Economics

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Near the start of this episode, Yeva Nersisyan talks with Steve about leftist economists who are still wedded to the belief that government spending relies on taxpayer money. She says if an academic on the left uses the ‘taxpayer dollar’ framing, then you cannot be surprised when the right uses it too – to say they’re saving taxpayer money, cutting wastefulness, cutting inefficiency. It’s why being consistent is so important. If one side can use it, the other side can too.

“It leads to the Elon Musks of the world using this taxpayer money trope to basically take a sledgehammer or a chainsaw to the public sector.”

Yeva and Steve revisit some basics of MMT, including the understanding that a government is not like a household.

Our own spending doesn’t really affect our own income. We’ll still get our wages, we will still have that, and then we will continue consuming, but consuming less and therefore end up with more savings.

But it doesn’t work for the economy as a whole. Because for the economy as a whole, if spending goes down, that means there is now less income, and less income means someone somewhere is earning less and therefore they have to cut their consumption and they also have to cut their saving. And it becomes this cycle where, okay, someone cut their consumption, now someone else is earning less or the grocery store is earning less, right? And now they have to fire their workers. Now their workers don’t have income and they are spending less, and so on and so forth.

Yeva and Steve go into other insights of MMT, including sectoral balances and the reality of the so-called national debt.

They unravel the absurd dynamics of current economic policy and look at the implications of proposed spending cuts by the Department of Government Efficiency, or DOGE. Fallout from the government’s ruthless abandonment of social programs will be disastrous.

Yeva Nersisyan is an associate professor of economics at Franklin and Marshall College in Lancaster, PA. She received her B.A. in economics from Yerevan State University in Armenia, and her M.A. and Ph.D. in economics and mathematics from the University of Missouri-Kansas City. She is a macroeconomist working in the Modern Money Theory, Post-Keynesian, and Institutionalist traditions. Her research interests include banking and financial instability, and fiscal and monetary theory and policy. She has published a number of papers on the topics of shadow banking, fiscal policy, government deficits and debt, and the Green New Deal. Nersisyan is currently coediting The Elgar Companion to Modern Money Theory with L. Randall Wray.

Find her work at <levyinstitute.org/publications/yeva-nersisyan>

Data is only to 2023.

Manufacturing, and other physical goods should count as double in GDP. In a way goods trade surpluses/deficits don't matter because receiver gets something tangible in exchange for money.

US GDP is still inflated by overpaying for healthcare, and "owners equivalent rent" "fabrication" of 11% of its GDP. This component happens to also get boosted by high interest rates.

https://archive.ph/DHizX

When asked if tariffs would fuel inflation, he acknowledged the possibility but pointed to lower interest rates.

These are largely expectations of recession or coming Fed easing responses. Economy stood up during Trump45 because of ultra low interest rates helped by Fed.

But a recession won't encourage investment, or help with deficits.