US Fiscal Policy and the 'Deficit Myth' with Stephanie Kelton

Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Master's in
Business with Barry Ritholts on Bloomberg Radio.

Speaker 2 (00:17):
This week on the podcast, I have another extra special guest,
Professor Stephanie Kelton teaches public policy and economics at sunny Stonybrook.
She really came to the four in the twenty tens
when she was the chief economist for the US Senate
Budget Committee, and had previously in her career revisited the

(00:43):
works of people like Hymen Minsky and Lord Keynes and
Warren Mosler, who's really probably the single largest influencer of
modern monetary theory, which looks at the overall economy not
from the perspective of federal deficits but the federal impact

(01:07):
on inflation. Really just a fascinating conversation talking about what
is and it is not heterodoxy and conventional thinking in economics,
and why the field is so hesitant to change even
when the evidence is overwhelming that what they're doing is

(01:29):
false or based on data that just doesn't seem to
add up. Her book, The Deficit Myth, was a surprise bestseller,
came out right in the middle of the pandemic and
did really well. She's been on all the top one
hundred lists most influential thinkers, Women in Finance, policy influencers.

(01:51):
She's just really a fascinating person with a perspective that
is kind of hard to argue with. A lot of
what she believes is outside of the mainstream, but it
is really stood the test of time. When the traditional
economists have said and done things, They've made forecasts, they've

(02:15):
made predictions about what will and won't happen, and none
of it's come true. And so when the mainstream economists
are getting it wrong, you have to look at people
who approach the field from a different perspective. She's done
a really great job. I thought the conversation was fascinating
and I think you also. With no further ado, my

(02:37):
conversation with Sunny Stony Brooks Professor Stephanie Calton.

Speaker 3 (02:42):
Thank you for having me, Nice to be here, Nice.

Speaker 2 (02:44):
To have you. I've been wanting to have you here
since the book first came out during the pandemic, and
we'll spend a lot of time talking about it, but
before we get into that, I just want to get
a handle on your background. You get a bachelor's a
BA and a BS in economics and Business at California Sacramento,

(03:06):
then University of Cambridge Masters in philosophy and economics, then
a PhD in economics at the New School. That sounds
like you were teeing up for a career in academia.
What was the original plan.

Speaker 3 (03:19):
To be a dentist?

Speaker 2 (03:20):
Really? Yeah? Why a dentist?

Speaker 3 (03:23):
I think you just think, you know, what do you
do for a living where you have, you know, decent
income and you know there's going to be.

Speaker 2 (03:32):
A job and high suicide race.

Speaker 3 (03:34):
I didn't think about that at the time, but I
learned later. I also didn't realize that you had to
work on cadavers, and so I figured out pretty early
on that that wasn't going to be the path. And
then I, you know, I switched. I was pre law
for a while. I was an accounting major for a
good period of time. I got well into the upper
division stuff, and then I couldn't imagine myself as an

(03:56):
accountant and I thought, what do you do You sit
in a room all day doing tax returns or something.
It's just not you know that it seemed anti social,
and so then it became finance and a series of accidents,
you know, you have that one professor who you stumble
on and it just changes your life. And my trajectory
changed to economics by accident.

Speaker 2 (04:17):
Really fascinating. So you end up teaching at the University
of Missouri Kansas City for eighteen years from nineteen ninety
nine to twenty seventeen. Tell us, I'm curious. California to Cambridge,
to the New School in New York, and then Kansas City.
Tell us about this geographic progression.

Speaker 3 (04:39):
Yeah, so I was doing my undergraduate at cal State Sacramento.

Speaker 2 (04:44):
Were you originally a California girl or well, we were.

Speaker 3 (04:46):
Living in North Carolina. I was a senior in high school.
I was going to go to the University of North Carolina.
My dad was in the military, so we lived all
over the place. And one day he came home and
he said, you know, we're sitting at the dinner table
and he announces that he put in his retirement papers
and the family was going to go back to California.
And I could either stay on the other side of
the country by myself at seventeen, well you know, a

(05:09):
college kid with a car that used to break down
on me all the time, or I could follow them
to California. Of course, I missed all the application deadlines,
and so I ended up going with them and doing
most of my undergraduate work at cal State Sacramento. And
that's where I ended up taking a micro theory course
with this guy named John Henry. And you know, I

(05:32):
could have picked any course in the catalog, any Tuesday
Thursday section. I happened to pick that one, and he
just kept encouraging me to keep going. And by the
time I took the History of Economic Thought, I was
really hooked. And he took me out to lunch one day.
I was thinking about graduate school because he said, you know,
you ought to think about it, and so he took
me to lunch, and this guy named Randy Ray happened

(05:55):
to be in town. And Randy is an economist. He
did his PhD dissertation at WashU under I'm in Minsky.
So a lot of listeners will be familiar with Minski
because it's stuff like the Minski Moment and all that.
And so Randy came to lunch. I'd never met him before,
I knew who he was. But John said, to Randy,
give her some advice, tell her what she should do

(06:16):
about graduate school. And Randy said go to Harvard, and
John said no, no, no, no, don't listen to him.
And he was totally opposed. Why because I think he
rightly understood that if I had gone to Harvard that
I would have received a certain kind of training. And
by that point I was already you know, people will

(06:39):
use the word heterodox. I don't like that word, but
for lack of a better synonym at the moment, I'll
just use it. But you know, I had been reading
people like Minski and I was really into that kind
of stuff and Veblen and you know, the history of
thought really grabbed me. And I think John understood that
if I'd gone to Harvard, I would have gotten really

(07:00):
conventional training and I wouldn't have been exposed to some
of the really interesting thinkers and theorists. So John Henry
said go to Cambridge, not Harvard, but go to Cambridge University.
And there were people there he thought were interesting. And
that's what I ended up doing.

Speaker 2 (07:14):
Huh. So Thorstin Veblin fascinating, probably the earliest theorist on
consumer spending and materialism, and kind of interesting that you
gravitated towards that and away from just being cranked out
of the factory to become another consultant. Not your path, No,
it wasn't.

Speaker 3 (07:34):
And you know, when I was at Cambridge, i was there,
it was a very unusual program because you know, you
show up straight out of undergrad you do four courses.
Each course is one year long, and at the end
of the one year period you start writing a dissertation.
And then you're a PhD economist, having four courses at

(07:54):
the graduate level under your belt. And I thought, how
do you sell yourself as an economist? Really, it just
didn't feel right, and I wasn't sure I could compete
for a job in academia, which is four courses, and
most of the you know, kids, I'll say kids, most
of the people that I did the master's degree with,
they were flying back to the US and they were
interviewing for Wall Street jobs. And I knew that that

(08:16):
was not my path. And I've already gotten a fellowship
from Cambridge University through christ College to go to the
Levy Institute and spend a year working on the dissertation.
And so I went away.

Speaker 2 (08:29):
So this is this is a year of four classes.
I finished a full year class. This kind of reminds
me a little bit of law school where you're taking
the four gut courses towards civil procedure, property and uh
law No klo was second year what was the contracts
And they're like killer courses and you're taking forum at once.

(08:52):
Then you have a full additional year to work on
your not PhD dissertation. But master's dissertation. Is that right?

Speaker 3 (09:00):
No? It would it be the PhD.

Speaker 2 (09:02):
Oh. So you do a year of four classes and
then the pH.

Speaker 3 (09:05):
And then you write your dissertation and you have a PhD.

Speaker 2 (09:07):
So I hold the who ho ho? So so you
get a PhD from Cambridge and then you go to
the New School for a PhD in economics.

Speaker 3 (09:15):
So I started on the journey I took. I got
the fellowship, which was go to the Levi Institute. It's
an upstate New York. It's right there on the campus
of Bard College, kind of in the Hudson Valley. Very lovely,
it's beautiful up there. And so they gave me money
and the Levy Institute gave me, you know, office space
and housing, and they had this arrangement with Cambridge and

(09:36):
the idea was you go when you spend a year
there and you start writing, and then you would return
and finish up the PhD.

Speaker 2 (09:43):
So Wolden Pond for economics.

Speaker 3 (09:46):
Honest, it was like magic. And I get there and
Randy Ray is there. He's on a sabbatical, I think,
and he's doing research there. But I meet this guy
named Wynn Godley, and Godly is just a fascinating character
about him a little bit in the book. He really
pioneers the work around sectoral financial balances and stock flow

(10:06):
consistent modeling. And he's this old British guy who was,
you know, quite famous in England as a policy advisor
and an economic forecaster. He was known as one of
the Seven Wise Men. And anyway, his office was right
next to mine. We shared a wall. He would sit
in his office and play the Obo and just an

(10:27):
amazing person. And I learned so much from him that
I got there and I thought, there's so much more
to learn. I've done four courses, but I don't know enough.
So I started taking the train once a week, I'd
go down to New York City and I would sit
in on courses at the New School. And I mean,
I was surrounded by people I thought were ten times

(10:48):
brighter than I was they were more thoughtful. They were
having conversations that felt, you know, important and weighty. And
I thought, oh, there's no way, you know, I'm not ready.
I need to to stick around and do some more coursework.
And so that's what happened. I transferred. I finished up
at the New School when Godly served on my dissertation committee.
And that's that's kind of how the journey unwrapped.

Speaker 2 (11:13):
Really fascinating. How do you end up in Missouri Kansas City.

