Stephanie Kelton interviewed on "Le Show"
James Keenan
For the first time in several years, (Modern Money Theory) MMT advocate Stephanie Kelton has made an appearance on "Le Show," the long-time radio show/podcast produced and hosted by comedian Harry Shearer. You can access this interview via the net here or (as they say on public radio), wherever you get your podcasts.
Shearer affords Kelton more than twenty minutes of airtime, so this is a much more detailed presentation than Kelton (or anyone else, for that matter) would get on, say, Bloomberg News. The interview takes off from the recent flurry of "deficit panic" articles in mainstream news media following the U.S. national debt's climb above the $40 trillion level in recent months. In the first part of the interview Kelton keeps the focus on the national debt as financial-assets-of-the-non-U.S.-government sector, deferring discussion of budget deficits to later in the session. She manages to bring in a demystified discussion of Japan's national debt and budget deficits. She also touches upon the impact of today's much larger volume of interest income flowing from the federal government to the generally wealthy holders of U.S. treasury securities -- though she emphasizes the distributional impact of those income flows more than their impact on frustrating Federal Reserve monetary policy.
I appreciated this interview because Kelton's public postings have been sparse recently (e.g., fewer Substack postings in the past year-and-a-half than, say, three years back. Her communication skills are, as always, excellent. Shearer's weekly show usually consists of his riffs on the past week's news, but about a half dozen times a year he does interviews with subject-matter-experts that are quite informative. This was one of them.
Jay Mills
For the first time in several years, (Modern Money Theory) MMT advocate Stephanie Kelton has made an appearance on "Le Show," the long-time radio show/podcast produced and hosted by comedian Harry Shearer. You can access this interview via the net here or (as they say on public radio), wherever you get your podcasts.
Shearer affords Kelton more than twenty minutes of airtime, so this is a much more detailed presentation than Kelton (or anyone else, for that matter) would get on, say, Bloomberg News. The interview takes off from the recent flurry of "deficit panic" articles in mainstream news media following the U.S. national debt's climb above the $40 trillion level in recent months. In the first part of the interview Kelton keeps the focus on the national debt as financial-assets-of-the-non-U.S.-government sector, deferring discussion of budget deficits to later in the session. She manages to bring in a demystified discussion of Japan's national debt and budget deficits. She also touches upon the impact of today's much larger volume of interest income flowing from the federal government to the generally wealthy holders of U.S. treasury securities -- though she emphasizes the distributional impact of those income flows more than their impact on frustrating Federal Reserve monetary policy.
I appreciated this interview because Kelton's public postings have been sparse recently (e.g., fewer Substack postings in the past year-and-a-half than, say, three years back. Her communication skills are, as always, excellent. Shearer's weekly show usually consists of his riffs on the past week's news, but about a half dozen times a year he does interviews with subject-matter-experts that are quite informative. This was one of them.
--
You received this message because you are subscribed to the Google Groups "Modern Monetary Theory" group.
To unsubscribe from this group and stop receiving emails from it, send an email to modern-monetary-t...@googlegroups.com.
To view this discussion visit https://groups.google.com/d/msgid/modern-monetary-theory/51b3d420-0148-41df-b212-e95ed140d6e8n%40googlegroups.com.
Nate Roberts
To view this discussion visit https://groups.google.com/d/msgid/modern-monetary-theory/AC3768EE-665C-4FA5-B666-AA1F0E1483BE%40gmail.com.
--
University of Göttingen
Jay Mills
Warren would broadly agree, I think, with Richard Murphy’s argument that UK government debt interest is more of an inequality issue than a solvency problem, but he would go further in both his analysis and policy prescription.
Both argue that the UK, as the issuer of its own currency, cannot involuntarily run out of pounds. Government interest payments therefore do not represent the same kind of financing constraint faced by a household or business. They also agree that higher interest payments disproportionately benefit wealthier households and financial institutions, while austerity is ultimately a political choice rather than an unavoidable consequence of government debt.
