepticism. You know, someone throws, “well what about the Federal Reserve raises interest rates.” I don’t understand, I don’t know you know. So I want to ask you and your viewers, please, while we’re talking, I really hope that you can have an open mind. I know you will. I want you to ask questions, I want you to interrupt me. I want this to be tailored to you know your state of mind.
But when we’re done you should be absolutely as skeptical as you need to be. You should do your homework and you should decide the truth for yourself.
So that’s like sort of the ground rules. I can’t handle someone who’s confident in the wrong thing and be able to refute that.
J: So. Okay. So, you’re going to quickly learn what I have to teach you. There are plenty of people. Particularly lots all over Real Progressives. Geoff Ginter and many people in Real Progressives and many other places. And MMT economists that they are in touch with, would all be happy to talk with you. Especially someone that reaches so many.
G: Who is the MMT economists? Is it a bunch of them?
J: Oh, there’s plenty. I mean, Bernie Sanders – Stephanie Kelton was Bernie Sanders’ economic advisor for his campaign. She was an advisor – She’s, she’s probably the first one you should –
J: Stephanie Kelton. And actually I’ll tell you. The first video you should probably watch is called “Angry birds and deficits” by Stephanie Kelton. It’s just an hour-long talk. Sort of on the concepts that we’re about to talk about. But, you know, she’s more elegant and all that. But there’s plenty. There’s tons. I can give you some notes if you want to put them in the show notes.
J: Okay. So I want to start off with two scenarios, okay? Two scenarios. Trust me, this is all going to come together. But we’re going to start with two scenarios.
First, I want you to pretend that you’re the father of twins. It’s almost their birthday. All right? You go to them, you ask them, what do you want for your birthday? One of them tells you that they want a big-screen TV, the other one tells you that they want a video game system. Neither of it’s a surprise. They’ve been wanting this for years. They’re passionate about it, you know it’s going to make them happy. So you go to the store, you look around, you do some comparisons, and you find out, unfortunately, you can only afford just one. So you go to your kids and you say,
“I’m really sorry but our family budget, the amount of money that we have, will not allow me to buy both of you a present. I can only afford to buy one of you a present. You have to share it, you know, I’m not trying to be mean. But I can only afford to buy one of you a present. So this is what we’re going to do. You have to convince me which one I should buy a present for. You have to do analysis and research. You have to give me the pros and cons, you have to tell me why you’re so passionate. You have to tell me why, given our family budget, given how much money we have, convince me that you are the ones that should get the money and not your brother.”
And so they spend a lot of time doing this. They spend a lot of time on this research. They consult with people. They do their own research, in libraries, or whatever it is – with the family budget. They spend a lot of time and they hand in a paper to their father of all this analysis. The father reads the papers and decides for, whatever reason, that the one about the big-screen TV is better. So he says, “I’m buying a big-screen TV. This is great. Good job. You did a good job, too, but it’s just – you know, this was better. That’s what I’m deciding. So he buys this big-screen TV. You have to share it, but I’m buying it for you. I’m sorry I can’t buy it for you. We just can’t afford it.”
And it’s upsetting. It’s upsetting because you know how passionate he is. You know how much he wants it. You know how hard he’s been yearning for it. So it’s upsetting.
Okay, so, done.
Scenario number two. Same exact thing, but this time, you are a father of twins, and you are a multi-multimillionaire. Okay?
Same exact thing. You have two twins it’s almost their birthday, so you ask them, and you say, what do you want for your birthday? One of them tells you a big-screen TV, one of them tells you a video game system. You know that this is what they wanted for, you know, forever, so it’s no surprise.
You go to the store, you look around, you do some comparisons and you realize you can only afford just one. With the money that you have and the budget that you have, you can only afford just one. So you go to your kids and you tell them, “I’m really sorry but I can only afford just one. We only have so much money we have our budget,” and so on. He tells his children, “You have to convince me which one of you deserves this present.”
So they spend all this time doing their research, all the same stuff. All of this effort, all this time. And obviously it’s competitive, there’s going to be some resentment, there’s going to be maybe even some backstabbing, right? They give you the research paper. The father reads the research papers and he decides the big screen TV is better. He chooses that one. He buys the big-screen TV and he says, “You a great job. You have to share it. You know, I’m not unreasonable, but unfortunately I can only afford this unfortunately you did a good job but I can’t afford the video game system this year.” And it’s it’s upsetting because you know how much they wanted the video game system you know, you know, on and on and on.
And that’s completely insane, right? You are a multi multi-millionaire you can afford to buy both of your children presents. You can afford to buy anything and everything you want. But even more than that, why would you even bring up the topic of money? Why would you even bring up the topic of affordability? And even more than that, why would you make your children spin their wheels and take all this time to do all this research for something that doesn’t even matter? Okay? And even more than that, why would you pit your children together when there’s no reason to do so?
Okay? So that’s just a teaser. Now we’re going to go on. Bring that up to the United States. So that was the end of that scenario, the two scenarios. Now I want to bring this to the United States. I think I said this in some social media stuff to you, that –
It’s a travesty that the United States chooses endless war, excessive military, and tax breaks for millionaires. It’s a travesty. It’s obscene.
It is a travesty that the United States chooses to not give us Medicare for All and free college and living wage and to fix our poisoned water. It’s terrible.
But the even bigger travesty is that the American people have been tricked into thinking that we only have enough money for one or the other. That we have to choose. And that we spend most of our time analyzing and justifying and researching why we should be able to afford this, when the United States can easily afford to give us all of it.
They can keep their endless war, they can keep – I mean temporarily, this is not a good thing, but – it shouldn’t be a prerequisite to end endless war and to reduce the military (because it’s ridiculous) and to raise taxes on the wealthy (to get rid of immoral income inequality). That should not be a prerequisite to getting what we want.
[18 minutes, 0 seconds]
Okay. So, I’m glad you brought up a pony before. So next section here is – I mean, I’ll stop there if you want to say anything but this is obviously a teaser. It’s a teaser for what we’re about to go into.
J: If you want to say something before we go on.
G: Yeah. I guess, I mean, some of my questions – I just I feel like there’s going to be some sort of bigger reveal. Because, right now, I’m still in the – so, the United States government is like the millionaire in the scenario who has the money for all of this stuff. My only concern – I mean the question that you asked, why would he, why would the dad pit the two sons against each other? Well that’s obvious they want to keep us divided I mean I talk about that a lot on this show. They want to keep us distracted and divided.
J: Those two sides are not exactly what you think. Those two sides are the powerful and the powerless. It’s not, you know, black and white people, separating them with racism or anything like that. But go on.
G: Sure it is a class war. It’s the one-percenters versus everybody else. The tactics that the one-percenters use to keep the 99% divided is race and red state, blue state and whatever else they can find. Which is why – that’s what I heard, at least with the “well I need to keep my two sons fighting with each other so they don’t realize that dad could take care of everything that they want so I’m going to get them to waste all this time on these two bullshit proposals over with which is better.”
G: So that all makes sense to me.
J: Yes. So the money thing is…was… There’s a bigger picture than money.
J: So, we’ll get into that. Okay. So, hopefully by the end of the discussion you’re going to understand really why all this is true.
So the Pony for All Act of 2018. So the Pony for All Act of 2018. So I want to take a ridiculous scenario and take it very seriously just for a few minutes. So Hillary Clinton in her book, “Bernie Sanders oh you want to give everybody a pony that’s so nice everybody would love a pony but how’re you going to pay for it?” I want to say that, actually, not exaggerating, not silly: It is truly possible for all for every American to get a literal, actual, biological pony. It is possible. Okay? It’s ridiculous that we want to do that, but it is genuinely possible that we could do that.
So I have the hypothetical: I have great news that our government is suddenly not corrupt, they have all the money that – money is no object and Trump has committed that he’s going to sign the pony for all act of 2018 tomorrow. Okay? So he does and that’s great. Great surprise. It allocates, this Act, this law, allocates ten billion dollars and it requires by next week on Thursday that everyone in the country gets access to a free pony. Okay?
So ten billion dollars. The law is signed – the bill is signed into law. Ten billion dollars floods into the economy for the purpose of enacting this law that everyone in the country gets a pony for free. And it’s got to happen by next week Thursday. My question to you – and with all my questions I’m totally willing to rescue you but I just want to throw it out there: What happens? Ten billion dollars floods the economy to enact the Pony for All Act of 2018. Next week on Thursday, every single American gets access to a free pony. What happens?