Speaker 3 (11:17):
So another person who had a major impact on my life.
A lot of people if they hear his name and
recognize it, they'll say, oh, Warren Mosler, the father of MMT.
So Warren was funding a small program at the New School.
He was supporting some graduate students, and he had a

(11:38):
faculty member there named Ednell who had students kind of
working on Warren's ideas. And I was part of that group.
And Randy Ray who was at the Levy Institute, another
economist named Matt Forstatter who was at Levy, and I
all ended up going to UMKC in the same year
because Warren, you know, provided some seed money to help

(12:01):
the graduate student program really kind of build itself up
there bring some economists in have a you know what
an outpost, I guess for tea and so we all
went together.

Speaker 2 (12:16):
So what brought you in twenty seventeen to my alma matas,
Junie stony Brook. What led you to move over there
and what's your focus there?

Speaker 3 (12:27):
Well, my husband was the associate dean at the University
of Kansas and I was the chair of the department
at the University of Missouri in Kansas City. I had
taken a bit of time away to work on the hill,
and so anyway we were, you know, the universities are
about an hour apart. We lived in Lawrence, Kansas. It's
a great little college town. We loved it, you know,

(12:49):
season tickets to the men's basketball games and all that
kind of stuff. It was a lot of fun. But
he had one foot in the administration and one foot
in academia. And you know, he a history professor. He
writes a lot of books, and so he kind of
put himself out there on the job market and he thought, well,
I could either go for a dean position, or I
could you know, go for some kind of endowed chair somewhere,

(13:10):
you know, move up. And so Stonywork had a position
for an endowed share in the History Department, and he
interviewed for it and they liked him. And then the
provost at the time was an economist. I think he
had been Jamie Galbraith's roommate at Yale, and he found
out who Paul Kelton was married to, and then I

(13:30):
think the conversations between the Dean and the provost started.
They said, we got to get this two for we
got to get him, and so we did. We decided
it was it was a great opportunity to you know,
go and be together and you know, build and I
could do public policy and economics and that was going
to be you know, really appealing for me because I
was just teaching economics at UMKC.

Speaker 2 (13:53):
Now you just briefly alluded to your time on the hill.
You were the chief economist for the US Senate Budget
Committee during was that during the Obama administration.

Speaker 3 (14:04):
For the Democrats stuff? So, yeah, there are the Republicans
have one, the Democrats have one.

Speaker 2 (14:10):
Who was your who was on the other side.

Speaker 3 (14:14):
Mike Enzi, Senator Mike Enzie uh huh from Wyoming.

Speaker 2 (14:19):
Was the Democrat or Republican on the well.

Speaker 3 (14:23):
The Republicans had the Senate. Democrats had the House at
the time, and so Bernie Sanders was the ranking member
and hired.

Speaker 2 (14:32):
Wait, so you're the chief economist for the Democrat US
Senate Budget Committee, who was the chief economists for the
Republicans bill something, so not someone you interacted a lot
with you, No.

Speaker 3 (14:45):
I when I got to the hill. I think it
was just the first few days after I arrived. He
reached out to me. It was a really nice guy,
and he said, you want to get together and have
coffee and I'll kind of tell you how this whole
thing works. And I said that would be sure, that'd
be really nice. So the two of us sat and
it was really interesting because you know, he's chief economist
for the senators on the Budget Committee, the Republican side,

(15:09):
and I'm there for the Democrats. And he said, look,
we're in charge because we have the majority. So periodically
every week, couple of weeks or whatever, we're going to
call a hearing. We get to decide what the hearing
is about, and we're going to get usually three witnesses
to testify, and you guys will get two, and we'll
try to give you as much notice as we can
to liign your witnesses up. We'll go for a week.

(15:30):
You won't always get that, but here's how it's going
to go. You know, we'll say where you want to
have a hearing on you know, I don't know, disability,
fraud and disability, or the budget crisis or whatever the
hell it is. And you know, maybe we'll reach out
to the people at Heritage or CATO or AI or
someplace like that, and we'll say, I need a quick

(15:50):
paper on X y Z, you know, leading up to
this hearing, because they want to make their points as
strongly as they can. He said, you might want to
reach out to the people at CAP or the Center
on Budget Policy Priorities or Washington Center for Equitable Growth
or EPI. You know, like you know, you're just so is.

Speaker 2 (16:05):
That friendly and non adversarial because the you know, when
I was growing up, there were different parties, but there
was some bipartisan everybody seemed to be focused on what
are we going to do to make life better for everybody?
And then it just sort of devolved into this partisan
wrangling where the sort of collegial dare I say, academic

(16:30):
relationship across the aisle that seems to have gone away.

Speaker 3 (16:35):
Yeah, I mean we had a nice report. I will
say that that most of it felt to me very performative.
You know, it was you said, making people's lives better.
I don't think I ever really had the sense that
that was what these hearings were about. A lot of
it was allowing folks to have their five minutes of

(16:55):
you know, I don't know.

Speaker 2 (16:57):
Oh, I mean, this is long before a long before W.
George W. Bush back in the I don't know, maybe
I'm maybe I'm romanticizing. Yeah, Johnson Nixon, Ford, Carter Reagan era,
but it seemed like Tip O'Neil and Ronald Reagan. The

(17:19):
joke was they would argue all day and then they
go out and have a beer together.

Speaker 1 (17:23):
Yeah.

Speaker 3 (17:24):
Well, I think there was still some of that around
when I was there. And you know, there's certainly you know,
Bernie's Sanders for all the you know, personality and so forth,
people associate him with a really kind of cantankerous old guy.
He's just as friendly as anybody else on the committee.
Mike Enzie, the chair of the committee, was just like

(17:45):
you'd look at him and think that's my grandpa. You know.
He's just a mild mannered, soft spoken very easy. But
things have changed obviously.

Speaker 2 (17:56):
So let's talk a little bit about the book first.
What was the inspiration to.

Speaker 3 (18:01):
Write this frustration? Really? You know, I don't. I don't
enjoy writing. I don't like the process. I don't I
don't like sitting still that much.

Speaker 2 (18:12):
That's really interesting.

Speaker 3 (18:13):
Yeah, I could never write a book because I wanted to.
I wrote it because I felt like I had to.

Speaker 2 (18:20):
I've had that experience. I've had. I've had both. I've
had the I just got to get this out because
it's burning a hole in my brain. But I've also
had the oh, let's have some fun and play with
some interesting ideas. That's a little less tedious and cathartic.

(18:41):
But this just had to come out. Is that was
that you had to get it out of your head
or I.

Speaker 3 (18:46):
Had to get it out. It's so funny that you
use that metaphor or that kind of terminology. Because I
had a conversation with Mary Ann Williamson.

Speaker 2 (18:56):
You know, why do I know that name?

Speaker 3 (18:57):
Because she ran for president? Oh yeah, okay, and I
had just moved out to Stonybrook. We just moved to
Long Island, and I get this email from this person.
I've never heard of before. And she said, we have
a mutual friend. And he says that I need to
talk to you because I want to try to understand

(19:17):
economics better. Can I? I will come to you. You
know what would you talk to me? And I said,
I guess, so you know, sure you're gonna come to me.
So one day I'm sitting in the house sweatpants whatever,
you know, T shirt. We're in the basement my husband.
I think we're watching a football game or something, and
all of a sudden I get the notification on my phone,

(19:38):
you know, and it says Marian Williamson is coming at
four o'clock or whatever. And I thought, oh, was.

Speaker 2 (19:43):
She running by that time with like secret service. Oh no, no,
so just a very casual drop by years.

Speaker 3 (19:49):
Before, years before that. And yeah, so I see this notification.
I said, oh jesus, you know. My husband said, what
I said, somebody is coming over? He said, who's coming over?
I said, I don't know. I said, You've got somebody
coming over and you don't know who it is. So
I google and I see Larry King New York Times Bestsellers,
seven books and all the stuff. I thought, Oh Jesus,

(20:11):
you know, I got to change, So I changed clothes,
I went to the grocer store. I got some, you know,
things to put out and host her and so forth.
So she's she's a very sweet lady, you know. She
came to the house and I mentioned that I was
kind of toying with the idea of writing a book,
and she said, Darling, you must be pregnant with a book.

Speaker 2 (20:32):
I get that.

Speaker 3 (20:33):
Okay, I didn't get it at the time she said it,
but I understand it now that it's exactly what you said.
There's something that's in you that you just have to
push out. And that's the best I can.

Speaker 2 (20:48):
No, that makes perfect sense. But pregnant with the book
is a great listen.

Speaker 3 (20:52):
I got pregnant, Barry. It wasn't expecting.

Speaker 2 (20:57):
It's funny because my last book was fit fifteen years ago,
and now I have a new one coming out and
the next one will be in twenty forty. I'm like,
I'm clockwork every fifteen years because it takes not only
does it take a lot out of you, but it's
you have to really enjoy sitting alone in front of

(21:17):
a screen typing, and you end up spending writing is
the easy part. It's the eddling. That's so difficult because
the first draft is, you know, the final version is
ten steps removed from the first draft, and you don't
realize how much time you spend thinking about why a

(21:38):
semi colon and not a comma in this parrot? Like
just dumb things. But it is a birthing process, and
it is messy and painful, to say the very least.
But that brings me to a really interesting question. The
book comes out in June twenty twenty, instant acclaim New

(21:58):
York Times bestseller list. How giant of a surprise was
that reaction?

Speaker 3 (22:05):
Huge?

Speaker 1 (22:06):
Huge?

Speaker 2 (22:06):
Right?

Speaker 3 (22:06):
For sure? The phone rang. My editor was on the
line and he was just tickled, tickled pink, and he said,
I want to be the first to congratulate you, and
he he knew what the list was going to look
like the next morning, and really.

