Le Show; 2018-10-21

From deep inside your audio device of choice. Well, first some news about our friend, the Adam. Clean, save, do cheap to meter. Save, save, do cheap to meter. Save, save, do cheap to meter. Save, save, do cheap to meter. Save, do cheap to meter. Deadline Tokyo, Japan's Toshiba. Unlike Haiti's Toshiba, this is the big one. And IHI, another Japanese company, are dissolving a joint venture that manufactures nuclear power plant equipment. They're scaling back operations in a field battered by Renewable Energy. Who would have thought that this is from Nikkei Asian Review? The combined company will be dissolved and liquidated. Just like a headache powder.

In reverse, they liquidated and then dissolved. Roughly 80 employees will be assigned to other departments at parent companies, in principle. Well, that's the best way to be reassigned. The FUC disaster occurred soon after the company was formed in 2011, has depleted global demand for new reactors and upended the business landscape, which is when you gaze upon it, perhaps the most beautiful plant, no. And understanding the mechanics of earthen materials and their interactions with everything else, like fluids, the atmosphere, mines, natural resources like oil and gas, even structures like bridges and houses and tower of pizza, is the specialty of a Duke civil and environmental engineering professor Tomas Huikun. Huikun. Now, he and fellow Duke faculty member. Both experts in multi-physics geomechanics will be using it a nearly $1 million grant from the Department of Energy

to determine how physical and chemical processes deep inside the earth might interfere with or degrade nuclear waste storage facilities. You see, these are facilities that have to keep something safe. For, you know, 10,000 years, America is what? 300 years? 200? New Orleans is 300 years old. I know that. 10,000 years, ladies and gentlemen, the decommissioned fuel rod is still highly radioactive as it languishes for 10 years in a cooling tank. Even then, it registers a temperature of about 215 degrees Fahrenheit. The time it'll take to reach a point when it's no longer dangerously radioactive 10,000 years. Most nuclear waste is currently stored temporarily, temporarily around the plant where it was produced. Those locations are vulnerable. A safer place to store nuclear waste according to Huikun is between a quarter mile and a half mile beneath the earth's surface.

Where nobody will know it's for decades. Nuclear-capable countries have been busy designing deep earth repositories, each designed varies. But, says Huikun, the steady heat emitted by the nuclear waste has a disturbing effect on the surrounding rock of those repositories, which, of course, have only been designed, not used. After only a few hundred years, that rock may dry and crack, crumbling the protective barrier and allowing radioactive isotopes to migrate back up. Other geochemical processes could also degrade the barrier materials, corroding metal canisters or transforming the clays in which they're packed. We're charged with understanding how temperature and pressure can contribute to drying and cracking in the plant repository. And what kinds of remedies we can propose? I can think of one. Clean, cheap. Too safe to meet our friend, the atom. Hello, welcome to Lucia. Hello, welcome to Lucia.

Hello, welcome to Lucia. Hello, welcome to Lucia. Hello, welcome to Lucia.

Hello, welcome to Lucia. Hello, welcome. Hello, welcome to Lucia.

Hello, welcome to Lucia. This is Lucia. And a few things ago, some time ago, in one of my occasional conversational segments, I had a guest by the name of Dr. Stephanie Kelton. And she talked about something called modern monetary theory. And a lot of listeners were intrigued by it. It's time has passed, many things have happened. And I thought there was an opportune time to welcome Dr. Kelton back to the show. She's Professor of Public Policy and Economics at Stony Brook University. In New York, formerly Professor of Economics at the University of Missouri, Kansas City. She was Chief Economist on the US Senate Budget Committee Minority Party staff. That is the Democratic Party staff. And founder and editor-in-chief of the blog, New Economic Perspectives. Dr. Kelton, welcome back. Thank you so much for having me back. Let's do a little really preliminary stuff at the beginning,

just so people don't feel left behind, or just so people don't start reading the left behind books. What is macroeconomics? So macroeconomics is the big picture stuff, right? As distinct from microeconomics, which focuses on things like individual consumer behavior, individual firms, macroeconomics, tries to wrap its arms around the entire economy and asks questions like, what makes the economy behave the way it does? Why does our output or our GDP bounce up and down and then go through these things we call business cycles? Why do people sometimes get thrown out of jobs in large numbers? And why does the economy go into recession? And what if anything, can policymakers do to mitigate those business cycles? And so there are policy-related questions attached to being a macroeconomist? Now, as I understand, and I've been reading your work and the work of two other people,