G: Well, I guess all of the ancillary pony businesses would see an uptick, right?
J: That’s true.
G: The feeding, the grooming –
G: – the veterinarians, the blacksmiths. The pony –
J: Oh, blacksmiths. Yeah.
G: – saddles. Whatever, all that stuff. You’re going to need a gate for your ponies. Now everybody has to go buy a gate for their pony. And they need to buy a feeding thing. They need to clean up all of the pony shit. And so now there’s all of that business, right?
G: And then how is everybody going to continue to feed this pony, now that they have them? Because the feeding and the veterinary bills over the life of a pony. Actually now, you might be like, “Wow, I didn’t want this pony because oh now I have to pay all these things for it.”
J: You’re not required to have one you’re just, legally, you have the access to one.
G: Access to one. Okay.
J: Yeah. So, and actually, if everyone in the whole country has a pony then what happens when it dies? That clearly has to be a big issue.
J: So, yeah. You’re on your way. But I’m asking you, can everyone by next week on Thursday have a pony?
G: I would say no. There’s not enough ponies out there
J: So, there (let’s say roughly I have no idea) but let’s say there’s a half million ponies in the country. There are around 320 million people in the country. There is no way that in one week that we can get everybody a pony. But ten billion dollars has flooded the economy to make this possible and there are 500,000 ponies and 320 million people that want them. So what’s going to happen? And again I’ll rescue if you want me to just say.
G: Yeah there would be fights, there would be battles, there would be political things, there would be all that shit.
J: And the prices of each pony –
G: – goes way up.
J: – would skyrocket.
J: That is hyperinflation. That’s inflation. Okay? So, as you just said, there is not enough real resources (ponies, fences, veterinarians, you know, food, stores that sell this stuff, and all this disposing of dead ponies we got to come up with, something for that). There’s not enough real resources to handle this.
J: Okay? But, again, I told you in the beginning that, although it’s completely ridiculous to want this, that it is genuinely possible to make this happen. So what is required to actually make this happen? So I’ll throw it out to you and then I can take it if you want.
G: Yeah I guess you would have to put in place a however timeline plan to get 320 million ponies, to get the veterinary infrastructure, to get the food infrastructure to get –
G: Right. Get the truck still where’s the pony meal food going to come from? Where is it grown? Where is it processed? How’s it distributed? All that stuff so we then –
J: Educating people to be able to you know we’re going to need a lot more breeders and veterinarians and so on.
G: Yep. So then we need all those people we need a million more blacksmiths we need all this stuff so then we write what a five-year plan in place, let’s say, to get the pony infrastructure in place, so that every 320 million ponies can happen.
J: Exactly. So you said everything when I first asked you, what’s going to happen until next week?, and you said all of these things. The life cycle. Birth to death. A lot of mommies and daddies are going to have to do their thing over and over and over and over again. So, I would have said ten years but five years is perfectly reasonable, that some serious amount of time is going to be necessary to make all this happen. The core of it is the mommy and daddy ponies need to do their thing.
That’s going to take, you know, gestation for whatever to reach 320 million. So you are exactly right. So the entire lifecycle needs to be considered and given to I’ll say ten years. Given ten years, flooding $10 billion into the economy is reasonable. Okay? It’s reasonable. It’s not reasonable in one week. It’s reasonable in five or ten years. Okay? Because all the real resources – our productive capacity – can handle it.
J: Our productive capacity can handle it. Our real resources can handle it.
G: Physical production of things. These are physical things that need to be made: food, medical supplies, veterinary supplies, all the physical things that need to be produced and distributed and sold and all that stuff.
J: Right. Physical things and labor and the most important – not the most important one, the most unusual one – is time. A real resource is time. That’s what’s most important. The money doesn’t matter. If you flood more money into the economy than our productive capacity can handle, that’s bad. That causes inflation. If you pour money into our economy with consideration of our real resources, in consideration of our productive capacity, no problem at all. Everyone in the country can get an actual pony. Okay?
So, that’s it. That’s it for the pony thing. So you get it. Real resources are what’s important. Money’s not important. So, okay. let’s switch subjects. I’ll stop there and see if you have any comments before I switch, if you want.
G: I guess at this point everything is sort of – I mean that simplistic hypothetical makes sense to me. The two children, the rich dad and the middle-class dad with the twins. That makes sense to me. And this everybody 320 million ponies how do we actually do that even though we have plenty of money? how do we actually do that? All of that makes sense to me.
J: Okay good. All right good. So, next subject. And this is all going to come together I promise
You have a dollar bill in your pocket. An actual dollar bill. Where did that dollar bill come from? I’m asking you to to answer.
G: Let’s say it came from change when I bought something at the store using a five.
J: Okay. Where did that come from? Where did that – you got it from somewhere?
G: Sure. That five, one of the “Make Gotham Great Again” shirts that I sold after one of my shows on the road with Ron Placone this past week. On the last night, I took one of the $20 bills from this “Make Gotham Great Again” shirt that somebody bought at the show in Atlanta. They gave me that and – That’s right.
J: So merchandise. You also have your patrons.
J: So merchandise and patrons is probably a significant amount of it.
G: Yeah. Ad revenue. Yep, and money from the shows and all that stuff.
J: Okay. So that’s where you got your dollar from. But that’s not where the dollar truly came from. Where did they get the dollar from? Where did your patrons get the dollar from? Where did the person who bought your shirt get the dollar from?
G: Right. They got it from wherever they work. Whatever jobs they have.
J: Okay. I’m asking you to keep going and keep going, until we reach the final thing. Where did that dollar come from?
G: Right so they work from a company that sells a bigger thing and they got money for that and… then… Yeah, I guess this is where your brain starts to get caught in loops.
J: Do you have a guess? I can say.
G: I mean, I guess, if you to get to – it came from the Federal Reserve?, or it was printed? Or…
J: Thank you. All right. So is that is that the final answer?
J: Okay. The Federal Reserve. You’re right. It comes from the Federal Reserve. The Federal Reserve makes the money, but who instructs the Federal Reserve to make that money?
G: The Illuminati. No.
J: That’s your skepticism after we’re done.
G: Well, the thing about the Federal Reserve what I know about it. It seems like it’s sort of its own thing sort of a rogue institution.
J: Okay, well, that’s the skepticism but that’s not what I’m teaching you that’s not as I understand it so I’m asking you –
G: All right. So then so just from a non-conspiratorial standpoint, the United States government instructs the Federal Reserve.
J: That’s right. So the Federal Reserve is instructed by the Treasury, the Treasury is instructed by a new law, and the law was created by our Congress.
J: The legislative branch. It comes from the Congress. The Congress is – the Constitution article 1, section 8, gives the Congress the monopoly power of creating the currency. So they write a law, they put a number in, $10 billion for ponies. That bill is passed into law, then that instructs the Treasury, instructs the Federal Reserve, goes to the state reserves, goes to the actual banks, goes to the companies that are required to make that law possible.
Okay? I know that’s high-speed but that is what it is. Ultimately it’s the Congress
J: Okay? So the Congress makes the dollar.
So, they’re the monopoly currency issuer. They’re the only ones in the world that can make the currency. Not me, not you, not companies, not States, not municipalities, not other countries, not China, not Russia. Everybody else except for the United States Congress is a currency user of the United States dollar. Everyone. So everyone except for the Congress is in exactly the same position. China is no different than me or you, aside from just the amount. Okay? So currency user, currency issuer. Monopoly currency issuer.
Creating the dollar is a child’s game. It is no different than drawing a one dollar bill on a piece of construction paper. It is no different than drawing a trillion dollar bill on a piece of construction paper. A child can do it whenever they want how much they want however much they want and for whatever they want and so can the Congress they should do it responsibly as we’ve discussed in the pony thing. It is foolish to create infinite money, but they can. They can create infinite money. So it is a game, it’s a social construct, and it’s a choice. Money is a game, money is a social construct. It is not backed by gold. It used to be backed by gold, but in August of 1971, it stopped being backed by gold.
G: Thanks to Nixon.
J: Thanks to Nixon. A lot of the textbooks for economists were written before that. So a lot of the economists are still learning what is no longer true. They’re still learning on the gold standard. Some of them. So, as much as they can create the dollar, as much as they want, whenever they want, for whatever they want. So they’re the monopoly currency issuer.