Speaker 2 (22:21):
Yeah, wow, So number one on the New.

Speaker 3 (22:23):
York Times, No number one, but it was in the
top whatever it made the list. I think there were
fifteen and oh really thirteenth or something.

Speaker 2 (22:31):
Yeah, amazing, that's amazing. So the book publishes June twenty twenty.
I'm going to assume you finished writing that before the pandemic,
before the largest government stimulus since World War Two. What
was the reaction to putting a book out in the
middle of the pandemic?

Speaker 3 (22:49):
I was it was in January of twenty twenty. I
was in Australia and.

Speaker 2 (22:54):
Oh, so you were out and about traveling.

Speaker 3 (22:56):
You know, we didn't know it was January.

Speaker 2 (22:58):
We were in flight in January twenty twenty, and like
you didn't have a clue what was coming at all.

Speaker 3 (23:07):
I was there and I had the copy edited manuscript
in front of me, and I remember just going through
it one last time, and you know, two months later,
the world changed and I managed to get there was
room on the last page of the introduction or preface
or something like that, and they allowed me to add
a paragraph as.

Speaker 2 (23:27):
Well as it doesn't affect the pagination the rest what
they said.

Speaker 3 (23:30):
That's exactly I got. Really lucky. And so there is
some commentary in the hardback the very first, you know,
published edition of the book about the pandemic. But that
left my hands in March, and in June it was
out in stores.

Speaker 2 (23:44):
So let's talk a little bit about the deficit myth.
I've heard pretty much since Ronald Reagan was elected president
in nineteen eighty. Deficits are going to crowd out private capital,
choke off innovation. It'll reduce this new company formation, It'll
make us barring cost skyrocket, will devalue the US dollar.

(24:06):
It's going to cause rampant inflation, and it will act
as a drag on the overall economy. None of these
things have happened. So why should we really care about deficits?

Speaker 3 (24:18):
Well, so I wrote the book not to say we
shouldn't care about deficits, but to say, you know, to
address a lot of what you just said, why do
people continue to repeat these things decade after decade after decade.

Speaker 2 (24:30):
I mean, it's we're talking literally my whole forty five years,
fifty five years since nineteen eighty. That's a long time,
half a century.

Speaker 3 (24:38):
It's funny because you know, you got Dick Cheney saying
Reagan proved deficits don't matter, right, But everybody you know
really believes that deficits have the potential, and in some
respects not all of it is wrong. You know, there
are times where deficits can create problems, but so much
of the commentary and the way we think about and

(24:59):
talk about and shape policy around beliefs around, you know,
the dangers and risks of running budget deficits. I just thought,
you know, you almost need a chapter for every one
of these different myths. And it's not that deficits don't matter,
it's that they matter in ways that we aren't paying
attention to. And so the book was really to try

(25:19):
to get us to, you know, flip our perspective around,
to see that every deficit is good for someone, I mean, right,
you know, So a lot of what the book does
is to try to make clear why that's the case,
Why is every deficit good for someone? In purely financial terms,
government deficits are just the mirror image of a financial
surplus in the non government part of the economy. So

(25:41):
we should talk about deficits for whom, deficits for what. Right,
Deficits can be used to accomplish big things like you know,
repairing crumbling infrastructure, improving our healthcare education systems, and so
on and so forth, that they can also get too big,
and they can also exacerbate or cause an inflation problem.

(26:05):
So we don't diminish or dismiss any of those things,
but really have a very different conversation about the role
of deficits in the economy.

Speaker 2 (26:13):
All right, so let's let's have that conversation. When you
say deficits can get too big. I think it was
Ryan Hunt and Rogoff's paper set one hundred percent GDP
to debt ratio is problems and tipping point right. I
mean that was that was the problem. Wasn't the Excel
spreadsheet error which changed their math. The problem is Japan

(26:35):
is running to fifty percent and their economy seems to
be doing just fine. Their quality of life is higher
than ours, their life expectancy is higher than ours, their
income is comparable. If Japan can run, what are we
running like one seventy five two hundred in the US? Oh,
we just I.

Speaker 3 (26:53):
Mean publicly held. I think we just hit ninety nine percent.

Speaker 2 (26:56):
So we're about one hundred percent. Japan is two and
a half times size. Does that suggest we have a
long ways to go before the deficit is a problem
or are there other potential issues? Well?

Speaker 3 (27:08):
I just don't think the ratio is a very useful
metric in terms of, you know, thinking about when you've
quote unquote gone too far. And I think you know,
it's always interesting how Japan tends to get left out
of the conversation, right, because it really is the counterpoint
to so many of these arguments. I mean, the Japanese

(27:30):
government pre COVID had been running large, persistent fiscal deficits
for three decades. Three decades they had, you know, the
tenure interest rate pinned at zero more recently, but they
didn't interest rates didn't go up. They didn't suffer the
crowding out problem of rising interest rates, you know, pushing
investment down. They didn't get an inflation problem. They've been

(27:53):
battling deflationary pressures basically the entire time. You never have
a failed auction. You don't have a situation where you know,
bond vigilantes show up and say that's it, two hundred
and fifty percent, we're out of here. All of those
things kept not happening, and so we always pointed to Japan,
and people say, well, it's demographics. There's some reason that

(28:13):
Japan is an exception to the rule. But I think
the truth is that it's just we've got so much
of it wrong that that's been the reason that all
these bad things that we're supposed to happen kept not happening.

Speaker 2 (28:26):
I just got an email from Washington, DC consultant Bruce
Mellman saying, please explain this chart to me showing all
these deficits, and how is the United States up here?
And how is Japan down here? And I know the
answers that Japanese central bank has interest rates said it
zero point five percent. You can finance a lot of

(28:49):
deficits when the FED is it was at least over
five percent for a while and now is barely below it.
When you're a tenth of that interest rate, Hey, it's
pretty easy to finance deficits. How do you look at
the relationship between a country's central bank and its ability
to manage its own debt?

Speaker 3 (29:12):
Well, the central bank, So if we're talking about a
country like Japan or the US what i'll call in
what I call in the book, you know countries that
if issue their own sovereign currencies, it's not even an
issue at higher rates of interest. Right, Remember when Volka
was fedchair, Reagan was tripling the national debt, right, a

(29:33):
massive build up in military, you know, a couple of
huge tax cuts. Deficits were increasing, that debt was increasing
very rapidly. Interest rates were quite high, but it still
doesn't pose a financing challenge is the central bank is
just crediting bank accounts. I mean, that's how the payments
are made. And you can do that at very high
interest rates. You can do that at very low interest rates.

(29:54):
But when you get that combination of high interest rates
and high debt, right you've got a lot of treasuries
or a lot of jgbs, you got a high debt
to GDP ratio and high interest rates, you can very
easily get into a situation where the rate hikes themselves
are generating enough additional interest income that itself can become

(30:19):
a source of inflationary pressure. So I would say that's
always the relevant risk. It's not that you're going to
run out of money, it's not that you're going to
turn into grease. It's not that you're going to bankrupt
the nation or burden future generations or any of that.
It really is all about inflation as a constraint. And
you can find yourself in a situation where you have
quote too much debt, but in combination with kind of

(30:43):
a central bank policy that is pushing interest rates very
and then you can get into that sort of.

Speaker 2 (30:49):
So we had pretty high deficits in the following the
financial crisis in the twenty tens, we had no inflation
when there was a huge and I mean huge, biggest
since the Marshall Plan since World War two, ten percent
of GDP as a fiscal stimulus that combined with the

(31:09):
shift to products over goods over services and snarled supply
lines and a lot of other factors, led to a
transitory inflation spike from twenty twenty peaked in June twenty
twenty two at nine percent, came back down. Now we're
in a three percent era as opposed to a one
to two percent era. But it's not the deficit that

(31:34):
caused that. It was the fiscal stimulus primarily as the driver.
Where do we see or is that the region me?

Speaker 3 (31:43):
I thought you were setting up a different argument than
you went somewhere. I didn't know.

Speaker 2 (31:46):
I'm gonna say it wasn't the deficit that was a problem.

Speaker 1 (31:48):
That was.

Speaker 2 (31:50):
It was the fiscal stimulus that was inflationary, and that
inflation seems to be transitory. We had following the financial crisis,
we had very modest fiscal stick and massive monetary stimulus,
and we were in mostly a deflationary environment. When we
shifted from monetary to fiscal seemed that all at once,

(32:11):
seemed like that's where we had our transitory inflation spike?
Or do you see it? Am I framing it in
a way that is incorrect? Tell me what you see here?

Speaker 3 (32:22):
Well, so I think a couple of things I would unpack,
rewind a second and go to QE. And I don't
know if you think of that as monetary stimulus.

Speaker 2 (32:30):
I don't, So you don't. You don't think quantity, So
the purchasing of bonds in order to lower interest rates
you don't think of as a monetary policy. How do
you know?

Speaker 3 (32:41):
I think of it as monetary policy. To be sure,
the central Bank was trying to achieve something by doing that,
and in part what they were trying to achieve was
pushing down rates at the long end, I think from
everything I've read, the evidence suggests that it didn't do
very much at the long end. I mean, I've seen estimates,

(33:01):
you know, twenty basis points, So you just didn't get
a lot out of that. Now, they hoped that, you know,
people would reach for yield, you'd have a wealth effect.
Maybe there was some of that kind of stuff going on,
but in terms of stimulus, what I what I see
in retrospect, and what I thought at the moment, right
at the time, was that, you know, BERNANKI and the

(33:24):
FED were thinking that QE was going to be like
stomping on the gas pedal and revving up inflation, and
we'd watch the Bank of Japan try and fail at
this for at least a decade. I think you figure
out why we expected a different result here from what
they got there. But we went ahead and tried anyway,
and you know, three rounds of QE and Operation Twist

(33:45):
thrown in in the middle, right, and still we didn't
get to two percent over the course of a decade.
So if that's monetary stimulus, I don't know. You know,
I'm struggling to see it that way.