Mosler would make several additional points. First, he would reject the idea that interest payments come out of a finite “public purse.” From an MMT perspective, government spending creates pounds, while taxation serves other purposes such as supporting demand for the currency and managing aggregate demand.
Second, Mosler argues that higher interest rates can themselves be inflationary when the government is a large net payer of interest. Rate increases raise government interest payments and inject additional income into the private sector, particularly to asset holders.
Third, he would treat interest paid to foreign holders of UK government debt as granting claims on UK goods and services without requiring those holders to provide current goods, services, or labour in return.
His preferred solution is therefore more radical than simply lowering rates. Warren advocates a permanent 0% policy interest rate and ending government bond issuance altogether. In his framework, gilts are essentially interest-bearing alternatives to reserve balances and are not operationally necessary for a currency-issuing government.
Economic stabilization would instead rely primarily on fiscal policy, taxation, management of real-resource constraints, and policies such as a Job Guarantee rather than using interest-rate changes as the main tool for controlling inflation.
On Sep 27, 2026, at 12:39 PM, Nate Roberts <rober...@gmail.com> wrote:
Warren Mosler
Warren would broadly agree, I think, with Richard Murphy’s argument that UK government debt interest is more of an inequality issue
than a solvency problem,
but he would go further in both his analysis and policy prescription.
Both argue that the UK, as the issuer of its own currency, cannot involuntarily run out of pounds.
Government interest payments therefore do not represent the same kind of financing constraint faced by a household or business.
They also agree that higher interest payments
disproportionately benefit wealthier households and financial institutions, while austerity is ultimately a political choice
rather than an unavoidable consequence of government debt.
Mosler would make several additional points. First, he would reject the idea that interest payments come out of a finite “public purse.”
From an MMT perspective, government spending creates pounds, while taxation
serves other purposes such as supporting demand for the currency and managing aggregate demand.
Second, Mosler argues that higher interest rates can themselves be inflationary when the government is a large net payer of interest.
Rate increases raise government interest payments and inject additional income into the private sector,
particularly to asset holders.
Third, he would treat interest paid to foreign holders of UK government debt as granting
claims on UK goods and services without requiring those holders to provide current goods, services, or labour in return.
His preferred solution is therefore more radical than simply lowering rates. Warren advocates a permanent 0% policy interest rate
and ending government bond issuance altogether.
In his framework, gilts are essentially interest-bearing alternatives to reserve balances and are not operationally necessary for a currency-issuing government.
Economic stabilization
To view this discussion visit https://groups.google.com/d/msgid/modern-monetary-theory/B4D2CE8C-B63C-42E2-B2AE-21915AD01ED1%40gmail.com.
kerry pechter
To view this discussion visit https://groups.google.com/d/msgid/modern-monetary-theory/CAKT5Wi1Umxjg-Z3%3D%2BL2NgBJUSnY3ZRZz49qbcx0%2Buk0FRPuuOw%40mail.gmail.com.
Jay Mills
I think you've got part of the sequence right, but I'd change one important piece. The federal government doesn't lend or spend dollars against anticipated tax receipts. It doesn't need the tax receipts to get the dollars. It spends or lends first, and those dollars are then available to satisfy tax liabilities. Taxes don't fund the currency issuer in the ordinary sense. They create demand for the currency and remove private-sector spending power.
I'd also push back on the swipe about Democrats "mewling" over the rich paying their fair share. You don't need the conventional story that taxes on the rich are required to finance federal spending to make a serious case for taxing high incomes or large accumulations of financial wealth.
From an MMT perspective, the relevant question is what those taxes do to the distribution of claims on real resources. Dollars and Treasury securities held by the private sector are net financial assets. If very large quantities become concentrated at the top and remain there generation after generation, that doesn't make the federal government run out of money. But it does give a relatively small group increasingly large financial claims that can be converted into ownership and control of real assets, including land, housing, businesses, equities, and scarce productive capacity.