I think, who are founders or major thinkers in modern monetary theory, Randall Ray, no relation to the FBI director, right? Correct. Okay, good. Well, they go to bed. And Warren Mosler, I gather that one of the key points in this theory that you all propound, is that there are a couple of basic mistakes in conventional economic theory, one of which is analogizing household behavior to the economy, which would be basically analogizing macroeconomics to macroeconomics. Do I have that correct? Well, I think that's close enough. I think that definitely you're correct to say that one of the things that we work very hard to try to do is disabuse people. You know, policymakers, lay people,

pundits, and others, disabuse them from this notion that the government needs to operate its budget the same way that you and I would operate our budgets, and that is, like you said, that the government is basically just a giant household, and it's subject to the same sort of constraints, and it should play by the same set of rules, and be prudent with respect to its finances, not spend more than it takes in, pay down its debt, and all that sort of stuff. That's the stuff that I remember from Econ 101 way back when I was in university, as something that was described as fiscal recititude. Is that derived from Austrian economic thinkers of the mid-20th century, or does that go back farther? It even goes back farther. Yeah, I mean, this dates back centuries. Even going back to the work of Adam Smith or somebody like that, you can find these sorts of arguments about, you know, the need to be prudent with respect

to government finances, and in some cases, you know, it was a pretty good argument during the time, because the country is operated with very different monetary arrangements, countries that were on a gold standard, or a bi-metallic, gold and silver standard, or something like that. So the rules really are different, depending upon the type of currency arrangements, or monetary system we're talking about. But today, you know, in the modern era, in the United States, for example, we've got a purely, we call it a fiat currency. It's not feathered to anything. It's not tied to gold. We don't fix the value of the US dollar to another country's currency. There's no underlying reserve asset that the government promises to convert dollars into. And so it's a floating currency. It's purely fiat, and the rules change. It changes the rules of the game. And what we think is that too often, the government fails to recognize that it's gone off of the gold standard, and so it continues to try to behave

with respect to budget and so forth, as if it's still, you know, as Williams Jenning Bryan once said, on this cross of gold. In the days of the gold standard, the government pegged, as I understand it, the value of the dollar at so many dollars per ounce of gold. I remember when I was growing up, it was $35 an ounce. What determines the value of the dollar now? Well, you kind of have to say with respect to what. So, you know, the value of the dollar relative to another country's currency. So you'd say, well, I want to buy some British pounds. So what's the value of the dollar in terms of British pounds? But it changes all the time, because there are exchange rates and those things fluctuate all the time. It's an open market, right? Yeah, so these are currencies, the value of which changes relative to other countries' currencies. And even with respect to gold or, you know, housing or anything you can imagine,

what is the value of the currency? Well, it changes over time. Now, I think that when people heard our last discussion, the thing that inspired some of them to write in letters and saying, but wait a minute, was the assertion propounded by you and your colleagues that not to quote Dick Cheney, but deficits don't matter in the way we've been taught they matter. That there are times in the business cycle when running a deficit is not a bad thing. It's arguably a good thing for the economy and that if I don't make an absolute hash of it, the argument that you folks would make is that the wisest macroeconomic policy is in many ways to be counter-cyclical, to go against the tide of the business cycle as opposed to going with it.

I have that took completely wrong. No, you have an exactly right. That's exactly what you want. A government like the federal government to do with its budget is to allow its budget to move counter-cyclically, like you said, which is to say that when the economy is turning down, when people are tightening their belts and closing up their wallets and they're reluctant to go out and spend more money, that's depriving the economy of customers, of sales, businesses, of revenue and profits. While the private sector, while households are tightening their belts and businesses are losing customers, what you want is for the government to take the opposite position with respect to its budget to replace some of that lost demand. It does that exactly, as you said, by allowing its budget to move counter-cyclically so that either more spending happens or fewer taxes are collected or a combination of two. That helps backstop the slide in the economic activity

and replace some of that lost demand so that the economy can operate closer to full employment. So if I follow that, this would not in terms of MMT thinking have been a really great year to enact a tax cut because the economy is already running hot. Well, you know it's interesting because what I just said wasn't really unique to MMT. It's just sort of Keynesian economics. The idea that the government should behave, you know, run fiscal policy, counter-cyclically is very Keynesian and what you're suggesting is also very Keynesian. And that is that as the economy gets closer to what economists would call something like full employment that the government's budget then should be backing away in terms of the amount of stimulus that it's providing to the economy. So there are a lot of Keynesian-type economists right now who argue that the tax cuts were a horrible idea that they were going to be destructive in the sense that they were pouring gasoline

on the fire that the economy was already running hot and that this is precisely the wrong time to come in and add additional stimulus. I don't think that's the MMT position. I think that, you know, you mentioned Randy Ray and Warren Mosler. I think that, you know, Randy wrote a very substantial piece co-authored and published at the Levy Economics Institute about a year and a half ago, I guess, asking full employment, are we there yet? I think that was the title of a piece. And Randy took a different position from the conventional wisdom within the economics profession. Most economists would have said, yeah, we are there. This is full employment. And Randy's piece argued, no, we're not there. We have a good ways to go in terms of the labor market and the slack. And he said, we're not close to full employment. So if you were to come to one of us and say, could we afford to do a trillion dollars of infrastructure at this stage in the business cycle? All of us would have said, yeah, we probably can. Because we view there being enough remaining slack