Speaker 2 (33:58):
So let me throw something at you that is not heterodox.
And my economist friends disagree with me on this, but
I'm pretty convinced I'm right. I find the wealth effect
at the very least has been greatly exaggerated, and then
in the real world, I think it's kind of meaningless
because look when you look at who. So the wealth

(34:22):
effect is defined as a rising stock market leads to
greater economic activity, which I think is backwards. I think
you have good economic activity. People get hired, they get raises,
they go and spend money. That ultimately leads to a
rising stock market. And the reality is when the stock market,
aside from crashes and like eight or nine one, people

(34:44):
panic sold things and I don't mean just stocks, but houses, cars, collectibles, art, whatever.
When you don't have the stock market rising, that doesn't
affect eighty percent of the population. You know, the vast
majority of equities are held by the top one percent,
ten percent, twenty percent. I think top twenty percent is

(35:05):
something like three quarters of all equities are less than
the top quartile. So the wealth effect isn't an effect
people raising wages affects people spending. And by the way,
the wealthy, however you want to describe, it's the top
one percent ten percent. They tend to spend no matter
what the stock market's doing. You know, if they want

(35:27):
a new car or a vacation or a new house,
they tend to go get it regardless. So the whole
concept if the FED was engaging in QE because they
thought it would awaken the animal spirits via the wealth effect,
well are we you and I in agreement that their
fundamental premise is just completely wrong.

Speaker 3 (35:47):
We are.

Speaker 2 (35:48):
Yeah.

Speaker 3 (35:48):
I mean, maybe there was some kind of placebo effect
associated with QE. If people thought it did a certain thing,
they behave in that way and it has real impacts
on the economy short term or something like that. But
it sure didn't appear to do what the Central Bank
anticipated and hoped it would do. And one of the
things I can remember, you know, people like Janet Yellen
and Ben Bernanki, when they would get pressed on this

(36:10):
what are you hoping will happen? You know, they would
bring up the wealth effect and the reach for yield
and that sort of stuff. But you know, I remember
Bernanki testifying before Congress, and Congress was really frustrated in
the wake of the financial crisis, Like, you know, unemployment
is still really high. The economy is clearly not getting
juiced by whatever it is you're doing.

Speaker 2 (36:30):
Which, by the way, is a very typical post financial
crisis scenario if you look at history, that's what those
recoveries tend to look like.

Speaker 3 (36:39):
Yeah, I mean, you know, you got one fiscal package,
the American Rescue Recogniact, Right, it seemed like a big
number at the time, seven hundred and eighty seven billion,
but it wasn't nearly enough given what we were up against.

Speaker 2 (36:52):
And so a third was a temporary extension of unemployment,
a third was a temporary tax cut yep, and a
third was remember shovel I do two hundred billion dollars.
I mean, yeah, the first Cares Act was en x
that it's a joke.

Speaker 3 (37:08):
It was. It was way too small, and as you
just said, the way that it was put together was
not going to provide a big shot in the arm
for the economy. And so here's Bernanki sitting before Congress,
and congressmen are really upset. They're saying, what is going on.
You're supposed to fix stuff. You know, it's your job.
We gave you the dual mandate. Why isn't it Why

(37:29):
isn't it being fixed? And Bernanki said, and I mean
I remember this, you know it's a quote. He said,
let me just say that monetary policy is not a panacea.
It's not the ideal tool.

Speaker 2 (37:42):
WHOA.

Speaker 3 (37:42):
When he said that, I was like, you know what,
when he's not telling you that fiscal policy is the
ideal tool, but he's telling you that fiscal policy is
the ideal tool.

Speaker 2 (37:53):
Was that was he too nuanced for the geniuses in Congress.

Speaker 3 (37:57):
You have to think, you have to think, I mean speak.

Speaker 2 (38:00):
I'm doing your job and I don't have the tools
that you have. Yeah, so don't expect the same results.

Speaker 3 (38:05):
I'm pressing the buttons at the keyboard. I'm buying mortgage
backed securities and treasuries and I'm hoping it does something.
But you all have the real firepower and you're not
using it. That's what he said. And so when COVID came,
I think we really did learn the lesson this time.

Speaker 2 (38:20):
Maybe you a little too much.

Speaker 3 (38:21):
And you know, but you had the collision. So, yeah,
you have an economy that is largely shut down. As
you said, You've got consumers who can't you spend money
on services because most of that part of the economy
is closed. So we all try shoving what money we
do have into the goods pipeline, and goods have to
be manufactured and shipped, and then we all remember what

(38:42):
that was like, you know, backups at the ports and
all the rest of it. So that collision of constrained
supply and some demand. Yes, to be sure, the stimulus
packages from CARES on through helped people right, not only
replace income, but in some cases people ended up with
more income than they had when they were working. And

(39:04):
so all of those things together, and then you have
to remember that the pandemic came in waves. It wasn't
just you know, one time shock. We thought we were
kind of, you know, moving beyond it, and then here
came delta, and then here came omicron, and then different
parts of the world closing at different times. So I think, Barry,
when you look at the the autopsies that people have
tried to do, say, where did all this inflation come from?

(39:27):
Was it really that last stimulus package? Was it the
fourteen hundred dollars checks that you know, some economists warned,
we're going to put us over the edge. People who've
gone and I think, done the really serious work here,
you know, Peter Orzag, Robin Brooks and somebody else. They
have a paper Bernanky and Blanchard, Olivia Blansharp and Burnet.
You have papers. The IMF has looked at this, different

(39:48):
federal Reserve banks have looked. When you cut across all
of the research that's been published, I think virtually everyone
lands in the direction of it was overwhelmingly the supply
side stuff. It wasn't the demand stamus that played a role,
but it was a modest one. And I'm writing about
this now, so I'm really steeped in, you know, going

(40:09):
back and revisiting.

Speaker 2 (40:10):
What so when we say supply side, how much of
this were the where the we remember seeing all the
ships off of the port and Long Beach. I have
a vivid recollection of interviewing Professor Jeremy Siegel of Wharton
after I don't remember if it was the first Cares
Act or the second Cares Act. I'm pretty sure it

(40:32):
was before the third Cares Act. So CARES Act one
and two under Trump, one, Cares Act three under Biden.
And I recall Siegel saying, we're gonna have a massive
seventies like spike in inflation. No one's prepared for it.
The only good news is it'll be transitory. And he

(40:54):
like long before anyone was even using the I word,
Siegel was all over this based on the fiscal side.
Are you saying did he get lucky or was it
fiscal plus supply shocks?

Speaker 3 (41:06):
Well, I'm saying it was fiscal plus. I mean, you know,
I had a piece in the New York Times in
April of twenty twenty.

Speaker 2 (41:13):
I kind of remember that.

Speaker 3 (41:15):
I mean, that was my sort of warning on inflation.
I submitted it. It was just ready to go in March,
but you know, they liked to hold things, and so
it was published in April. But I don't think that
that last fiscal package is what gave us that burst
of inflation. This, this is what I'm suggesting, is you
go back and you do a really careful retrospective on this,

(41:38):
and yeah, it played a role, But was it the
reason that we tipped over? We wouldn't have had the
inflation that we had, you know, hitting nine percent by
the summer of that year, by twenty twenty two, you know,
getting that inflation. This was a global phenomenon, right, Countries
that did massively less fiscal than we did still the
same or more in some cases more inflation. So I think,

(42:03):
you know, the truth is it was pandemic. It was
pandemic related, it was supply chain, and inflation went up
for reasons mostly related to the pandemic and the disruptions,
and it came down for reasons mostly related to the
working out of the kinks and the supply chains and
you know, resolving some of those issues.

Speaker 2 (42:24):
So I have a vivid recollection of ed Yardini, another economist,
who wrote, when you have very rapid increases in inflation,
they tend not to be structural, and they tend to
be resolved in almost a symmetrical way. The chart looks,
you know, if you have a fast rise, you tend
to have a fast drop off. He was pretty right

(42:45):
about that. And when you go, and he was basing
this on when you looked at the history of previous
inflationary shocks, what you don't want is a long, slow,
gradual increase that suggests structural underpinnings. You want, Oh, we
have this temporary issue. It'll eventually be resolved. I think
the problem was that transitory took longer than everybody expected.

(43:05):
But that still doesn't mean it's structural. It was still transitory.

Speaker 3 (43:09):
Look, you're a brave man. I know using the T
word is still the kind of thing that gets your
head lopped off in certain circles. But I think that's right.
And the part of the story that we haven't mentioned,
of course, is the war and entered the role of
energy and food. And you know, I spent the last
two days I'm working on this new book. And so
I went back and I reread every speech that Jerome

(43:33):
Pell has given it Jackson Hall from twenty twenty to
twenty twenty four, and you can see, you know, his
thinking in real time. And when you read them all,
you know, one after the other, you really see his thinking.
Initially with the transitory and then the war starts and
he starts emphasized.

Speaker 2 (43:53):
Twenty twenty two was the war Russian invasion of UK.

Speaker 3 (43:57):
Yeah, and so that becomes a much big part, and
you can hear him saying, you know, this is where
it's coming from. This is what's driving We still have
problems with supply chains. Now we have this new problem.
So it wasn't a supply side shock.