Okay, so if they can create as much, whenever, for whatever, the United States dollar, do they need any income? If you can draw a trillion dollar bill on a piece of construction paper, and that is legal tender. And you’re the only one that’s allowed to do so, would you need the Graham dollar as income to be able to buy something?
J: Okay. So the federal government, as a currency as a monopoly currency issuer, does not need any income you said no just confirming correct? Yes, correct. Okay. So it makes no sense –
G: – that there’s taxes.
J: You’re jumping ahead here.
G: I’m sorry.
J: All right. So it makes no sense for someone that can create a dollar as much as they want, whenever they want, for whatever they want, to have any income. So why, then, do they collect taxes and why do they borrow? So that’s my next question to you.
G: Man. That is a – that is a – this is the – I see where we’re getting into the mind-bendingness of this.
J: I know. But, again, I wanna – again, I really want to emphasize this is only mind-bending because of how badly we have been –
J: – miseducated our entire lives.
J: If we started off this way in elementary school, this would be a no-brainer.
G: Yeah. We’d all go there’s no reason for taxes. Which is – this wasn’t an oversight, that we are all – that this was missed by our textbooks because they don’t want everybody rising up going, “Wait a minute you don’t need to take a dollar from my paycheck.”
J: Well, actually, taxes are extremely important, which we’ll get into in a minute.
G: Okay. So, then I don’t have – I can’t find an answer to your questions.
J: Okay. So, China – again China is just like anybody else, they’re just like individuals and companies and municipalities and states. They have a lot of money. They have, whatever, five trillion dollars? But the United States can draw five trillion dollars on a piece of paper tomorrow, if they wanted to. So this – do they need to borrow money from China, when they are the only ones that can create the money and they can create as much as they want, and so on. Do they need to borrow money from China? Do they need to borrow from money from Russia? Obviously the answer is no. The answer’s no.
And it’s like, it’s just as silly as saying the Philadelphia Phillies – I was listening to a game years ago and there was like 21-2 or something. So the Philadelphia Phillies call up the Pittsburgh Pirates and say, “listen we need to borrow some points we got to get some points. You know, it’s a really high scoring game.” It’s stupid. It makes no sense. Those points are a game, are a social construct, are a decision. It’s not – there’s not a bucket of points in the Philadelphia Phillies back office.
So, it’s very similar to the Congress creates its own money, so clearly, we don’t need to get money from anybody else, whether it’s a country or a person or a company or a state. Okay. So the next –
G: Yeah. So why do we have a national deficit? Why are we collecting taxes? All this stuff? This is really…
J: Right. Right. So I can’t really address the borrowing in depth. I can’t really address the debt in depth. But what I can address is – so since we don’t need any income – the federal government – and we’re only talking about the federal government. Since the federal government can make its own money, doesn’t need any income, then why does it collect taxes? And – you I think you’ve made it clear that you’re not sure at the moment and there’s – they’re very important.
G: My supposition would just be, you know, my – is what I always go to with this government. It’s some form of control and keeping people down and keeping people in line.
J: That’s not that’s not so far off. The ideal is, is keeping people down is not necessarily true. They can use it for that reason. But the pure reason is not to keep people down. But, absolutely, control is a big part of it.
So this is the phrase that I want you and your and your viewers to remember. If you remember nothing else from this whole talk this is what I want you to remember. And that is this phrase:
Federal taxes do not fund federal spending.
Federal spending funds federal taxes.
G: Okay. Federal taxes don’t…
J: Federal taxes do not fund federal spending. Federal spending funds federal taxes. If you remember nothing else in this whole conversation, that’s what I wish that you would remember. That one phrase.
G: Fed spending funds federal taxes.
J: Yes. So just like we said, when the “federal government spends,” that is exactly the same as the “federal government creates” the dollar. They choose to spend ten billion dollars for the pony bill and that by definition means that they create ten billion dollars. So you would think, oh, I need income before I can spend, and that’s for everyone in the country, except the federal government. They have to spend before they can tax. So we’ll get into that.
So taxes are very important, but not because – you know, actually I’ll stop you if you want to say something or ask a question. So we’re getting into heavy duty stuff.
G: Now we’re getting to the heavy-duty stuff. So I want to let’s – Let’s end part one on this: federal taxes do not fund federal spending federal spending funds federal taxes. So everybody watching at home, watch the second part of this video, where we’re going to go into the details of that. This first part we went into the very simple explanations with the twins and the rich dad and the regular dad.
J: The ponies.
G: And the mind-bending thing that, if Congress is the one writing – creating currency, they don’t need any money. So now all of these questions are flourishing, flying out of my head, which I’m sure –
G: – all the viewers are like what the fuck?!
J: All these blobs of knowledge with no connections between any of them.
G: Woh! Why are they taxing us? Why is there a deficit? Why is there all of this stuff. And we’re going to get to all of that, you guys, with Jeff from Citizens’ Media TV in part two. So please watch that.
[40:30 in audio-podcast]
G: Hello everybody. Welcome to the Political Vigilante on the modern money theory tutorial that I am going through with Jeff Epstein from Citizens’ Media TV. If you watched part one of this – please watch part one before you watch part two. So, Jeff, for some people who have it’s been a while since they watched part one, let’s say, just give us a quick recap on what we covered in part one of this video.
J: Well, if you wouldn’t mind if you give it from your point of view and then I’ll fill in the blanks?
G: Ok, that’s great. So what Jeff explained to me, we did a couple hypotheticals. The big one though. The big takeaway is, let’s say, there was the Pony Act of 2018. Where everybody wanted a pony. That the federal government said, we’re going to spend ten billion dollars to give every American, 320 million plus people, their own pony. We started to realize that we have the money to do that, but there’s all these other resources we would need. Blacksmiths, veterinarians, food – all this stuff and so –
G: Fencing. All of these physical products that would need to be created and distributed. There’s not enough ponies. There’s only 500,000 ponies in America (these are hypothetical numbers obviously) and – but there are 320 million people (that’s a pretty real number). So it would take five to ten years to breed 320 million ponies, to put the infrastructure in place, and all of that. And then, you also –
J: Yeah, and let me add to that, if I may. Training people, because –
J: – they’re going to need a lot more labor and in – and most, not importantly but most unusual, is time.
J: We can’t do it in a week, which would cause inflation, but we can do it in five to ten years.
G: Five to ten years. Yeah. I mean we’re going to need more truck drivers to drive the feed around and the medical supplies and all this stuff and the fencing. There’s just going to be a whole – millions of jobs and a big infrastructure, logistical undertaking to get this done in five to ten years. So, it’s not about the money, it’s about the physical resources and the time.
Then you pointed out that – you asked me where money came from and we got to the conclusion that it came from the Federal Reserve, which is controlled by the United States Treasury, which is controlled by Congress. So, basically, Congress creates its currency. So then you proposed this big, this big, this big explosion of a question: So, Congress can write its own currency, why would it need any revenue? Why would it need tax revenue? Why would it need to borrow money? Why would it need any of those things? And then we needed to take a break so that I could put ice on my skull to figure out why this happened. So now that’s sort of catching everybody up. So let’s now get into the answers to those massive questions.
J: Okay. So, again, thank you so much for having me. You reach so many people and this is important. Not to just teach you but to teach everyone that watches you. So thank you.
G: Well I appreciate you being on the show, because the purpose of this show, for anyone who’s finding this show for the first time. What Political Vigilante is, is, I want to educate people. I want people to wake up to the world that we’re living in. We’ve all been fed a lot of propaganda Kool-Aid, from – “There’s the two parties are so different from one another,” to “The media is all” – you know, it’s nonsense. It’s all the same in my opinion. There’s one party. They’re all for banking and war and all that other stuff. And anyway. That’s what the point of this channel is to get people to open their minds up. I like to be open to it which, when you approached me about, hey Graham, I would love to come on your show and teach you MMT, I’m like let’s do it. Because I like talking about subjects that the corporate media won’t talk about. Which there’s no way in hell they’re going to talk about this. I want this show to educate and inform, and hopefully it’s a little bit entertaining to watch it’s not boring. So.
J: Okay. Alright. So let me just add a couple things before we go on which is, I mean, you got to watch part one there’s just no way you can, but – Productive capacity. Real resources. You said the Congress can create as much money as it wants, whenever it wants, for whatever it wants, and it’s the only one that can do it but that doesn’t mean that you shouldn’t be responsible about it. We talked about the ponies. You can’t do it in a week, that would cause insane inflation. You can do it in five to ten years, because that considers the real resources. That considers the productive capacity. So, I just want to remind people of two definitions and then we’ll go on, which is – and actually the phrase, I’ll say.