that the economy could absorb that additional demand without causing some inflation problem. And now we wouldn't have said terrific. Let's do these tax cuts, because this is really great policy. But we would not have been put off by the idea that the economy could handle additional stimulus. Now we're speaking on a day when the most recent unemployment figure came out and it's 3.9% I think, which is being hailed in the headlines as the lowest unemployment figure in 49 years or something like that. So it's your argument that we're not really a full employment yet based on people who have left the labor force and therefore aren't counted in the unemployment figures. It is in part. It is in part that. Yeah, I mean, the job numbers came in this morning. They were kind of disappointing, actually. But the unemployment rate, I believe, the official unemployment rate ticked down to 3.7%. So yeah, I mean, we're looking at near record low, official unemployment rate.

And yet there appears to be lots of evidence that the economy can absorb additional stimulus and more people will come in, take jobs. There are a lot of people who are still out of the labor market who we think could be brought back in. You have a lot of people, millions of people who are working part-time. Economists say part-time for economic reasons, which means they want more hours, but their bosses won't give them additional hours. So they're stuck in part-time work when they really want full-time work with benefits and so forth. So it isn't clear how much more unemployment there is in the economy, how much closer we can get to something like genuine full employment without creating an inflation problem. But I don't think we're there yet. You mentioned benefits. I get the impression from some stuff I've read that one of the reasons employers won't employ more people full-time than they do now is because they want, precisely the reason they want to avoid the obligation to pay benefits.

Is there any data to support or rebut that? There's not only data to support that. There's plenty of anecdotal evidence as well. In my previous post at the University of Missouri, where I was chair of the economics department, I can remember being cautioned by the dean and other administrators to be careful or chairs to be careful when hiring adjunct professors and putting people over that threshold where the university would be on the hook for benefits. So it's just a feature of our disastrous health care policy and the delivery system that incentivize employers to restrict the number of hours available so that they can avoid providing benefits. Now I'm not big on charts. I'm a text person as opposed to a chart person. But as I read MMT material, there's one chart that sort of stands out as particularly memorable and mnemonic,

which is the, I guess it comes out of the banking background of one or more of the people in MMT, which is that accounts have to balance that spending on one side of the balance sheet equals income on the other side of the balance sheet. Can you talk a little bit about that? Sure. The chart you're referring to, we usually refer to it as the sector financial balances chart or the sector balance graph. That's a catchy name for us. I mean, it rolls off the tongue. It's funny about this thing. You're right. We use it. We use it in MMT. But a lot of other people use it like Jan Hatsius, who's the chief economist at Goldman Sachs, has referred to that chart as, these are his words, the most important graph in the world. And he said, wow, what is so important about these three lines? Why is studying and understanding this thing? So important.

And what I usually do when I, you know, speak to audiences and I introduce this chart. And it is a mind-bender. It really does flip the perspective, because I walk in and people have a certain understanding of the way government deficits work. And by and large, the audience thinks the government's budget ought not to be in deficit, that it would be better to eliminate deficits and even better if we could get the government's budget into surplus. That's kind of the starting point for people. And then I put this. And again, you're talking about the federal government, because it's very different for study than local government. Right. Good, exactly, for the federal government. So this is the starting point for most of these people. So I walk in and I put up this chart and I say, okay, let's talk about this. Let's talk about what the government's deficit really is. And, you know, I started at basically zero with them. And I say, what does a government deficit really mean? What it means is that the government is putting more money into the economy than it's taking back out. Okay. So if it spends a hundred in, but it only taxes 90 back out,

we label that a deficit. And everybody gets all, you know, their hackles up because the government's budget is in deficit. But it's like walking through life with one eye open and the other eye closed. You got to open both eyes so that you can see both sides of the ledger. These are accounting identities, as you said. Everything has to net to zero or everything has to balance. So if the government's budget ends up in deficit with 10, somebody else's budget ends up in a surplus with 10. And that's what this sector balance graph does. It brings that into that full picture. And so people are able to see effectively that the government's red ink is our black ink. And so I can walk them through history through the 50s and the 60s and 70s and that period in the late 70s, early 80s, when the trade balance goes from deficit into surplus into deficit when the US begins running trade deficits and all that. And I walk them through the whole thing