Speaker 2 (44:11):
It was a multiple Yeah.

Speaker 3 (44:13):
We were just getting hit left and right, shock after
shock after shock, and they fed through the system. And
then at some point when you get to energy, you know,
then all bets are off because it's transportation, it's fertilizer,
which gets food, which gets and then it's just you know,
we we sort of live that before in the seventies.
You know how quickly an energy price increase can bleed

(44:33):
through into you know, broader consumer good categories.

Speaker 2 (44:37):
I just read an article somewhere online recently about used
car prices are still elevated, and it's directly related to
semiconductor's manufacturing. We're closed for a year or so. It
takes a long time to ramp that up. So by
twenty twenty three, when we finally get back to normal production,

(45:00):
you have three almost four years of new car production
down substantially worldwide. Hey, fast forward to or three years now,
you have a shortage of used cars that's still out there.
How long are we going to be dealing with the
fallout from the supply side shock of the pandemic in
twenty twenty it's half a decade later, we're still feeling

(45:22):
effects of that.

Speaker 3 (45:24):
Yeah, I mean, we have words for things like this
when the labor market experiences a really negative shock and
then in the disrupt it doesn't sort itself out. We
talk about labor scarring and historyesis and this sort of stuff.
I don't know that there's a term to use for
stuff like this, but maybe there needs to be. And
you're right. I mean, once we finally got chips again,

(45:45):
they weren't the right kinds of chips, and so it
does take a very long time. An event like, this
is not something you flip the switch off and then
you know. I used to say, when the pandemic started,
you could park your car in a garage, turn the keys,
you know, turn the engine off, toss the keys in
the in the front seat of the car, and go

(46:06):
on vacation to Europe and come back eighteen months later
and start the car and drive and everything would be fine.
But you can't shut the economy down that way and
just turn it off and then expect to come back
a year later. You got a vaccine, let's open everything up,
turn it back on, and things work smoothly. It's just
not going to happen.

Speaker 2 (46:22):
And then complicating things are following the financial crisis, at
least in the US. I can't talk globally. We underbuilt
single family homes here for pretty much a decade that
didn't lack of supply didn't help pricing for either homes,
starter homes or rentals. But I want to address a
labor which you mentioned and hysteresis and scarring that. You

(46:46):
have a very interesting line in the book that kind
of struck me. Unemployment is always a policy choice. Explain
what that means.

Speaker 3 (46:57):
Well, it means that if you truly wanted to eradicate
I mean big thinking, right, involuntary unemployment? What is involuntary unemployment?
Anybody who wants a job, is ready, willing and able
to work, but can't find a job, you're involuntarily unemployed.
Suppose you had a policy whereby you said, the federal

(47:22):
government will fund a job for anybody who wants to work,
wants to contribute, can't find work anywhere else in the economy,
at some base wage maybe benefit package. You have a
federally funded, locally administered job. Right you can contribute, you
could eliminate involuntary unemployment. I'll scay quote unquote overnight. Right

(47:43):
once the policy is announced and you're prepared to provide
the jobs for people to have actual things for them
to do, then anybody who's still walking around without work
is voluntarily unemployed. We tend to worry about people who
are involuntarily unemployed.

Speaker 2 (48:00):
So what does MMT do for us in terms of
this unemployment issue. We don't really worry about it these
days because unemployment has a four handle on it. But
for most of my adult life we've had unemployment rates
as high as five six seven percent outside of crises.

(48:21):
Why haven't we been more aggressive the way let's say
Germany or Japan or Switzerland act when there's an economic contraction. Really,
isn't a whole lot of people involuntarily unemployed in those countries?

Speaker 3 (48:36):
Well, I mean, I think unemployment had a three handle
before the pandemic. That would have been an outstanding time
my opinion, to introduce a program like this, right, because
the take up rate would have been relatively.

Speaker 2 (48:49):
Small, would have been cheap to do.

Speaker 3 (48:51):
Yeah, So you put it in place then, and for
people who say sometimes people say, well there was no unemployment,
I say, great, then that's exactly the right time to
do it. Announce whatever you're willing to pay, and say
that you're willing to hire people. And if no one
shows up, that's just fine. Right, But now the policy,
you've stood up the policy and the program is there
so that when an event like COVID happens, you don't

(49:13):
have to throw twenty thirty million people into the ranks
of the unemployed. You can transition people from the job
that they're about to lose into some new job and
would truncate the downturn. It would replace income or a
portion of income, probably not replacing full income for most
people who lose jobs, But it would be a very

(49:35):
powerful automatic stabilizer. Those people could transition into paid work.
They'd have a job record, and future employer could call
and say, what kind of work is you know buried?
Does he get there on time? Does he picked fights
with his coworker? Is you a pretty good guy? And
then as the income is supported and the economy begins
to recover, those people can transition back into private sector job.

(49:57):
So it works like a very powerful buffer stock, like
a cushion for the economy through the business cycle.

Speaker 2 (50:04):
Sounds a lot like what Claudia Sam form of FED
researcher and creator of the Sam rule, has talked about
putting automatic stabilizers in place so that it's not a
partisan hot potato. When there's a big downturn, there's a
way to cush in the blow and reduce the unemployment rate.

(50:25):
So we're talking about modern monetary theory, we're talking about spending.
What we haven't really talked about is taxes. What are
the role of taxes in deficits and modern monetary theory?

Speaker 3 (50:40):
Well, taxes are for subtraction. That's how I think of it.
I don't think at the federal level. I don't think
of taxes for revenue's sake. Really, Yeah, I know it sounds.

Speaker 2 (50:54):
Well, it sounds Trumpian because some people have argued that
he wants to move to a tariff system, which is
effectively like a European vat tax only at the border
instead of a consumption. I don't know if it's a
negotiating stance, so what have you? But less focus on
federal taxes, more focus on other revenue sources.

Speaker 3 (51:16):
Right, But he's still thinking of tariffs as a revenue source,
so he just wants to change the allocation where the
revenue comes from. I don't think he's thinking that. You
know that taxes or tariffs don't generate revenue that the
federal government in a sense needs to pay the bills.
So what I'm saying is for the federal government, I

(51:36):
don't think of taxes or the role of taxes as
generating revenue that the government needs in order to pay
the bills. So what do taxes do. Well, they subtract
money from the rest of us. So every dollar that's
taxed away from you is a dollar you don't have
and you can't use to chase after goods and services.
In the economy. So one important function of taxes is

(51:58):
to reduce purchasing power in the non government part of
the economy, right, so consumers, businesses have less to spend.
That makes room for the government's own spending so that
it can spend money into the economy without creating inflationary pressure. So,
right now, the federal government this last fiscal year spent

(52:19):
let me just use rough numbers, let's call it seven trillion, right,
and collects five point two trillion in taxes and other revenue,
mostly from taxes, So get a one point eight trillion
dollar fiscal deficit. So what does that mean. It means
that they've made a deposit of one point eight trillion.
That's a financial contribution that goes into the broader economy,

(52:42):
and we can then talk about, you know, where it
goes and what good it's doing in the economy. But
taxes are important because they pull money out and our
one potential way to regulate inflationary pressure. Obviously, they can
be used it make changes to the tax code if
you care about the distribution of come in wealth and
you want to make some kind of change because you

(53:03):
think things have gotten too concentrated, or you can use
it for incentivizing and disincentivizing behaviors, but the big one
is regulating inflationary pressure.

Speaker 2 (53:14):
So let's talk about the opposite of MMT. Right after
the financial crisis, when a lot of economies around the
world were precariously balanced at the knife edge, you had
the Austerians come out and very puritanical belief that deficits
excess fiscal spending, really any good time is problematic, and

(53:39):
we must all pay for our sins. And so we
saw that in the UK, we saw it to some
degree in Greece other parts of Europe. How do you
look at these folks that are pushing on austerity argument
into a weak economy.

Speaker 3 (53:56):
I mean it's economically illiterate, okay, I mean it certainly
didn't work out well to say nothing, we'll hold Brexit aside.

Speaker 2 (54:06):
The UK's recovery was pretty weak, Europe generally was pretty weak.
Of all places, Greece seems to be doing really well today.
Germany is in and out of recession, like wherever you
look around, France and Poland and just Spain is doing okay.
But all these countries have been having ongoing economic contractions.

(54:30):
Do they need to raise their deficit. Do they need
to do a little more fiscal spending? What's the economic
malaise source in Europe?

Speaker 3 (54:39):
Well, I mean it's just what Cain's told us in
nineteen thirty six. It's a lack of effective demand. I
don't think it's necessarily the case that it's got to
be government fiscal deficit. But somebody's got to spend more.
So how do you do that? I mean, there are
two ways to generate this thing we call economic growth.
Somebody's some part of the economy has to spend more

(55:01):
than its income, and if the private sector does it,
that can work for a period of time. But that
generally involves leverage.

Speaker 2 (55:08):
Right, a little bit of credit, borrowing whatever.