The United States government, the federal government, the Congress specifically, is the monopoly currency issuer. Everybody else: people, states, companies, municipalities, cities, other countries, China, Russia – all of them are currency users. They’re not allowed to create it.
G: And real quick. Every country is the creator of its currency. Like the Chinese currency. The Chinese government are the only ones allowed to create it.
J: Well it depends on the currency. I don’t know about China specifically, but fiat currencies. We are a fiat currency. The EU EU is, but not the countries in the EU. The EU countries are all hooked into, are required to use the Euro.
G: Explain what a fiat currency is.
J: That’s exactly what we’ve been talking about. They get to create the money, as much as they want, whenever they want, for whatever they want. And they’re the only ones that are allowed to do it. And it is not backed by anything physical. It’s not backed by gold. And that is what changed. It used to be backed by gold before August of 1971. It is no longer backed by gold, since Nixon changed that in August of 1971. So a fiat currency can create its own money and all that stuff and it’s not backed by anything. Canada, Australia, Japan, England, I think New Zealand I don’t know about China they’re all fiat currencies. The Euro is a fiat currency but all the countries that use it, they’re users. They’re just like our states, they use the Euro. They can’t create it. That’s why Greece is in such a hard spot.
G: And so when it was backed by gold, so it was basically, we have what – I’ll just pick a random number – we have a trillion dollars in gold so therefore we have a trillion dollars in paper currency.
J: Right and if you create more, if you create double, then each dollar is worth half as much.
J: But that’s not true in a fiat currency. In a fiat currency, money doesn’t matter.
G: It’s whatever I write on the bill.
J: Only real resources and our productive capacity and time matters. That’s the only thing that matters.
J: So, okay so the phrase that I want people to remember. If you don’t remember anything, else please just remember this phrase:
Federal taxes do not fund federal spending.
Federal spending fund federal taxes.
Okay, so federal taxes are very important but not because we need their money. They’re really important. So why does the government collect taxes? Number one we’ve already spoken about. Control inflation. So if there’s 10 billion dollars in an economy for Ponies, the 2018 Pony for All Act. Then clearly, three days later, they realize, “uh oh we can’t get this done in a week this is going to cause hyperinflation.” So they tax money back to control that inflation. So they reduce the demand. So that’s an extreme situation. But if there’s like a disease in farms and now all of a sudden we can’t produce as much corn, but people want as much corn as they did yesterday, then that might be too much demand for our productive capacity to handle. So one way of handling that is to tax that money.
G: Oh, so then if you if we put a giant tax on the ponies now there’s a bunch of people that go, well I don’t want, I don’t want one now. I know I can have one but it’s too much so I don’t want one.
J: Exactly. That’s one way of doing it. And you could also tax the people, so they simply have less money to do anything with. So, I want – a great example, a really great example for emphasizing this is war bonds. World War two? So in World War two, they offered war bonds. “Help fund the troops.” “Help fund the war effort.” We now know that it didn’t fund anything, because the federal government doesn’t need the money. But what it did was – all of the resources of car companies went instead of making new cars, went into tanks and ships and planes and artillery instead. I’m pretty sure this is, if not exactly true, it is extremely close to true, that not a single car was produced during World War II. But the money in people’s pockets didn’t change. So the demand, roughly speaking (the war changed stuff, but roughly speaking). The demand for new cars didn’t change. They had the same amount of money in their bank accounts and their investments and in their pockets, to buy new cars. But now that the supply of new cars cratered because all those resources were going to the war effort.
So they gave they offer the American people war bonds. They said “fund the effort,” “fund the troops.” Buy war bonds. Give us a thousand bucks, or whatever you want, but let’s say a thousand bucks. Then we’ll hold it for ten years to use it for the war effort (no they won’t) and we’ll give you your money back in ten years and we’ll give you a five percent bonus. What that did – the federal government didn’t use that money at all. They just wrote down “Graham Elwood, thousand bucks, matures in 2023, five percent interest.” They just wrote it down, but they don’t use that money for anything. What that did is it removed that money from the economy to reduce demand.
Okay so if you have a question.
G: I don’t have a question really.
J: I assume that makes sense.
G: It makes total sense to me. It sort of opens up as to why – You know, the more I do this channel, the more I learn and actually, the more the answers actually become very simple. Which is just it’s about money and power and control like – Everything that’s done is to do that. And so, it’s like, we just need to take the demand out so, you know, the demand for cars out of there, and put it – yeah. It’s mind-boggling in the one sense, and then makes perfect – because that’s –
J: I think it’s mind boggling because you’ve been taught opposite world.
G: Yeah. Right. For my whole life I’ve been taught –
J: Right. What it boils down to is that they pretend that the federal government is exactly like you and your household. That’s what they do. That’s how they trick you. It completely has nothing to do with it. But they trick you and they pretend that it is exactly the same. Obama saying “oh we can’t afford it we have to bring out our credit cards.” Credit cards? What does that mean? “We have to borrow from China.” All of this stuff is pretending that the federal government is exactly like you, because you’ve never been taught what the federal government is like so you assume that it’s just like you.
J: Okay, so control inflation. Taxes are very similar to war bonds in the sense that it takes money out of the economy. Except taxes are coercive. They’re not voluntary. Taxes aren’t just ten years they’re… infinite years. And taxes do not, obviously, they don’t provide a bonus. But otherwise, they’re pretty much the same thing they remove money from the economy.
Government doesn’t use it in any way, aside from maybe notating how much it was. But they don’t use it in any way. Okay. So that’s number one. It’s controlling inflation. And feel free to interrupt me, you know, if you have any questions. So that’s number one. There’s two more reasons.
Number two is to impose moral decisions. So we as a society decide – and you know, pretending that the government is not corrupt. We as a society decide that we want to, not stop people, we want to discourage people from drinking too much alcohol. We want to discourage people from gambling too much. Cigarettes too much. We want to discourage people from activities that cause pollution. So we want to tax those activities.
We want to tax gambling some but not completely stop it. We want to tax pollution activities, activities that cause pollution, a lot. Because, you know, we’re all gonna die. Climate change. So it discourages behavior to tax someone for vices for behaviors that cause problems for society. So we can raise taxes to discourage those behaviors. And we decide how much we want to raise them. Do we really want to stop it or do we want to just, you know, slow it down? And income inequality. We can raise taxes on the rich to lower income inequality. So, I’ll go back to that one in a minute.
We can also encourage behavior by lowering taxes. So if people want to buy solar panels for their houses, we could lower your taxes if you want to buy electric cars. I’m sure there’s a million other examples I just can’t think of at the moment to encourage behaviors.
G: Yeah so the one of the things I got by buying electric car was I got a tax break I can write off some of my money that I brought in right because I bought an electric car.
J: Okay. So encourage behaviors by lowering taxes. And again you decide how much you want to decrease those taxes. Do you want to really make it cheap? Do you want to just make it a little cheaper? and so on.
So income inequality we want to discourage income inequality at the immoral levels that we currently have. Okay? So we want to tax the rich because, it’s fine if you want to be rich. There’s nothing wrong with being rich you can be 300 times more rich than everybody else. You know, whatever we as a society decide is moral. But at some point it gets to the point where they’re getting rich by extracting out of other people’s well-being. We are currently at the state where it is so immoral that they get to buy the politicians with their pocket change. They can then create the laws and create a cycle where that becomes easier. So we want to tax the rich because we decide as a society that this level of income inequality is immoral and unjust and wrong.
Not because we need their money.
J: And that for me was a lightbulb. We do want to tax the wealthy. We do want to tax the wealthy. Say, we say, you can have a billion dollars. You can have a hundred million dollars. Whatever we as a society decide. But after that? that portion of it – not all of it, but that portion of it – above that immoral boundary that we decide? That’s going to be taxed like ninety percent. They can cry, “Oh, ninety percent, that’s really obnoxious.” No, we’re only taxing the obscene part ninety percent. Whatever we as a society decide that is. So that is how we can control immoral levels of inequality stop them from buying the government stop them from extracting wealth from others and so on. But we don’t tax the rich because we need their money.
Everybody talks, even Bernie, talks about we need to tax the rich let’s use it for infrastructure and all that stuff. Tax Wall Street speculation raise the cap on Social Security.