and then we get to the Clinton years and we stop. And I say, okay, here we are. Bill Clinton is president, 1998, 1999, 2000, 2001. Four years running, the government's budget, the federal government's budget is in surplus. Now, we're supposed to celebrate this, right? This is a great achievement. Find the fiscal responsibility. And then I show them that the consequence of having the federal government's budget move into surplus is that the budget for the rest of the economy, the private sector, moved deeply into deficit at that time. And they can see it all right there before their eyes. And suddenly, they're not so excited about the prospect of having the government's budget in surplus or even in balance. They suddenly gain a new appreciation for government deficits because they can see that they're, in fact, the source of the surplus to the rest of the economy. It strikes me, because I'm old enough to have seen a lot of different administrations come and go, sadly. No, actually, fortunately, that the out party,

whether Republican or Democrat, very often seems to be more hawkish about deficits than the in party that the in party for various reasons differing between the two parties. But the in party always likes to spend money more than it doesn't. And that the out party always likes to hector it for creating deficits. So that now the Democrats are the deficit hawks. The Republicans make these tax cuts. They make the espouse a very big defense budget increase. And, you know, don't worry about it. Don't worry about it. It'll take care of itself. It's almost, well, I guess it's really supply side economics again. The growth in the economy from the tax cuts will pay for the tax cuts and even more. Have we ever seen that actually re-affired in data? No, but you know what?

It might be possible to have it work that way. It's just that they keep constructing their tax cuts in the worst possible way, which is to say, almost all of the benefits go to the people who are least likely to turn around and spend the windfall back into the economy. So 83, 84 percent of all of the benefits from the recent 1.5 trillion Republican tax cut, virtually all of the benefits go to the top 1 percent over time. Now, if you were really trying to have tax cuts do the supply side, art, laugh, curve, trickle-down thing, pay for themselves and all that stuff, then presumably you would construct tax cuts exactly the opposite way, right? You would make sure that, yeah, you'd make sure that the money goes to the people who are the most likely to turn around and spend virtually all of it back into the economy. And you might in fact create so much of a boom that tax revenue goes up and the thing, quote, unquote, pays for itself. Right. I guess Republicans would say,

but yachts are part of the private economy too, aren't they? Yeah. Yeah. There are great incentives for private jets and yachts and so forth. Yeah. But I mean, that is the private economy as well. I mean, it's not just gross. Well, no, no question. So if some of that windfall, if the very, very wealthy takes some of that tax break and buy a new yacht, somebody's got to build it, somebody's going to be employed producing that yacht. So you get a few jobs out of that, but not the kind of widespread job growth that the Republicans were touting when they told us that this was going to be the greatest, you know, they called it the tax cut and jobs bill. So it really was supposed to create lots and lots of new jobs and not just new jobs, higher paying jobs. That was the promise. Now, last time we spoke, we talked mainly about the United States. I want to talk about two other countries, which seem to be on point for this discussion. One of which is the United Kingdom. Theresa May at the recent Conservative Party conference, proudly announced that after 10 years,

the period of austerity is over. austerity was the approach taken by almost all the countries in the European Union in response to the crash of 2008 and as I recall, I think you and your colleagues thought austerity was exactly the wrong approach to dealing with that crash. Well, yeah, I mean, like we were saying earlier, what you want the government's budget to do is behave counter-cyclically, not pro-cyclically, and austerity is pro-cyclical policy. It means at the exact same time that your economy is turning down because everyone in the private sector is tightening their belts. The government tightens its belt as well, which is the same as just putting a noose on everyone and saying, you know, we're all going to jump together. It's precisely the wrong policy, and not only that, by announcing, as she just did, that the era of austerity is over, what she's really doing is just confirming that it was entirely voluntary,

it was gratuitous, it was never an out-of-economic necessity that the British government pursued this disastrous 10-year experiment. It was just purely wrong-headed gratuitous policy to inflict mass pain and suffering on the population. The other country that I want to talk about a little bit, that has been in the news recently, is Venezuela. Now, MMT thinkers always make the point that this theory of how things work applies to countries that print their own currency, that have their own sovereign currency. The US with its dollar, the UK with its pound, the EU with the euro. Japan with its yen, China with whatever it's got. Does Venezuela have its own currency? Well, they do, but they also have, and I'm not an expert on what's happened in Venezuela,

so I just want to put that out there. But what Venezuela... Well, that makes two of us. What I do know about Venezuela is that it does have a substantial amount of debt that is not denominated in the local domestic currency. It's a US dollar denominated. And that's where things get tricky, right? So what MMT says is that countries like the UK, like the US, like Australia, like Canada, these countries have spent and taxed and borrowed in currencies that they, and only they can create. And so, as Alan Greenspan told us, there's no point in the future where the US government is going to have a bill come due in US dollars, and it's going to be unable to pay its bills. Because it is the sole source of the dollar when the payments come due. The US government can always meet its obligation, provided the debts are due in its own currency. Venezuela is in a tricky spot, because they've got currency, they've got debt denominated in their local currency,