That matters to the average person even if the wealthy don't immediately spend all of those dollars on consumption. They can bid up asset prices, acquire income-producing assets, receive an increasing share of future income streams, and compound their claims through interest, dividends, rents, and capital gains. The result can be a population whose wages may rise while access to important assets becomes progressively more expensive and ownership becomes progressively more concentrated.
There is also a macroeconomic issue. High-income households generally spend a smaller fraction of an additional dollar of income than lower- and middle-income households, so concentrating income at the top can weaken consumption relative to a more broadly distributed income flow. That doesn't automatically cause a recession, because government deficits, private borrowing, investment, and exports can offset it, but it changes the composition and financial structure of demand.
The empirical backdrop isn't really in dispute. CBO finds that income inequality increased substantially from 1979 through 2023, driven importantly by income growth toward the top of the distribution, while the Federal Reserve's Distributional Financial Accounts document substantial concentration of household wealth and financial assets. Research summarized by the IMF likewise finds a considerably lower marginal propensity to consume among high-income households than among the middle class.
So I'd separate two propositions that often get confused.
You don't tax wealthy people because Washington needs their dollars before it can spend.
You may tax wealthy people because you don't necessarily want unlimited private accumulation of dollar-denominated claims, economic rents, and ownership rights concentrated in a small part of the population.
That's a distributional and resource-allocation question, not a federal solvency question.
And I'd make the same distinction with Social Security. Payroll taxes don't operationally provide the federal government with the dollars required to make benefit payments. The real question is whether, when retirees spend those benefits, the economy has the labor, health care, housing, food, energy, and other productive capacity available to meet that demand without unacceptable inflation. The financial constraint is largely one Congress has imposed on itself. The real-resource constraint is the one we actually have to manage.
Best,
Jason
<The_Forced_Bid_SSRN (1) Lane.pdf>
Nate Roberts
Jay Mills
kerry pechter
To view this discussion visit https://groups.google.com/d/msgid/modern-monetary-theory/4AA0BDAD-82C6-4571-AD59-952EDE3693A5%40gmail.com.
Ed Lane
Warren Mosler
Warren Mosler
I agree. We're all in agreement, I think.But when you get to"The real question is whether, when retirees
spend those benefits, the economy has the labor, health care, housing, food, energy, and other productive capacity
available to meet that demand
Warren Mosler
The MMT idea that taxes are unnecessary is problematic for me. Warren I believe wrote that
the government gives you the money to pay your taxes with. I like the image of a currency cycle. While I'm no Ricardian, I prefer to frame it this way: Our sovereign federal government, with its
huge reservoir of credit (based on the almost unlimited supply of stuff that dollars can buy) lends money to
the banks and the public
against the anticipated
receipt of federal taxes.Warren or Randy or Stephanie may not quite agree with that. But it helps me anchor MMT in my mind. (It also fits Farley Grubb's illuminating research on the creation and destruction of paper money in colonial Virginia.)Regarding federal taxes, my scenario does not insist that "the rich pay their fair share," as Democrats mewl. It's an assertion that not paying your taxes is tantamount to defaulting on loans from the government (or perhaps the extension of gov't credit to individuals). My readers in the financial services industry self-servingly believe that taxes are confiscation
and that minimizing or avoiding them is OK.
I'd prefer that they regard dollars as credit-money, and that taxes retire the implied debt.In my work, MMT helps refute the characterization of pay-go Social Security financing as "intergenerational warfare." In MMT, current benefits aren't financed by the payroll taxes of current workers. They're paid out of newly created money.
So there's no solvency crisis looming in 2033 when benefits begin to exceed all forms of trust fund revenue.
kerry pechter
I had ChatGPT create visuals for my students. Any corrections?
Jay Mills
Warren Mosler
I had ChatGPT create visuals for my students. Any corrections?