Speaker 3 (55:10):
Yeah, barring, and that can be fine. But as the
engine of growth, what we've seen is that when you
rely disproportionately or sometimes entirely on private sector to generate
that growth, it ends very badly. That's basically what happened.
You know, when Bill Clinton was president and you had
the budget, federal budget in surplus for four years in

(55:31):
a row, ninety eight through two thousand and one. The
government's budget was in surplus, and a lot of folks
looked at that and said, oh my god, we finally
did it. You know, let's celebrate the miracle of the
federal surpluses. Isn't this a great thing? And there were
people like I mentioned earlier when Godly who were writing
about this in real time and saying, man, this is
going to end badly because those government surpluses that everybody

(55:54):
is celebrating are being built on the backs of private
sector indebtedness. That it was the private sector that was
spending more than its income, running deficits year after year.
Wind said, it can go on for a while, but
it can't go on forever, and when it ends, it's
going to be really bad. Of course, we had a
recession in two thousand and one and then the surpluses disappeared,

(56:17):
government's budget moved back into deficits. So, yeah, these countries
have to figure out some way to generate the demand.
And it doesn't have to be from government, but it
tends to be the more sustainable way to sort of
create enough demand to keep an economy operating in close

(56:38):
proximity to full employment.

Speaker 2 (56:40):
So, following those four consecutive years of surplus, we had
the dot com implosion and then the recession, and then
towards the very the last month or two of the recession,
we had September eleventh, and then eventually we ended up
with not just the creation of homeland security and a
whole bunch of increase in wartime and defense spending, but

(57:03):
you also had a pretty substantial tax cut under President Bush.
Did that giant tax cut and all that extra deficit spending,
did that then shift that private sector deficit over to
the government, and did things end up a little better
balanced because the economy wasn't terrible, it was just over

(57:28):
leveraged as we had headed into the financial crisis exactly.

Speaker 3 (57:32):
Yeah. I mean when consumers pull back right, because the
government surpluses are like they work like a hoover. They're
just vacuuming up net financial assets. They're sucking dollars off
of the balance sheets of the private sector. That's what happens.
And at some point the private sector christ uncle, and
they want to spend less and save more. That alone

(57:54):
will tend to move the government's budget back into deficit.
So much of the you know, year to year movement
in the fiscal balance is driven not by what Congress
is doing, but by what the private sector wants to
do do they want to save more they're trying to
save more or are they okay spending more and saving less.
Government's budget is endogenous in that way, will automatically move around.

(58:17):
As the economy started to slow down, George W. Bush,
Republicans realized, oh, we should have a policy response. The
economy is slowing. So you got the tax cuts in
two thousand and one, and then you got another one
in two thousand and three. Right move. I mean, the
right impulse was to relax fiscal policies. So I give
them credit. Maybe I wouldn't have structured the tax cuts
the way that they did, and you got a big

(58:39):
expansion of medicare as well r D.

Speaker 2 (58:42):
Right, that was really substantial. So last question on the book.
You're right that Obama was essentially a fiscal conservative when
it came to policy. I don't think the average person
thinks of Barack Obama as a fiscal conservative or certainly
a fiscal policy conservative.

Speaker 3 (59:03):
Explained, Well, like we were talking earlier about that fiscal package.
You know that's seven hundred and eighty seven billion dollars.
When he was coming in to office, the first time,
the wheels were coming off, they were off the economy,
and he had people around him. You know, Christina Romer
was an economic policy advisor, you see, Berkeley professor. She

(59:25):
went on to become chair of the Council of Economic Advisors.
But she told Barack Obama, this is your holy moment.
She was trying to say, this is not going to
be your garden variety recession. You can't do some little,
you know, tinkering and some modest fiscal package, and all
of this is going to be in the rear view mirror.
This is this is big, right, and she could see

(59:47):
that this had the potential to be the worst economic
downturn since the Great Depression. And her memo was to
encourage Barack Obama to go really big on fiscal Now,
a lot of people have written about this, and and
there were others in Barack Obama's.

Speaker 2 (01:00:02):
Circle, the guys Larry Sommer.

Speaker 3 (01:00:05):
Yeah, Larry Summer's David Axelrod, I think I put in
my book famously said you cannot be talking about anything
that has the tea in it, not trillion trillion meaning trillion.
You're going to give people sticker shock, he said. And
so you know, they the I think the men basically
said don't listen to Christina Romert, you got to go
for something more modest. And then what he did was

(01:00:28):
try to negotiate with Republicans to try to bring some
of them on board. Didn't get any but ended up
changing the package so that you had about a third
of it in the form of tax cuts, hoping to
sweeten the deal and pull some Republicans in. Didn't work.

Speaker 2 (01:00:42):
Uh.

Speaker 3 (01:00:42):
And then when it became clear that the fiscal uh,
that the fiscal response was too small, and voices came back,
and you have people like Paul Krugman and all kinds
of people saying, you know, Congress, you got to get
back in there, you got to do another package. By
that point, you know, Barack Obama and the economists around
him had pivoted to austerity. They were talking about, you know,

(01:01:05):
what can we do with a commission to try to
get the deficit down by four trillion dollars at least,
and all this sort of stuff. And we're looking over
at what's happening to Greece and Spain and some of
the periphery countries that how can we.

Speaker 2 (01:01:16):
Make those same mistakes? Yeah? Right, it seems sort of
I have a vivid recollection of having a dinner with
about eight ten people, and Paul was one of the
people at the dinner around this time, and I remember
sort of floating the idea, Hey, you know, this is
the first time I've seen in my lifetime that the

(01:01:39):
party that doesn't hold the White House is actively trying
to sabotage the economy to regain the Like we you
mentioned economic literacy. I said, you can't come out of
a financial crisis and say no fiscal stimulus, and that's
effectively what Congress said, And it kind of got hooopooed

(01:02:00):
back in twenty eleven and twelve ten years later, people like, oh, okay,
maybe this, you know, there was some purposeful economic literacy
that conveniently made the economy less attractive for a president
running for reelection.

Speaker 3 (01:02:20):
Yeah, so we ran the opposite experiment. It's just too
bad that it had to run against the backdrop of
globally constrained supply chains, because we don't still have an
opportunity to just road test what if we really just
engaged the fiscal lever and instead of relying so much
on monetary policy, which is what we did for the
previous three decades. It's just the central banks will take

(01:02:43):
the economic steering wheel and fiscal can mostly worry about
just trying to balance the budget or something.

Speaker 2 (01:02:48):
Well, certainly, since eight oh nine, to let's call it
twenty seventeen, the Tax Cuts and Job Act pure monetary policy,
almost no fiscal policy, see, and we saw the result.
It was a subpar weak job creation, little wage gains,
poor sentiment, poor consumer spending. As soon as the fiscal

(01:03:11):
spigots opened up, things seem to begin to By twenty seventeen,
things seventeen things had already sort of gotten better. But
you know, that was a trillion and change, so I
only had a positive effect on GDP.

Speaker 3 (01:03:26):
Monetary policy works by trying to get people to spend
more out of the same income, and fiscal policy works
by trying to get people to spend more out of
more income. So this shouldn't be a huge surprise, which
one tends to be. The more you know, have, the
more potent response.

Speaker 2 (01:03:42):
Especially when you're coming off a decade or two of
low interest rates. It's one thing when your mortgage goes
from eight percent to four percent. Hey, we could refinance,
and we have a little extra cash in our budget.
But you can't do that from three percent to two percent.
It's just there's no juice left in the limit. Let's
talk a little bit about what we've been seeing over

(01:04:03):
the past couple of decades and what it means for
public policy today. I have to start by talking about
how few recessions we've seen over the past twenty years.
We had the financial crisis, that the recession began in
I think October seventh or December seven, something like that,

(01:04:23):
and then we ever so briefly had a pandemic recession.
That's pretty much it. It seems we're having fewer recessions
and we're responding to them quicker than we used to.
How do you see the depth and frequency of recessions
these days?

Speaker 3 (01:04:43):
Yeah, it's a good question. I definitely agree we've had
longer stretches between them when they've happened. With the exception
of I guess the global financial crisis, they have been
somewhat weaker. That was obviously a big When COVID has
it is its own unique thing. I don't know, Barry.

(01:05:06):
I mean sometimes I feel like Larry Summers had it right,
you know, years ago when he said we only know
one way to grow the economy and that's through bubbles
that we get a good run up in. You know,
whether it's the SNL period or the dot com era
or the housing bubble. You know, something comes along and

(01:05:29):
provides a nice tailwind, and we get a what looks
like a long, robust expansion, except it's sort of sowing
the seeds of its own destruction. And then we end
up with a recession. But we've gotten very good at
clean up on Aisle four. You know, we respond, and
then we set the table and we do it again.

Speaker 2 (01:05:49):
I'm always happy to push back on anything Larry Summers says,
because he is so frequently wrong and yet so widely
louded and regarded. Hey, the twenty tens a gradual, slow
recovery from the financial crisis, despite the lack of fiscal stimulus,

(01:06:10):
and despite the FEDS zup policy that wildly stimulated asset prices.
We didn't have a bubble the pandemic. We still don't
have a bubble. If you want to say maybe crypto
is a bubble or AIS a bubble, I guess you
can make that case. But so far there's the difference

(01:06:35):
between a broad society wide bubble like the led to
the financial crisis where you had really the bubble was
in mortgages. We no longer care about your ability to
service the debt. We just want to It's all about
our ability to sell the debt to a securitizer that
was clearly a bubble. It's kind of hard to say

(01:06:57):
we're in the midst of a big bubble of me today.
It's always obvious in hindsight. Are we in a bubble today?
Can we say that this has been a pretty robust
fifteen year run with no bubbles?

Speaker 3 (01:07:14):
Look, I don't I don't know. I think that things
have felt awfully bubbly to me for at least a
few years. I mean, you can it was the spackfa
the spack craze.

Speaker 2 (01:07:28):
Oh god, that's a decade ag, I.