but they've also got foreign denominated debt. And that's where the trouble comes in. Because their currency is going down as the economy craters. Right, essentially right. Now, you remind me of something else about Britain. I do pay attention to what's going on in Britain, because I'm there part of the year. The debate there always seems to be, if you don't raise taxes enough to cover the costs of what you want the government to spend, you have to borrow money. What I hear you saying is that's not true. Well, it may be true, but what I'm suggesting is it's not inherently problematic for a country like the UK or like the US. So, you know, if you set a budget, if the British government sets out a budget or the US government congress passes a budget, and they say,

we're going to spend this much money on health care, we're going to put this much into education, and this much into defense, and this much into the transportation and ag. So they come up with a budget, and they agree upon what the numbers will be. This is what the agencies will be authorized to spend. Now, you do all of that in advance of knowing what the tax receipts are going to be over the course of that, let's say, fiscal year. You just don't know, but you've already committed to spending certain dollars. So what happens is, as these agencies begin to spend what they were authorized to spend, tax receipts come pouring in, right? They're being collected all the time. At the end of the fiscal year, things are netted out, and you've discovered whether the government spent more than it collected or collected more than it spent, or some happenstance managed to balance its budget. But if they do what they normally do, which is end up running a deficit, then bonds are sold in the amount of the deficit. So if they spend 100 in and tax 90 out, they've run a deficit of 10.

And so bonds are auctioned and sold in the amount of, let's say, 10 billion. I'm just using easy numbers. So the borrowing takes place, but the deficits themselves are providing the money that can be used to buy the bonds. So it's really kind of a non-starter to say, somehow it's going to be a problem to find buyers for government bonds when the government is providing the money, and then offering to swap the cash, which pays no interest, for a bond which pays interest. You discover very quickly that there are always more people trying to scramble to get into bonds than you can accommodate. Or then want to hold cash? Or then want to, yeah. In other words, people at Treasury will tell you, auctions are always oversubscribed, which is to say we always have more demand than we can satisfy in any given auction. Okay, but the nightmare scenario that is always dangled before us is, and I think the New York Times ran a piece about this a few weeks ago, that at the level of the national debt now in the United States,

there comes this point putatively in the future, in the near future, when U.S. federal government spending on interest on the debt will exceed all other expenditures except the Pentagon budget or something like that, is that we're torturing our grandchildren by strangling them in interest payments for our debts now. Yeah, it's an obsession. I can tell you having worked on the hill that interest on the debt, that line item in the budget is a major obsession for lawmakers on both sides of the aisle, and I saw that New York Times piece, and so my first reaction is always this. So they say, oh, there's a time in the not too distant future when we're going to be spending as much on interest payments to service the debt as we pay for the entire defense budget, to which I say, you can always increase the size of the defense budget if you want to pay, right, not have that be true, or you can do other things.

I mean, that's not my preference, I'll say that, but it's one way to make that statement not true. Another way is to say, you know, why don't you ask yourself, why are we paying interest on treasuries in the first place? What is it that these bondholders are doing in terms of risk taking that should command them some sort of a reward in the form of interest payments? And the answer is, there ain't much that they're doing, right? It's purely a subsidy and the decision by Congress to swap out the cash for this thing called the Treasury Bond is a political one. They don't have to do it. And they don't have to, you know, allow the Fed to have authority to set the interest rate wherever they want to. They could instruct the Fed to maintain interest rates at a half a percentage point, or a quarter percentage point, or keep them at zero, where there are some of my MMT colleagues have advocated what they call permanent ZERP, ZIRP, zero interest rate policy. How the Fed to just set the interest rate at zero and leave it there forever?

So that would attenuate the, you know, concern, I think, over time that people have about the interest on the debt because it would be effectively very close to zero. Doesn't a zero interest rate or a very low interest rate environment punish savers? Well, there are certainly a wide variety of riskier assets available for people who wish to part with cash in order to earn some sort of a return. So there are lots and lots of other things. There would be a markup over that zero interest rate. But the idea being the risk-free rate should be very close to zero because there's no compensation for risk-taking. And then as you begin to move into riskier things, that's where savers can capture some positive yield. So interest is basically payment for taking risk. Well, or it ought to be. You mentioned your career at the time in the Senate. And I think we've all gained a great deal of appreciation for the dignity

and circumspection of the United States Senate and the committees thereof. Tell me a little bit about your experience working there. Oh, Harry, it was eye-opening. It was eye-opening. You have a sense as a citizen listening to commentary and so forth of the level of understanding. But then when you actually get there and you're sitting in the bench behind members of Congress and the hearings that are being called are all around the debt crisis, the problem with the deficit, the fiscal crisis. And after hearing, after hearing, and of course the Republicans were the majority. So they set the agenda. They say that we're going to have a hearing on this topic. And I swear five of the six hearings, the first ones that I attended were all around the debt deficit, fiscal crisis, and all this sort of stuff. So you get a real window into the way that some of these people think about things.