Yes we should raise the cap on – we should eliminate the cap on Social Security. FICA tax. Which pays into Social Security, helps pay for Social Security (which is nonsense, which is nonsense). But FICA pays into Social Security, so we feel invested and years later say, “I’ve been paying my whole life, don’t take my Social Security away.” It’s complete nonsense but setting that aside.
Bernie Sanders says we should eliminate the cap on Social Security and we absolutely should. But not because we need the money. Because Social Security isn’t paid for by taxes. It’s not paid for by FICA taxes. FICA taxes just disappear and they go away. They’re not used to pay for Social Security because simply because of everything we’ve been talking about. You eliminate the cap on Social Security taxes, not because we need the money, not because Social Security is running out of money (because it doesn’t make sense for a federal program to run out of money. That doesn’t make sense) We eliminate the cap because it’s a regressive tax, that only the powerless are paying that tax.
The powerful are not paying that tax. We should really be eliminating that tax for everybody. That’s what we should do. Because it’s just a trick to make people feel like they’re invested. It is not actually paying for things. There’s actually a quote from FDR saying it was just you know I did it because there’s no way that people are going to take it away from them because they’re paying into it. But they’re not. So, I’m not going to go into Social Security but that’s a really interesting subject.
J: Okay. So, we tax them we tax the wealthy because it’s moral and just and right. Not because we need the money.
Okay. So, if you have any comments, there’s one more reason. There’s three reasons.
G: I think – I’m trying to see if I have any really major comments. I’m really, just sort of digesting all of this.
J: Yeah, I know. It’s high-speed, I know.
G: But, right. It all actually sort of it does connect and does make sense. Since the government is writing its own currency it doesn’t need taxes. But it uses it just more sort of a moral or ethical guideline, which is why when mainly the Republicans like tax breaks for the rich, it just shows you what they think the rich should – they trust that the rich are going to do good with their money which is not the case.
J: The rich want to become the government.
G: Right well they are.
J: The rich want to eliminate the government and become the government. Not just, you know, create the law. They actually want government to step out of the way. They don’t want to give us health care because they want to profit off of our health care.
J: Which makes our laws about health care inapplicable to their private companies. They want to get public schools out of the way so they can have private schools, which are no longer susceptible to public records laws.
J: So it’s not just making money. It’s actually getting rid of the government. They want it to just go away so that they become –
J: – law and the government that’s how I see it. So okay if there’s anything else that was the –
J: Okay. So reason number three. The last one. Is to “drive the currency” and “drive the economy.” I know that’s meaningless when you first hear that. Taxes drive the currency and drive the economy. I’ll totally explain that. You want to soak that in for a minute?
G: I don’t get that at all.
J: You shouldn’t. We’ve never been taught it. It drives the currency it drives the economy. All right so I’m going to do this with my last analogy and that is:
I’m a father. I have two boys. They’re about to be nine and twelve. They barter and trade with each other. They, you know, my little one will sneak behind our backs and say to the older one, “Please do my homework, I’ll make your bed for three days.” My older one will go to the younger one and say, “Please take out the trash. I’m too busy. I’ll give you thirty minutes on my iPad tomorrow.” So they barter. They trade.
And then I come in and I say, “Guess what boys I’m going to give you allowance.” And I take out my old boxes of old business cards and I give them – I tell them, “I’m going to give you ten business cards a week for your allowance, both of you.” They look at me like I’m nuts. What do they care? Like, what, why, what do I care about your business cards? I go, “Well, you can buy things from each other. So instead of, you know, “Make my bed, I’ll do this for you,” “Make my bed and I’ll give you two business cards.”
They go, “Why in the world would I want to do that?” I say “You could also buy stuff from me and mommy. You could say, you know, chores. Can I pay you and I don’t have to do this or can I pay you and you drive me somewhere, or whatever.” Yeah sure. Then they say well can I go to a store and use this? No. And they look at me like I’m nuts. Why in the world would they care? Why in the world would they want to do this? They tell me, “I don’t want to do this. This is stupid.”
Then I tell them, “You’re going to get ten a week. But every four weeks you have to pay me fifteen in taxes.” They look at me like, “What in the world are you doing? What are you talking about?” I say, “I pay you ten a week and then every fourth week you have to pay me fifteen in taxes.” They say, “I’m not going to do that.” And I tell them, “Okay. Then you will be grounded for a month and you will not have any allowance.” Then they tell me “Fine. Well, then I’m going to go to a copy shop and I’m going to make a thousand copies of them. I’m not going to to worry about this anymore.” And I tell them, “Fine and then you will be grounded for six months with no allowance.”
And now they care about the money. They care about my business cards. Because I’m telling them that they have to pay taxes and if they don’t, they go to jail. If they try and counterfeit them as a currency user, they will go to jail for even longer. Now they care about my money. And now, instead of saying, “Make my bed and I’ll do this for you.” Now instead, they say, “Make my bed and I’ll give you two business cards.” Now they say, “Let me use your iPad and I’ll give you three business cards.”
Now the bartering is discouraged. You can still do it, but it’s discouraged. Because now you will be grounded for a month if you don’t pay your taxes. So I have just – I am now driving the economy. I am now driving the currency. My children care about the money now, because I make them care about the money. I’m not being a jerk. I’m not being unreasonable. I’m not trying to “keep them down” like you said at the beginning. But I am forcing them to use the currency that only I am allowed to create. Okay?
G: Right. And now they’re beholden to that currency so they can’t just barter. Now they need to go get a job that pays them that currency.
J: Maybe in addition to allowance, maybe they want to do extra chores. “If I do this can I get a couple extra,” or whatever. That’s true.
G: Versus, “I don’t need to get a job if I’m just bartering with you.”
J: Right. But you can’t go to Walmart and barter. So bartering is extremely discouraged –
J: – with taxes.
J: So, okay. So I am a monopoly currency issuer. They are currency users. They care about the money. What do I care about? Do I care about the money? I care about it from the point of view of controlling the people, but what do I care about it directly? What do I use the money for myself?
Let me ask the question again. What do I care about? Because I don’t – I’ll tell you – I don’t care about the money.
G: Well, you care about controlling.
J: That’s part of it.
J: That’s part of it. But there’s more.
G: I don’t know what else.
J: I care about my children’s labor. I care about the real resources. So the federal government, the only thing that they care about is the real resources. Real resources. In this limited example, I can only say labor. The analogy breaks down at that point. But for the federal government, they care about real resources. They don’t care about the money. They care about time and people, and things in the ground and things that grow. They care about real resources. They don’t care about the money, which is another way of saying they’re not limited by the money. They are only limited by real resources.
You can create infinite money. I want to emphasize: You can create infinite money if you want to but it would be foolish to do so without a consideration of your productive capacity of your real resources.
G: Oh. Going back to the analogy of the ponies.
G: Right. Right. Oh. That makes total sense. So going – Yeah. So, I don’t care about the money but I need you – Like, let’s say instead of two kids, I’ve got ten. One kid works my garden, brings food out of there. The other kid milks the cows and then sells that milk. Another kid builds chairs and sells those chairs to the neighbors. I get it. That’s what I care about.
J: Exactly. I need things to be done so maybe I’ll give them a couple extra bucks. Maybe I might spend extra into the economy to encourage more production. Maybe I might tax if they’re so flush with business cards that I might do some extra taxes for this week because something’s out of control or I don’t have the time to drive them somewhere or whatever it is. So that’s the controlling inflation thing.
G: Right. Your oldest son can now drive and you don’t want to drive the other kids around. So now you pay your son – yeah.
J: Right. Right. Okay. So that’s that. Now we’re putting all this together into these real mindbenders and it’s starting to come together. So that’s the end of that. Now we’re on to a new subject. If you want to say something, please feel free.
G: No. It’s all – It sort of all makes sense. I mean, a big part of what I do on this show is I always connect the dots. That’s the thing I always try to do when I cover a story about anything is sort of connect the dots and show the simplicity of it. Because the tactics – It’s control and I need resources and I need money and power which is – makes perfect sense to why the real reason for a fiat currency.
G: If everyone’s just out there bartering then you don’t need me and what do I do? I need these resources taken care of and I need people to do this labor and that thing and get this and build that and –
J: Yeah. And we are the richest country in the history of the world not because of money but because of the resources available to us. Because we lucked out with the land that we have. You know, we killed Native Americans and all that stuff. But we are blessed with the resources that we have. That’s why we’re the richest country in the history of the world. Not because we have a big pile of money.