Speaker 3 (01:07:30):
Know, but it you know, these things come and then
they transition, and then it's the next thing. It's you know,
we did the memes stock thing. Now we have AI
at Crypto and it feels tenuous. Let us I.

Speaker 2 (01:07:44):
Try and draw a distinction between these giant, bubblicious, impacting
society things that you know, feels like it's just taken
over everything that dot COM's felt like it just took
over everything in the late nine these and people forget
the Greenspan speech was ninety six, the irrational exuberance speech.

(01:08:05):
You still had another for almost five years of growth.

Speaker 3 (01:08:09):
Well that was Kine's point, right, The market can stay
irrational longer than you can stay solvent, which is what
makes it so tough to find the entry point to
come in and say yeah, we're here.

Speaker 2 (01:08:19):
You know, you know Canes had. I still don't understand
why so many people fight against what have been such
self evident observations by Canes. Of course, when you have
a contraction, it's the government that should spends, but no
one wants to do the flip side of that, which

(01:08:41):
is when you have a robust economy, that's where the
government should be. That's where you can think about a deficit,
not in a contraction. Why do so many economists ignore
the brilliant insights that Lord Kaines had a century ago.

Speaker 3 (01:08:58):
Well, well, I think we got you know, stripped of
most of the really interesting stuff. When Hicks and Hanson
gave us the sort of islm interpretation of John Maynard Kaynes.
It took out a lot of the really interesting you know,
the role of expectations and psychological impulses and all of

(01:09:19):
that sort of stuff, and it became this kind of
static you know. LM curve go up, I curve go down.
We pretend we can analyze the economy as having two
separate and distinct spears of spheres, a monetary and a
real side of the economy. And I just don't think
people go back and read the original text, and so
the rich stuff too often gets left out.

Speaker 2 (01:09:41):
Meaning explain the rich stuff from Canes the animal spirits.

Speaker 3 (01:09:47):
Well, people use the phrase animal spirits, but they use
it loosely to just mean that when people start feeling good, optimistic,
that it means they're willing to take on some more risk,
make more investment. They sort of turn it into that.
Where I would say Chapter seventeen is the most important
chapter in the general theory, it's also the hardest one

(01:10:07):
for most people to understand. That's where Caines deals with
things like the own rates of interest in liquidity preference theory,
and that's what I'm talking about that's very hard to
tease out and to bring forward in the ISLM framework.
It's kind that you can argue that it's embedded in
the LM curve it's there somewhere, but nobody sort of

(01:10:30):
manipulates the standard Canesian model in ways that really reflect
that deep concern of Kynes's in terms of the role
of long term expectations and liquidity preference and that sort
of stuff.

Speaker 2 (01:10:42):
So we're recording this towards the first quarter of twenty
twenty five. We're in full DOGE administration mode, the Department
of Government Efficiency. How do you look at all these
federal layoffs, all these people in DC that we don't
know if these job losses are going to stick with

(01:11:05):
the courts are going to say, But hypothetically we lose
ten or twenty percent of the federal government three million workers.
What does that do to the economy, Well, it throws.

Speaker 3 (01:11:16):
A lot of people out of work, and then through
a multiplier effect. Now we go back to Keynes, it's
not just the person who loses their job and now
has no income or has income replaced on unemployment at
a lower rate or whatever. It's the jobs that are
tied to those jobs. And so when millions of people
are hundreds of thousands of people in this case, I

(01:11:37):
guess start losing their jobs, it means less spending, which
means less income for someone else, which means they go
on to spend less. I think it was You'll probably
know very better than I will. I think it was
Torsten's lock. I think who put out a note for
clients just maybe a week or so ago that said
basically three x whatever. You know, if you think that

(01:11:57):
one hundred thousand people are going to lose their jobs,
it's more like three. It's three to one. Right, You're
not just.

Speaker 2 (01:12:02):
Looking canes and multiplier.

Speaker 3 (01:12:03):
Effective to the macro effects. So I don't know this
haphazard thing. Do you respond to any email or this
is no way to go about looking for smart ways
to trim you know, and find efficiencies in government.

Speaker 2 (01:12:19):
So from a modern monetary theory perspective, what are the
smart ways to approach public policy? Do you think about
deficits to think about spending?

Speaker 3 (01:12:31):
Well, the big thing that frustrated me when I served
on the Budget Committee was the fact that no one
and I mean not a staffer, not a senator, not
anyone on either side of the aisle ever gave the
briefest moment of concern care attention to inflation.

Speaker 2 (01:12:48):
You're seeing there that is genuinely shocking.

Speaker 3 (01:12:52):
Absolutely shocking, frustrating, maddening. You got people writing bills, you know,
a trillion dollar infrastructre your bill of Medicare for all,
bill of this bill of budget or whatever. And the
mentality is if you can just stitch up the numbers
such that the amount of money you want to spend
is offset by you know, savings elsewhere in the budget

(01:13:15):
or new revenue, then you've done your job, because now
you have deficit neutral legislation and you're good to go
and you can go vote and you've been fiscally responsible.
And Kelton is sitting in the room going, oh my god,
you guys. You know, you're talking about spending let's say,
trillions of dollars into the economy, and let's suppose it

(01:13:36):
was some big, ambitious, green new deal infrastructure whatever program,
trillions of dollars, and your plan is to completely offset
that spending with new revenue. But you're only going to
get the new revenue from a handful of people at
the very top of the income distribution of corporate tax increase,
the wealth tax, or financial trans out, whatever it is.

(01:13:56):
You know, they throw all this stuff around, you're potentially
open us up to a huge inflation problem because You're
going to broadly spend trillions into the hands of people
in the economy while only removing by taxing money from
people at the very top of the income distribution. And
I look at that and say, this is not fiscally responsible.

(01:14:18):
If you're doing this in a fiscally responsible way with
an MMT lens, you're not asking how do I ensure
that my spending is deficit neutral? You're asking how do
I ensure that my spending will be inflation neutral? And
that's an entirely different problem for an agency, Congressional budget office,
for omb for other people who are thinking about and

(01:14:40):
writing federal legislation. You have to approach this in a
completely different way.

Speaker 2 (01:14:44):
So I'm going to assume you're not a big fan
of the Elizabeth Warren wealth tax sort of thing, or
even some of what Bernie Sanders has proposed with another
tax bracket for the wealthiest people. I don't think that's
how people generally perceive MMT. Am I mischaracterizing this or

(01:15:04):
is that accurate?

Speaker 3 (01:15:05):
I mean you're accurate. We talked earlier about what is
the purpose of the tax, and I said, the big
one is it removes It removes income from somebody, and
why would you want to do that. Well, one reason
is to make sure that they don't have those dollars
and they can't spend them, because it helps you regulate
inflationary pressure. But I also said you could make changes
to the tax code if you have, you know, deep

(01:15:27):
concerns about concentrations of wealth and income. If you think
things have gotten to extreme, there are things you can do.
You can close loopholes, you can think about new ways
to raise revenue, can look at the estate tax, you
can look at and that's a legitimate thing to do
or to think about through an MMT lens, independent of
how much revenue will it raise. And that's how Senator

(01:15:49):
Warren's Senator Sanders. They tend to think of these as
I need to get money to pay for X, Y
and Z. Rich people have a lot of money. Therefore,
let's tax rich people so that we can be fiscally
responsible and pay for our spending. And I just think
from an MMT perspective, that is not the way to
go about it.

Speaker 2 (01:16:09):
The Willie Sutton theory of taxation. So I doubt that
you're going to get this phone call. But hypothetically this
administration reaches out to Professor Calton and says, hey, we're
really thinking about extending the twenty seventeen tax cuts and
job ACKed. We could do it for ten years, because

(01:16:29):
that's what the rule is. We could do it for
five years and not worry about the offset at someone
else's problem. What do you tell them about the TCJA,
which some people accused of being very and a lot
of the data supports it was very heavy towards the top.
Pick a number ten percent, five percent, two percent of earners.

Speaker 3 (01:16:53):
I mean the number that gets quoted a lot is
that eighty three percent of the benefits went to people
the top one percent of the income distribution that's on
the personal tax.

Speaker 2 (01:17:03):
Have you seen the prices of portions and ferraris, they've
gone through the room. These people need some help.

Speaker 3 (01:17:11):
So look, I mean, on the I always think of
inflation kind of that's my first stop on the train ride.
So I heard a lot of people saying, if these
tax cuts are extended, it's going to exacerbate the inflation problem,
and I said, no, it's not. I mean, come on right,
we're just talking about a continuation of what's been in
place already for the better part of that new stimulus

(01:17:34):
of any kind, so that I set that aside.

Speaker 2 (01:17:37):
So if this is, if JA is renewed, non inflationary,
but there's still some inflation out in the economy, and.

Speaker 3 (01:17:47):
They're talking not just about an extension, but you know,
they might have to fiddle with the numbers because they've
only given themselves I'm saying, only only given themselves four
and a half trillion in headroom on the tax side.
So if the president wants things in there like no
tax on social Security, no tax on overtime, no tax
on tips, well you're not going to fit that in

(01:18:08):
that four and a half trillion. So now what are
they going to do. They're going to go and take
a look at some of the corporate stuff, some of
the personal stuff. Maybe they go for an extension of
three or five years so that they can create a
little bit of headroom to add some of these other things.
There's inflation potential in that. Now you hear talk of
a doze dividend and five thousand dollars checks. I mean,

(01:18:31):
we're getting into some serious money here.

Speaker 2 (01:18:35):
If the fourteen hundred dollars Cares Act one was inflationary,
what does that mean for what would a five thousand
dollars check do for PEDA.