And you realize just outlacking, I guess, an understanding of just basic money and budget. And there's just not much of an understanding. They really, really do talk and think and behave in ways that suggest they think the government is basically just a giant household. Or just a giant state government. Yeah, except as you noted, you know, when you're in a position to run the tables, if you have divided government, then you get more of this kind of jockeying this deficit politics is what I call it. But then if you're in a position to run the tables, and now you have the house, you have the Senate, you have the White House, then suddenly you can dispense with all that rhetoric. And you can get down to business, roll up your sleeves, write a budget that delivers the windfall to your constituencies. These are the people that I'm here to work on behalf of. My donors, the wealthy, big corporations, and you use the budget process in a way

that focuses not on what happens to the budget, where the budget ends up, but on how the budget can be used as a tool to benefit your constituents. And that's exactly what the Republicans have done. They're very, very good at it. One might contrast that with when Democrats were in a position to run the table, and were in the middle of a financial crisis, and some of the president's economic advisors were calling for a stimulus program of at least a trillion dollars, I think. And the president thought that he had to bargain it down in order to try to compromise with Republicans, whose votes he didn't need at that point. You're exactly right. They were in a position to run the tables. Essentially, Christina Romer, who was very influential at the time in the Obama administration, professor from UC Berkeley. And I think she famously was pushing, I think it's come out, that she was pushing

for something closer to $1.8 trillion. And you know, you had Larry Summers and others, also part of the conversation. There was dialogue about concern. Sticker Shock was a term that was thrown around. You know, anything bigger than a trillion would just, you know, the population couldn't handle it. The sticker shock would be too much. And so you're right. The president Obama went in and said, basically, we'll start at 780 or so billion and negotiate our way up. And we know now that that was not the right tactic. You should start up and expect to potentially negotiate your way down. He compromised with himself. He did. He did. He did. And remember that he, you know, wasn't just a few months in office as the, as everything is falling apart. And the deficit explodes because not because of anything Congress did. But because the downturn was so severe. And the economy was hemorrhaging jobs. And so people losing their jobs, you know, get a variety of support mechanisms from the government, you know, food stamps, an unemployment compensation,

and Medicaid, a whole host of programs automatically kick in to support a weak economy. And then meanwhile, people become jobless. Their incomes collapse. And federal tax receipts fall off a cliff. So the deficit just blows up all on its own. And President Obama goes on television. And he's asked about this explosion in the deficit. And, you know, the government trying to do something to prop up the economy. And they say, you know, what, at what point do we run out of money? And I don't know if you remember his response. But he said, well, we're out of money now. And I thought, oh, no, you know, that is, and that really boxes you in. Because once you say, essentially, we've done all we can do, you know, we're out of money, then that just allowed the economy to languish for so many years without the support that it really needed. Because the fiscal authorities just kind of stepped away and said to the Fed, you know, you guys got to do this because we're done. I think you and Alan Greenspan have both made the point that the federal government

can't run on the money, right? Right. So that was not a useful comment from President Obama. At the time, I remember my heart sinking. I think the color drained from me when I heard that. Because I knew what it meant. I knew that it meant that we were not going to get the kind of fiscal response that was going to be necessary to pull this economy out of, you know, the doldrums and that we were going to end up with a long, protracted recession, which is exactly what we got. I want to go back to your Senate experience for one more question. Obviously, as a staff member, your main interaction is A, with the members on your side of the aisle, the legislators on your side of the aisle. But you also have interaction with the staff members on the other side of the aisle. As you tried to put forward your understanding, your macroeconomic understanding of this stuff, what kind of response did you get from the staffers on the other side? Hmm. I remember some conversations with, I was the chief economist for the Dems

and I remember some conversations with the chief economist for the Republicans. And he found it, we used to sit and have coffee sometimes. And I remember that he found it fascinating. I don't know how convincing he found it. I don't know how much time he spent really thinking it through. But he did, there was something about what I was saying that he was receptive to. I think maybe it's because I didn't sound like what he perceived to be the typical Democrat that just wanted to spend more, spend more. That I was also open to the possibility that tax cuts could be a useful thing, especially where we were at the time. And so I remember that. But to be honest, I didn't interact a lot with staff on the other side. I was mostly dealing with Democrats and their staffers. Do you think that's an increased siloing effect reflecting the increased partisanship of Congress or is that the way it's always been?