G: Right. Because we – absolutely – we have the breadbasket to the world. If this was a desert, if this was like Afghanistan or some country like that that was all sand and rocks, we wouldn’t have all this.
J: Right. Right. Okay. All right, so next subject. Mechanics. We touched on this. So how is money created, specifically, technically? We went through this high-speed. We went through it backwards.
So Congress writes a number into a bill, ten billion dollars for the Pony for All Act of 2018. Ten billion dollars is written in there and that’s how money is born. Because they wrote a number into a bill. It’s passed into law. That triggers the Treasury to instruct the Federal Reserve to create a new line in a spreadsheet – literally a spreadsheet (at least that’s very roughly true). “Pony Act of 2018, ten billion.” Then there might be sub ones that break it down for what specific companies need it to make this law a reality. Then that money, based on – you know, 300 million dollars goes to a breeding company in California. So that portion of it goes to the state reserve in California. Goes to the Wells Fargo branch that this company has an account in and then that company is now legally obligated to use that money in order to [implement this law].
So all of these companies work together based on what’s in this bill to implement the Pony Act. Same with Medicare for All.
J: Same with anything. Same with Medicare for All. Maybe a trillion dollars for Medicare for All. It goes into – Treasury, Federal Reserve, goes to all these different companies. Training for the people that are going to be – the private insurance industry. We need to train them move them somewhere else pay them [unemployment] insurance. So that money is going to go to this organization, in this state reserve and this bank branch and so on. So it’s all the same stuff. So that’s how money is – that’s the mechanics of how money comes from Congress to the people.
Now paying your taxes. What actually happens? Mechanics of it now, not why, but the mechanics of it. What happens when you pay your taxes? So let’s say you pay a thousand dollars in taxes. You pay it in cash. You send in bills. Without exaggeration, without being silly, they shred it. They actually sell shredded bills as souvenirs.
If you pay it – most commonly, it’s paid electronically. This is not exactly true but it’s effectively true. When you pay your taxes electronically, what you’re doing is you’re giving the government permission to reach into your bank account and lower your balance by a thousand bucks. They’re not doing anything with that thousand bucks, they’re simply reducing your money by a thousand bucks. Which is no different than taking the score off of the game at the end of the game. It just disappears.
So money is born with Congress in a bill –
J: – and money dies with taxes. A temporary death is bonds. It removes money from the economy. Comes back to life with a bond. Okay?
I love this. I see the lightbulbs going off. This is awesome. You want to say something say something.
So they keep a record of your taxes. They keep your tax return. So they know how much you paid. But it’s not like they have a bank account filled with that money anywhere or a spreadsheet filled of that money anywhere. They just have a record of what you paid in your tax return. That’s all they need. That’s all the record that they need.
So same with Social Security. There’s not a bucket of money. You don’t steal from Social Security because there’s nothing to steal from. Social Security benefits are created each year. So, quickly, the Social Security Act of whatever, 1935?, created the currency in perpetuity. It gave (and this is not exactly correct, but again it’s close enough). It gave the Social Security Administration the currency issuing ability for a very narrow purpose, which is to dole out benefits. So when you hear somebody say Social Security is running out of money, we need to steal money for, you know, they’re stealing money from Social Security, it makes no sense. Because the Social Security Administration pays its benefits by creating the currency each year, for each person.
So these trust funds that people talk out? There are no trust funds except perhaps in just an accounting point of view. That’s the trick with FICA. They pay FICA and it goes into this trust fund which does nothing and is not used for anything ever, except for the the Governmental Accounting Office, the GAO, puts out this big estimate after every big bill. People trust the GAO because it’s nonpartisan. But the GAO was told in 1985 in some bill with Ronald Reagan, some law, that the GAO has to use the terms trust fund and debt and deficit, to give the impression that it’s going to run out of money in X years, that our debt is spiraling out of control, and Social Security’s going to run out of money in 2032, and now it’s three years earlier. Not because they [don’t] know better, but because the law tells them to. Because the Congress put it into law in 1985, to tell them to use these misconceptions to trick people.
Which is all an effort to privatize.
J: They say, oh it’s failing, and then five years later, say “see it failed, we have to privatize it, now we have to make money.” But if you understand the economy, how it really works, there is nothing to steal from Social Security. Social Security will not default by definition because that’s what the law said when it was written. The only way it will default is if our politicians decide for it to default. Okay. So –
G: So basically they just they’ve just like, well let’s create this political football to kick around.
J: It’s – I mean any program. The health care thing in England. They have free health care but theirs is different because they actually pay the doctors and hospitals – well no, they wouldn’t be employees of the government. They would still have private hospitals and private doctor’s offices. The government would just do the payments. It would take over the insurance industry. In England, the doctors and hospitals are in the government. So that’s different. But my point was that they kill these public programs by defunding, –
J: – and then sabotaging and then a couple years later pointing back and saying, “See, it failed,” and now they have to privatize it. That’s the excuse for privatizing it.
G: Ah. Which makes perfect sense.
J: Yep. Of course. So the federal debt.
J: The federal debt. We are a monopoly currency issuer. What does it mean to be in debt? If we can make the money. $21 trillion, that silly clock in Times Square? Okay. So we draw $21 trillion bill on a piece of paper, no more debt. What’s the big deal? It’s just another trick to make the people feel like there’s something bigger out there that that makes it so, that we’re not allowed to have stuff. So the debt. A currency issuer can’t have debt. I mean, it can have like a number in a bank account, but if we can create –
G: I could just, yeah.
J: Right. So I can’t speak too deeply on the debt, so I got to skip over that but generally that’s true. But the deficit and surplus and balanced budget I can speak on. The deficit, according to what we’re told according to what we’re taught, is irresponsible. The surplus is responsible, the balanced budget is responsible. Bill Clinton left office in 19- whatever.
J: – and had a surplus. And it was hailed as, “Oh, he’s so responsible.” And then a recession hit. Wonder why? So deficit, surplus, balanced budget are all opposite world. They tell us a deficit is irresponsible. They tell us a surplus is responsible. They tell us a balanced budget is responsible. I’m telling you that a balanced budget amendment, which I’m sure you’ve heard of talked about. A balanced budget amendment is permanent – would be, would be – permanent and devastating austerity. And I want to ask you, why? And again, I’ll rescue you if you don’t –
G: I don’t know.
J: I mean, that doesn’t sound right, right? Because –
J: A balanced budget sounds like a good thing.
J: But the balanced budget amendment would be permanent and devastating austerity. So a balanced budget. Just technically, what is a balanced budget? Not why it would be bad, just what is a balanced budget?
G: A balanced budget is, you were allocated this amount of money for a budget and you stayed within that. I do a lot of movie review stuff. So let’s say, it’s a $10 million you gave me $10 million to make a movie and I got the movie made and I did not need any more than the 10 million you gave me. That’s a balanced budget.
J: So your income is exactly equal to your outcome.
J: So for the federal government’s point of view, our outcome is exactly equal to our income. So I spend a hundred dollars into the economy as the federal government and then what do I tax in April next year?
G: A hundred dollars.
J: A hundred dollars. I spend a hundred dollars into the economy I tax $100 back. Can anyone save? Can anyone spend? Without dipping into their existing savings? Can anyone invest? No. They can’t save. They absolutely can’t save. They can’t spend unless they dip into their savings or their investments. They can’t do anything. So a balanced budget means that the government can do nothing for the people. You actually railed against pay-go (or maybe it was Jimmy Dore) railed against pay-go a few weeks ago.
G: That was Jimmy.
J: Pay-go is a balanced budget: we cannot spend the money until we find the money to spend. Which we now know at the federal level is utter nonsense. Pay-go is utter nonsense at the federal level. Unfortunately, I hear a lot of stuff all over the place with progressive media. The debt is going to kill our – the deficit is going through the roof. That’s really why I’m talking to you which I’m going to get into soon. You guys all say all of these things. You do everything right, you do everything right. But then you frame it so wrong that it perpetrates… perpetrates… perpetuates all these misconceptions and lies and guarantees we never get the things that we preach for.
So a balanced budget. I spend a hundred dollars into the economy I tax a hundred dollars back. Because that’s the “responsible” thing to do. But now that we know, is utter nonsense. Why would the government need to do that? It doesn’t need any –
G: Yeah. They can write their own currency.