Speaker 3 (01:18:44):
Okay, so let's remember the first Cares Act was March
of twenty twenty and that package included twelve hundred dollars checks.
That was President Trump. And then at the end of
the year, in December of twenty twenty, you got the
nine hundred bills billion dollar package that included a six
hundred dollars check. That was President Trump was after the election,

(01:19:06):
but he's still president. He didn't want to send a
six hundred dollars check. He was really mad about that.
He said he wanted at least two thousand, four thousand.

Speaker 2 (01:19:15):
Yeah, that's a big number.

Speaker 3 (01:19:17):
It's a big number. And he said it ought to
be two thousand. He's in fact, he said six hundred
is like an insult, and is said, I want two
thousand per the individual and four thousand per family. But
he couldn't get it, so he had to settle for
the six hundred dollars check. And then it was Biden
three months later in March of twenty twenty one, who
came in with the fourteen hundred, which when you added

(01:19:37):
to the six hundred two thousand, which is what Trump
wanted all along. Ironically, it's a lot of the Republicans
who are the loudest at complaining about that fourteen hundred
dollars check being the thing that tipped us into you know,
the great inflation.

Speaker 2 (01:19:53):
Of the It's never one thing, it's always a multiplicity
of different Yeah.

Speaker 3 (01:19:58):
So all of those things definitely put a lot of
money into people's hands, and it definitely helped support consumer spending,
and I mean it modestly increased inflationary pressure. So now
I think they're talking about you know, a five thousand
dollars check going to households what seventy seventy six or
so million households.

Speaker 2 (01:20:19):
Wow.

Speaker 3 (01:20:20):
Yeah, but they're saying, no, don't worry, because that money
was going to be spent by government anyway. And we're
finding all these efficiencies and so we're just gonna let
you spend the money instead of letting the federal government
spend money. Problem is the math.

Speaker 2 (01:20:32):
Doesn't work well, you know math who really believes numbers
should add up anyway? All right, before we get to
our favorite question, I just have a curveball to throw
at you. When I was an undergraduate at sunny Stony Brook,
the head of the math department was a guy named

(01:20:53):
Jim Simons who eventually set up Renaissance Technologies. You've been there,
Did you ever get a chance to to meet Professor Simons?

Speaker 3 (01:21:03):
I did not meet him, but I had a couple
of encounters with him. One in particular, it was kind
of funny. I was right in the middle of the
pandemic twenty twenty. I don't remember what month it was,
but it must have been reasonably nice out because I
was sitting in the house drinking coffee one morning and
I happened to look over my shoulder into our backyard

(01:21:23):
and I see we live on the north shore of
Long Island, and I see these two kayakers pulling this
little dinghy boat up to our dock, and there are
two older people in the boat. And I said to
my husband, go find out what is going on. Who's
getting towed up to the dock. And so he leaves.
He goes outside, and I see the couple climb out

(01:21:44):
of this little boat and they tie it up to
the dock and they go walking up and my husband's
gone for a while and he finally comes back and
he says to me, you'll never guess who that was.
And I don't know what made me say it, except
I knew he lived in the area. I said, Jim
Simon's and he said, how did you know that? I
don't know.

Speaker 2 (01:22:00):
I just un believe.

Speaker 3 (01:22:02):
Yeah, there he was. You know, I pictured a yacht,
but no, it was a tiny little outboard.

Speaker 2 (01:22:09):
I'm sure there's a yacht or two flowing somewhere in
the Mediterranean or down in the Caribbean. All right, let's
jump to our favorite questions while we still have you,
starting with what have you been doing to stay entertained?
What are you watching or listening to these days? Yeah?

Speaker 3 (01:22:25):
I feel like it was a long dry spell where
we couldn't agree on anything. You're talking about streaming like
Coflix or whatever. We could not agree. My husband will
start something, I watch half of it, I hate it.
We stopped. So we went back and rewatched Miss Masel
because he loved that at the same time.

Speaker 2 (01:22:42):
Yeah, and then although it did kind of go off
the rails in the last couple of seasons.

Speaker 3 (01:22:47):
Well we enjoyed that was okay. We both loved that.
And then two nights ago we started streaming nineteen twenty three,
the second season. Oh really, I love I watched that.

Speaker 2 (01:22:58):
That's part of the Yellowstone.

Speaker 3 (01:23:00):
Yeah, I was on an airplane and I'd never heard
of the thing. And years ago I watched I think
they had five episodes available and I just ate them up,
and then I came home and said, you got you
got to watch this with me. I'll start it all
over with you. And so a couple days ago, I
think season two came out.

Speaker 2 (01:23:15):
So huh, I'm gonna I'm gonna definitely have to check
that out. Tell us about the mentors who affected your career,
who helped shape the economists you are today.

Speaker 3 (01:23:25):
Well, I mentioned John Henry early on. That's an undergrad mentor,
and then graduate kind of my masters, that's Randy Ray
I also mentioned, and then when Godly came after, and
then Warren Mosler. I know, those are the four men
who I think, more than anyone else, shaped not just

(01:23:48):
my professional life, but in a lot of ways just
my life.

Speaker 2 (01:23:53):
Huh, really really interesting. Let's talk about books. What are
some of your favorites? What are you reading right now?
Although I know when you're wrapping up a book, there's
no time to read other books other than research.

Speaker 3 (01:24:05):
It's exactly right. I go back and I consult books now,
mostly for the purpose of working on this book. But
I'm an old school you know, like I think people
should read Veblin. I think they should read The Theory
of Business Enterprise. I think they should read the Theory
of the Leisure Class. I think people should read Minski.
I think, you know, Stabilizing an unstable Economy is really

(01:24:28):
hard to plow through. But Can It Happen Again is
a wonderful little book. People should read anything by John
Kenneth Galbraith. Right now, I'm reading Galbray's son, James Galbraith
and his co author Jing Chen have a new book
just came out last month called Entropy Economics, So I

(01:24:49):
just started that.

Speaker 1 (01:24:50):
Huh.

Speaker 2 (01:24:51):
You know, that's the worst part about writing a book
is you just have to put all your reading that's
not related off to a side. It's no fun. Our
final two questions, what sort of advice would you give
to a recent college grad interest in the career and
either economics or academia.

Speaker 3 (01:25:09):
I think anybody who wants to study economics should try
to find a program where they can get exposed to
a broad array of you know, diversity of views, a
pluralist program if you like something where you know, every
class you walk into isn't going to be some version
of itself general equilibrium theory and that sort of thing.

(01:25:32):
Try to find places where to as much as you
can you get what might have won one day been
called political economy. You know, where you can actually read
interesting thinkers and do more than just i'll say sterile
agent based modeling and all that. You want the real
world in there. You want finance and banking. You know,

(01:25:52):
these people who came out of economic and finance programs
ahead of the GFC. A lot of people said, I
couldn't make sense of what was happening because we never
had any room in our models for finance or banks
or credit. We didn't talk about any of those things.

Speaker 2 (01:26:08):
Huh, really interesting. And our final question, what do you
know about the world of failing the blank? Public policy, economics,
deficit spending today? You wish you knew twenty five or
so years ago when you were first getting started.

Speaker 3 (01:26:23):
So that conversation I had when I was an undergraduate
about where to go to graduate school, and I can
remember Randy Ray saying, if you go to Harvard, you
won't suffer the slings and arrows that you'll suffer if
you go to a program like Notre Dame at the time,
or the New School or something like that. I'll never

(01:26:44):
forget him saying you can avoid the slings and arrows.
That was thirty years ago, and I think I didn't
take the advice. I went to Cambridge, England, and then
I went to the News School, and I have definitely
suffered the slings and arrows over many years. I think
I wish I had known or understood better just how

(01:27:07):
petty and aggrieve a lot of academics can be.

Speaker 2 (01:27:11):
What's the old joke, Why is academic politics so vicious
because the right there is so little at stake. Yeah,
it's really true.

Speaker 3 (01:27:20):
Yeah it is. I didn't understand at the time, but
I live to learn right.

Speaker 2 (01:27:25):
But you know, the academic lifestyle is really not a
bad lifestyle. You get to work with bright young students.
It's usually college towns or lovely parts of the country.
It sounds like you enjoy being a professor and your
husband enjoys being a dean.

Speaker 3 (01:27:46):
Well, he's a professor, sob.

Speaker 2 (01:27:48):
Is he still teaching or is he head of the
department or both?

Speaker 3 (01:27:51):
He's he's a professor. He's got an endowed chair in
the history department, but as of a month or so ago,
he is once again back in the day office. He's
an associate dean now, so he's doing both well.

Speaker 2 (01:28:04):
Stephanie, thank you for being so generous with your time.
We have been speaking with Stephanie Kelton. She is professor
of economics and public Policy at Stonybrook University and author
of the best selling book The Deficit Myth. If you
enjoy these conversations, well, check out any of the five

(01:28:25):
hundred and fifty or so we've done over the past
ten plus years. You can find those at iTunes, Spotify, YouTube, Bloomberg,
wherever you find your favorite podcasts, And be sure and
check out my new book, How Not to Invest The
Bad Ideas, numbers, and behaviors that Destroy Wealth, coming out

(01:28:46):
March eighteenth of this year. I would be remiss if
I did not thank the crack team that helps me
put these conversations together each week. My audio engineer is
Andrew Gavin. Anna Luke is my producer, Sean Russo is
my head of research. Sage Bauman is the head of podcasts.
Here at Bloomberg, I'm Barry Retorts. You've been listening to

(01:29:08):
Masters in Business on Bloomberg Radio,

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