My sense, just when I arrived, my sense is that it's gotten worse but that it's been that way for some number of years, some of the staffers that were on committee that when I arrived had been there for six years, something like that. And my sense was things were different but not much different. And they're not getting better. Well, Dr. Kelton, thank you so much for a return visit and for revisiting some of this material and for refreshing us on how it's been going here and in other places that I've asked you about. And you're at Stony Brook. And do you still do visiting lectures? I remember a couple of years ago, before you actually joined the Senate, you were doing a lot of video appearances at Harvard and stuff like that, talking to Harvard Law, I remember calling. Are you still doing that or are you pretty much nailed down at Stony Brook?

Oh, I flew to Harvard yesterday and flew back yesterday morning. I flew in and the last night I flew back out. So I actually did give a talk at Harvard Law yesterday. Great. But yeah, I'm on the road. I know it was at the British Public Library for a lecture on the sort of stuff that you and I have just been talking about. And I also, while I was there, was at the House of Lords. I gave a keynote address there. So I'm on the road more than I wish sometimes. But yeah, I still do all of that and I love that. Great. And if people want to dig into this a little more, what's the best basic book that explicates the whole modern monetary theory that people should check out? Well, I'm writing one now. Okay. It's going to, it's going to come out, I think, in early 2020. But I'm pushing myself to see if I can make it fall of 2019. But, you know, Randy Ray's got a good book. It's called Modern Monetary Theory.

It's a pretty good page-turner. I think it's a good introduction for, you know, somebody who's coming at this maybe for the first time. Or in Moasler's book has a long clumsy title, seven deadly innocent frauds of economic policy. But it's a real quick read and a page-turner. It's got lots of humorous anecdotes in it. So those are pretty good places to start. Okay. Dr. Stephanie Kelton, thank you so much for joining us today. Anytime. Thank you so much. And now the apologies of the week. Governor Bill Walker of Alaska apologized to natives of that state for historical wrongs that once threatened their culture. You know, this may be the last time I address you formally. I recognize that. The governor told the Alaska Federation of Natives Convention. He said he's spent a lot of time reflecting on doing the right thing. I conclude today with this message as the 11th governor of the state of Alaska.

I apologize to you, Alaska's first people for the wrongs you've endured for generations. For being forced into boarding schools, I apologize. For being forced to abandon your native language and adopt a foreign one, I apologize. For erasing your history, I apologize. For the generational and historic trauma you've suffered. I apologize. This apologies long overdue. It's but one step of hundreds more to go on this journey towards truth, reconciliation, and healing. The audience gave him a standing ovation. Later that day, he withdrew from the race for re-election. There a message there. Yeah, Sarah Penland wouldn't have done that. No ways government this week officially apologized to Norwegian women targeted for reprisals by authorities for having had intimate relations with German soldiers during wartime occupation. Between 30 to 50,000 Norwegians labeled German girls, or German curls, had intimate relations with occupying troops during World War II, according to Norway's Center for Holocaust and Minority Studies. We go one of those, don't we?

No. Many of these women are subject to reprisals by officials after the liberation in 1945, including illegal arrests and detentions, job dismissals, even being stripped of their nationality. Young Norwegian girls and women who had relations with German soldiers or wish suspected of having them were victims of undignified treatments at the Prime Minister. Today in the name of the government, I want to offer my apologies, the premier said. Speaking in an event, you'll find this rich. To mark the 70th anniversary of the United Nations' universal declaration of human rights. Saudi Arabia marked it, of course, in a different way. The official apology of my Norway is unlikely to open the door for financial reparations for their families. Wouldn't you know it? They'd like potter to braska students at a junior and senior high school, and then braska panhandled or served chili with kangaroo meat mixed with beef without their knowledge. The head cook said he had the kangaroo meat because its nutritional value is high as a very lean meat. He showed the nutritional information with the superintendent, Mike Williams, after it was revealed the ingredient was added.

If a family wants to eat exotic foods they can do so on their own time, not at school. The school superintendent said, If we were to have food or ingredients out of the ordinary, they should be listed on the menus so the students and families are aware what they were being served. We will no way be serving food of this nature again, period. I apologize for the anxiety in any harm that this has caused individual students and or families. He said, All right, no more kangaroo meat in Nebraska. Where'd they get? Carol Folt, the chancellor of the University of North Carolina at Chapel Hill, apologized for the university's role in slavery during his speech, marking the university's 225th birthday, never too late department. As chancellor I offer our university's deepest apology for the profound injustices of slavery, our full acknowledgement of the strength of enslaved peoples in the face of their suffering, and our respect and indebtedness to them. I reaffirm our university's commitment to facing squarely and working to write the wrongs of history, so they're never again inflicted on quote.