J: It doesn’t need to do that.
Surplus. A surplus. Bill Clinton left with a surplus. What’s a surplus? Just technically, what does a surplus mean?
G: To use the same analogy. You gave me ten million dollars to make a movie and I actually got it done for nine million. So I have a million extra dollar surplus that I didn’t use.
J: Right. So this from the federal government’s point of view, I spend a hundred dollars into the economy, I tax back a hundred and twenty. So now people need to dip into their savings and their investments just to pay taxes. Not only can they not spend, they actually lose their value because the government is gouging them. But Bill Clinton was praised because he had a surplus for a couple years. It’s not a coincidence (and I don’t know the details and I’m pretty sure I’m right). It’s not a coincidence that soon followed a recession because of the surplus.
G: And the reason for that is why? Because we –
J: Because we kept on taking money out of the people’s pockets and we weren’t doing anything for them. The Pony program was ten billion dollars, we don’t tax ten billion dollars back. They just implemented the pony program and then we’re going to take all that money back that they just used to implement this? that doesn’t make sense. We did that because we want everyone to have a pony – Medicare for All. We spent that money because we want Medicare for All. We didn’t spend that money to make Medicare for All and then we tax all that money back? They don’t make anything out of it. They’re doing all their work for free.
So the last one is deficit. Last one is deficit. The deficit is, I spend a hundred into the economy I tax back sixty. And now the people have savings of 40. So now they can save, now they can invest, now they can spend. So the deficit is a good thing for the people. You might want to change it for the purposes of you know all the reasons for taxing. Which is especially for controlling inflation. It may not be a good idea to have a deficit. But in many situations, it is a good idea to have a deficit. Because that puts money into the people’s pockets.
G: I see.
J: Okay? So a great example the PROMESA board in Puerto Rico. Do you know what I’m talking about?
G: Uh uh.
J: So the Puerto Rican government was taken over by the PROMESA Board because they’re not being “responsible” with their money. They’re colonialized. It’s filled with corporate people. Profit wanting people. The PROMESA board. P-R, Puerto Rico, P-R-O-M-E-S-A. PROMESA. And this PROMESA board is now the government. The government itself is not allowed to control Puerto Rico. Now the PROMESA board controls Puerto Rico, because the government is not responsible for whatever reason. The only condition – or one of the big conditions of the PROMESA board –
I learned this on Congressional Dish by Jen Briney. Awesome podcast. She doesn’t know – She’s very hip on pay-go and I wrote her about MMT, and she wasn’t too hip on it. But aside from that, it’s an extraordinary podcast. She did a podcast on Puerto Rico.
One of the conditions that PROMESA board gave to the Puerto Rican government was: you can get control back if you have four – if you’re responsible! – and you have four years of balanced budgets. So, if you have four years of balanced budgets, then you are “responsible” and now we can give you control of your government back. So not only are we screwing the people of Puerto Rico now, but you have to screw them ten times harder for four years straight. Then we’ll give you control of your government back.
So the “responsible thing to do.” It’s all opposite world. Deficit, surplus, balanced budget.
J: It’s all opposite world. Yeah. If you think about, it’s like you only consider the bank account of the parents. It’s like you only care about the bank account of the parents. So a balanced budget. Yeah, that’s great. The balanced budget, surplus, whatever.
Two things. Number one, it makes no sense because the federal government doesn’t need income. So that makes no sense to begin with, that you need to be responsible in this way. So that I don’t spend more than I have. Which makes no sense at the federal level. But it also in neglects every one of the people. Every one of the children in this analogy. Like you only care about the parents. You don’t care about any of the 320 million children and you don’t care about the country as a whole. And it’s nonsense to begin with.
So. All right. So I’m on to my last thing. You have any statements before I go onto this?
G: Yeah. Yeah. I – I’m just taking it all – Sorry, I don’t know. It’s like – It’s – I don’t know what the questions I have are.
J: I was exactly this way. It’s like all these – all of these amazing, mind twisting concepts but none of them are connected.
J: Right? It’s like really hard to grasp but I know that this is a big deal like at this stage I knew that this was a big deal but I had no idea why.
J: So, okay. All right. So this last thing – and I’ll be honest, I’m not as clear on how I want to present this but – This is where – Okay. I private messaged you on Twitter that you inspired me with one of your videos. Your Air Force video about their new bomber. The title of the video was – just less than two weeks ago – “The Air Force’s new bomber takes money from schools.” That was the name of your video and you can already see where I’m going.
But there’s a big deal here. There’s a big deal here. I’m not just saying that’s wrong and, you know, do better because it’s – do the right thing. I’m saying that there’s something much much bigger here that I’m trying to tell you.
J: So the Air Force’s new bomber takes money from schools. Okay. You said two things, specifically. One: “The money for these planes COULD BE USED FOR infrastructure, air pollution, homelessness, and so on.”
J: You also said, “Anytime some government official tells you that there’s NO MONEY for this fill-in-the-blank thing that would make your daily life better, just tell them let’s cut the war budget in half.” Okay?
J: So number one it doesn’t make economic sense and you understand that now. Or at least you’re beginning to understand that. That doesn’t make economic sense to say, “We should be taking money from the military because we need the money for the powerless.” Medicare for All and all –
G: Right. Because we can just –
J: – we should be taking –
G: There’s no money to be taken. We can just write more money to pay for all of these things if we wanted to.
J: Exactly. The point is not that it’s economically wrong. That’s not the point. I mean, yes, it’s wrong and it needs to be right. But there is something really really sinister that you are perpetuating because you have been taught to perpetuate it. And TYT perpetuates it, Jen Briney perpetuates it, Kyle Kulinski perpetuates it. This is the thing that drives me batty, because we do everything right. We preach for the right stuff, we want the right stuff, we want it for the right reasons, we understand what the problem is. We understand everything, but then when we go in for the kill to actually get it, we shoot ourselves in the foot and we go all the way back to the end of the line.
Because we hook these fights together. What I mean by that is: Yes, excessive military, endless war, immoral levels of income inequality. You should fight against them as hard as you can as much as you do. You should. It is unjust, it is immoral, it is wrong. But you should not be fighting against them because they’re expensive. You should be fighting against them because they’re immoral and wrong and unjust. You should not be fighting against that because they’re expensive.
Okay that’s part 1. Part 2:
You should be fighting for Medicare for All and a living wage and free college and forgiving student debt and fixing our poisoned water. You should be fighting for that stuff just as hard as you do. You should be just as angry as you are. But you should not be fighting for these things because they’re affordable. You should be fighting for these things because they’re right and moral and just.
The mistake that the progressive media – and most progressives, it’s not just the media. It’s most progressives. Nina Turner just did this a few weeks ago in one of her emails. I was really upset because she’s one of my idols. But it’s not, you know, it’s just what she knows. It’s not sinister.
G: Right. Right.
J: What is horrible that we have been taught to do and that all you guys do, and therefore you teach all of your viewers, is that we link these fights together. We make the programs for the powerless CONDITIONAL on wresting money from the rich and the powerful. So we can’t get Medicare for all UNTIL we reduce the military. We can’t get Medicare for all UNTIL we tax the rich. That pits the powerful against the powerless. We can’t get what we need to survive until we wrest it from their cold dead hands. That is a fight that the powerless will always lose.
So the the most important thing, aside from remembering that phrase way back when. The most important thing especially as you, who reaches all these other people. And TYT who reaches millions of people, and Jimmy Dore, who reaches hundreds of thousands of people. Is, you should fight just as hard against society’s injustices. You should fight and be a just as angry. You should fight just as hard and just as angry – righteous anger – about all the things that the powerless needs to survive. But you have GOT to stop linking these fights together. Because linking these fights together, making taking money from the rich, taking money from the military IN ORDER TO pay for programs for the powerless – We should not be funding the military because we want to use that money INSTEAD for programs for the powerless.
That is what’s killing the progressive movement. It’s killing the progressive movement. I don’t find that to be an exaggeration. We preach – everything we preach for we will never ever get because we link these fights together and make it a prerequisite to take money from the powerful, take re –
J: – and when when the economic reality, we now know, is completely not that.
G: Right. So the argument should just be, because we create our own currency, we could just write a check for 80 billion dollars and everybody has Medicare for All. We can just give that to people. We don’t need to take it from somewhere else. We don’t need to balance any budgets. Separate from that, we should reduce military spending just because it’s immoral and it kills people and ruins lives.
J: And same with immoral levels of income inequality. We should absolutely should tax the rich, but not because we need their money. And that’s the connection of, we have to get money from the rich, IN ORDER TO help the powerless. The powerless will always, and they have always for 40 years, lose that fight.
J: So that’s why we, you, and everybody. Most progressives. But especially the media who reaches all these people. The truly progressive media. TYT. Uh. It’s really – It’s just so upsetting. My pinned tweet [currently a reply to the pinned tweet] there’s a big thread about how TYT did this and does this and continues to do this. You link these fights together – We fight 95 percent of the battle valiantly and amazingly. We preach – we know what’s wrong, we know what should be. We know exactly what should be. Then we connect these two things together and say, “We should be taxing the rich,” or “The polls say that the people want to use their taxes for health care. We don’t want them used for bombs anymore. Every bomb that’s done is takes a takes a chicken wing off of a plate of a baby.”
J: All of that stuff links these fights together and pits class warfare and the powerless will always lose class warfare. What we should be doing is we should be walking on to Congress and demanding Medicare for All. Then when they say how we going to pay for it? You say because we want to pay for it and it’s moral and right and just. You know, there’s a lot of education to get to that point, but we should not be saying stop this military because we need – I think you get it now.
J: So the the most important thing is fight the injustices, fight the things we need. But stop linking them together. stop linking them together. Stop making this we have to get it from the powerful as a PREREQUISITE to getting what we need. So.
G: Okay. That actually all makes perfect sense. Literally, it’s, you show how it’s not just four decades it’s longer than that. That famous speech by Eisenhower about, “Every bomber could have been a bushel of wheat or a school,” and all this other stuff. It’s a very poetic speech emotionally and it does show how awful war is. But it does make sense to me as you say this, that it needs to not be connected. It needs to be a separate issue, now that we know, or as I know, that we’re creating our own currency. So we don’t need taxes or funding or anything like that.
J: Right. One more very quick analogy. Which is: This fighting ninety-five percent and then when we go in for the kill we stab ourselves. We do everything right except the one final thing that we need to actually get these things. It’s like we’re stepping on a rope as we’re trying to pull it. That’s how I see it. We’re pulling a rope and we’re stepping on it at the same time.
What it really shows is that our politicians want us to think that they –
G: Oh, for sure.
J: – that they believe. They want us to think that they believe that they – “Oh, I wish that you could have Medicare for All. I wish that you could have healthcare. I wish you could. I know how important it is to you. I know that you really want it. I know that you deserve it. But unfortunately, we can’t.” Because of all this stuff. Debt, deficit, responsible, money. When the truth is, is that they’re using that to hide the fact that they simply don’t want to give it to us. Because they’re paid not to.
Medicare for All. This is a very important example for me. They want to profit off of us. That’s definitely a big deal. They don’t want to give us a Medicare for All because they want to profit off of our sickness. Which is disgusting and wrong and unjust and all that. But profit is not the only thing in fact. In my opinion, it’s the second thing. The top thing, the most important thing to them, is that – and Caitlin Johnstone taught me this: Power is relative.
You cannot stay powerful unless you keep the powerless powerless. In order to stay powerful, you have to actively make the powerless, to keep them powerless. Medicare for All chains people to their jobs. So, yes, it would be great to give them healthcare and not to make them profit off of our sickness and suffering. But what I think it’s even more for, is it chains us to our jobs. Because if we left our jobs we would not be able to afford insurance for our family, and we couldn’t run for office, and take over their positions.
So it is their way of keeping us powerless. Profit is a big deal for them, but in my mind, even more important than that, it’s their way of keeping the powerless powerless and keeping the powerful powerful.
G: Well, going back to the top of what we said in the first video, they don’t want millions of Alexandria Ocasio-Cortez’s running. They don’t want that. They’ve got to be like, “what the hell?” They’re looking at her and they’re probably looking at at Kenneth Mejia, who won the primary – he’s running against – he was the top two in California. He’s a green he’s running against a Democrat in the 34th congressional district in California. They’re probably like, “Oh god we don’t want these regular people.”
J: Yeah. That guy who’s running against Kevin Yoder.
J: A TYT subscriber he he’s the same thing. He’s polling seven points ahead of the Republicans so the Democratic Party put it in the corporatist to try and cut him off at the past kind of thing. Yeah. I mean it’s it’s very clear now that they don’t want Bernie Sanders and Alexandria Ocascio-Cortez. They would rather a Republican. Because even though a Republican would do horrible stuff, he wouldn’t do anything that hurts the pocketbook.
J: Alexandria Ocascio-Cortez and me and you and Bernie Sanders would destroy their pocketbook.
J: So that’s why they stop us. They would MUCH rather Trump than Bernie Sanders.
G: Oh, easy.
J: Yeah. Yeah. My goal. My goal is – I hope that, you know, we can work our way towards teaching Jimmy Dore. We could work our way to getting this into the minds of TYT and Jen Briney and stuff. Be skeptical and do your homework and make sure and all that stuff. That’s my goal. Because the truly progressive media is killing the movement. Not because they’re doing something different than anybody else, but they’re just perpetuating it and they have the ears of millions and millions of people.
Jimmy Dore has actually shown some signs of modern money in the past couple weeks. He said he was going to talk to Stephanie Kelton, I haven’t seen that. But he’s actually said stuff. “We make our own money so we have to deficit spend when there’s a crisis.” That’s like, whoa, where did that come from? So I think he’s starting to show hints of it.
G: Well look. Thank you for coming on the show, Jeff. Thank you for doing this. I really appreciate it. I like having my eyes opened. I like learning the reality of things. Especially things that are just ingrained in me and for decades – my whole life, it’s been it’s been entrenched in America’s for well before I was born. It’s what I love about this show. So many Patreon supporters have come on and educated me about something I didn’t understand. And this is pretty huge.
I encourage everybody out there watching to go do your own research. Find information from Stephanie Kelton. Watch that video the Angry Birds one that you said.
J: “Angry Birds and deficits,” by Stephanie Kelton is a great starting point. Yeah.
G: I hope these two videos have opened people’s eyes up. I love these discussions. There really isn’t anything for me to debate really. I’m just like, wow. I’m just taking it all in. So. I appreciate and I appreciate the the constructive criticism on myself and other progressive media people. Because we do need to get our messages as informed and as concise as possible. That’s what we’re all about. We’re all about the truth, anyway. So, yeah. I hope this does – I’ll bring it up to Jimmy and anyone else that I can. I hope other people watch these videos.
J: Well, I’m really grateful. I appreciate you allowing me to criticize you in that way. It obviously took a long time to really be able to, you know, say it in a way that you would be able to understand, because we had to undo all that stuff and all that. I’m really grateful and I would love to – your viewers. You want to learn get in touch with me, Citizens’ Media TV on Twitter or Facebook, email@example.com. I would love to teach you. This is what it’s all about for me. If we can reach the powerless and teach them in this way, especially the leaders who reach other people, like you. That’s how we’re going to get stuff. That’s how we’ll actually get this stuff.
G: I love it, man. That’s what I’m about. I tell everybody, everybody watching this show, you’re a political vigilante. I always tell people, get involved on a local level and get involved in your local politics and school board and all that stuff. Get educated. And what you’re doing here Jeff is educating a lot of people to shift their thinking. I think a lot of us came into this progressive side because we had to shift our thinking on the two-party system. That this, “Well, this party’s better than that party.” and all this other stuff. Where now we get to see, “Oh, wait a minute. The whole system is rigged.”
This is another – this is a HUGE piece of the whole system’s rigged. I mean HUGE piece.
J: It is just as profound, it’s just as profound as what Bernie Sanders taught us, which is money in politics is the root of all evil.
J: And this shows us why we don’t have that stuff.
J: Modern money, MMT, modern monetary theory, shows us why we don’t have any of that stuff.
G: Well thank you so much for being on the show and thank you to everybody who’s watching. Please hit Jeff up at Citizens’ Media TV at all the places he just listed. Ask him questions and do your own research and come to your own conclusions. But this is probably going to change a lot of things for me and how I talk about stories that I’m covering.
J: I am really glad to hear that and you were very patient. I know this was long but, as I told you, I think it’s worth it. So I appreciate it.
G: Sweet. Thank you Jeff and thank you everyone out there for making Gotham great again.