She issued a apology and an ongoing controversy surrounding a Confederate statue in the middle of campus. It was pulled down by student activists earlier this fall. The statue was called Silent Sam. It's got a lot of secrets to keep. Democratic Senator Heidi Heitkamp of North Dakota ran a campaign ad in several newspapers identifying some women as victims of sexual assault and domestic violence, who had never endured either. The ad reads, We're all survivors of domestic violence, sexual assault or rape, we're all North Dakotans, we're all prairie tough. More than 100 names appeared below the declaration. As signatories, several women said they had not consented to their names appearing in the ad and some were not victims at all. Heitkamp issued a statement. We recently discovered that several of the women's names who were provided to us did not authorize their names to be shared or were not survivors of abuse. I deeply regret this mistake. We're in the process of issuing your attraction, personally apologizing to each of the people impacted by this and taking the necessary steps to ensure this never happens again.

A lot of never-againning today. Dayline Boise, the Idaho Fish and Game Commissioner, Blake Fisher, resigned this week, three days after a newspaper first reported on criticism he faced for sharing photos of his African hunting trip. He was asked to resign by Governor Butch Otter. Fisher received criticism from around the world after the report on the hunting trip he took to Africa and the photos he shared with friends and colleagues, particularly the image of his posing with a, quote, family of baboons that he shot with a bow and arrow during his trip to Namibia. That provoked criticism from former Idaho wildlife commissioners. Well, at least he didn't shoot an otter. I have high expectations and standards for every appointee in state government. Governor Otter said in a press release. I recently made some poor judgments that resulted in sharing photos of a hunt in which I did not display an appropriate level of sportsmanship

and respect for the animals I harvested, the former Fish and Game Commissioner Fisher wrote. While these actions were out of character for me, I fully accept responsibility and feel it is best for the citizens of Idaho and sportsmen and women that I resign my post. I apologize to the hunters and anglers of Idaho who are always appointed to represent and I hope my actions will not harm the integrity and ethic of the Idaho Fish and Game Department moving forward. He didn't apologize to the baboons. A former vice president of the Tokyo Electric Power Company apologized during court questioning. Defendant Sakai Muto said to the many people who lost their lives, their family members are those who were forced to evacuate their homes. I have caused a great pain that cannot be expressed in words and I extend my deepest apologies. I'm very sorry about what happened. He and two other Tepco officials are indicted on charges of professional negligence resulting in death and injury over the fuk. And Apple faced criticism from two of China's biggest payment platforms. Theaves they said were using compromised Apple IDs to steal funds from individual user accounts.

Now Apple says a small number of people had their accounts compromised due to fishing scans and that those users had not enabled to factor authentication of their accounts. We are deeply apologetic about the inconvenienced cause to our customers by these fishing scams. Don't go fishing with us. And speaking of don't be expecting any reparations, the president of Germany, Frank Walter Steinmeier, has apologized for horrors committed during the Nazi occupation in Greece. That country, Greece, prepares to relaunch claims for hundreds of billions of euros in World War II reparations. Steinmeier visited a former concentration camp. They had those used by the Nazis outside Athens, later met Greece's political leadership. He said his country still bears the, quote, moral and political guilt of crimes committed. Greek officials confirmed last month the country will press ahead with the reparations claims against Germany. A 2016 report by Parliamentary Reparations Committee said outstanding claims are worth $302 billion in dollars.

Germany says all claims have already been settled. Apologies the week. Ladies and gentlemen, just a moment for microplastics. Microplastics were found at sea salt several years ago. Now new research shows them microplastics to be found in 90% of the table salt brands sampled worldwide. 39 brands tested, 36 had microplastics in them. Three bands did not contain microplastics. They're from Taiwan, refined sea salt, China, refined rock salt, and France unrefined sea salt produced by solar evaporation. Study was published in environmental science and technology. The highest density of microplastics in salt were in Asian brands, highest in Indonesia, which has all at coast. Salt's bad for you anyway. One word, microplastics. Chinese plants,

K same There's a thing happening in Japan, a purple of the Olympics which is coming to Tokyo in 2020, a Japanese hydraulics firm has admitted falsifying inspection data for equipment used just to protect hundreds of buildings from major earthquakes, including venues for the 2020 Olympics. The, um, doctrine data for hydraulic oil dampers affected almost 1,000 structures across Japan.

The firm involved said the, um, data problem didn't present any immediate safety risk. So stand by for the safety risk to come. Ladies and gentlemen, that's going to conclude this week's edition of the show back next week. When and where that all depends on you, and it would be just like you being dependable if you'd agree to join with me then. Would you already? Thank you very much. Uh-huh. A typical show chef out of the San Diego Pittsburgh Chicago in Hawaii desk thanks to Jay Shaw at Stony Brook University and thanks to Pam Hallstead and Jenny Lawson at W.W.I. known your Orleans for help with today's program. The email address for me, your chance to get cars I talk to shirts, or find out the playlist of the show all at harryshure.com and I'm on Twitter at the harryshure. The show comes to you from century of progress productions and originates through the facilities

of W.W.N.O. New Orleans flagship station of the changes easy radio network so long from Santa Monica.