Jason Hartman hosts economist Mike Norman to have a conversation about Modern Monetary Theory or MMT. Mike explains some common misconceptions people have of the US monetary system and economy in general. He gives specific examples such as the US debt clock and the idea that inflation equals growth, and how the tax system works. He explains why the US has an unlimited supply of capital. Further, he illustrates why balancing the budget or functioning as a fixed monetary system would accomplish the opposite of what is needed to create growth.
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Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the company leet solution for real estate investors.
Jason Hartman 1:04
Welcome to the creating wealth show. This is your host Jason Hartman with episode number 888 888. Thank you so much for joining me today listeners from around the world in 164 countries. And you know, I am always saying it is an amazing time to be alive. And I’m going to play a news clip about that here in just a moment. First of all, I want to congratulate the winner for the Amazon Echo contest. This is the second Amazon Echo we’ve given away. And today goes to page Glenview page congratulations. Page tells us that she wants to avoid fluctuations of the unpredictable stock market. And the goal of investing in income property is early retirement and continuous cash flow. Well, I think we can certainly help you with that page. So congratulations and you know Ask Alexa for anything you want when you when you get her all set up in your in your home. So a lot of stuff going on in the world. This interview is going to be pretty controversial. This is actually the first time I had a guest hang up on me. Yes, hang up on me. We were doing our little quick talk before we started. And he got a little miffed at me. Because one of my questions he misinterpreted me as a gold bug and said, I’m not doing another gold bug interview. And you know what? I know how he feels well. Fortunately, I called him back. And we we kind of calm the situation down and, and we did a good interview. I think what he had to say is really interesting. And he talks about something called mmt modern monetary theory. And after that interview, you know, I was kind of thinking and I should have asked him this question. It really it really is pretty interesting. And I’m sure especially one of our venture Alliance members do Jeff will have a lot to say about this at our upcoming retreat in Palm Springs, California. And Jeff is known to have some spirited debates on inflation and deflation and all that kind of stuff. Jeff, I can’t wait to hear what you have to say about this one. But I think really, you know, this concept of mmt requires that you have a significant amount of belief and trust in government in the central banking system. But you know, definitely an interesting talk, and I’m glad I had him on and I want to check out some of his other stuff because, you know, it was it was rather new. I mean, I hadn’t heard much about this before. And in the last 887 episodes, we’ve discussed many economic theories, the Chicago School, the Austrian School, a whole bunch of other things from, you know, people who are into precious metals to Bitcoin and cryptocurrencies and everything under the sun, you know, whatever. It might be so. So I think you’ll enjoy this interview when we get to it here in a moment. But first, as I said, it’s an amazing time to be alive. So check out this little video. And just
‘Video clip’ 4:11
into Fox News for our sister network Sky News in the United Kingdom here this, Saudi Arabia has just announced it will allow women to drive cars for the first time ever. This will begin in June of next year. they’ve offered many different reasons for not allowing women to have driver’s licenses, some saying that men might not be able to handle women driving cars next to them. And one cleric claiming that driving harmed women’s ovaries.
Not true of course, women to be allowed to drive in Saudi Arabia beginning june of 2018. And we welcome you to the 20th century.
Jason Hartman 4:55
The 20th century mind you he said on believable you No, that’s just incredible. I mean, how can a culture be so primitive? It amazes me Now, granted, if you’re a woman and you commit adultery, you will still be stoned. But at least you can drive now. So hey, progress, I’ll take it. That’s progress. Amazing. So just had to throw that in there. Let’s get back on topic, Jason. Boy, some something else. That’s just totally amazing. I am speaking at a conference on Friday here in Las Vegas. And I am going to be talking about mixed use developments. And again, we have talked many times on episodes over the years about my absolute theory, that the autonomous vehicle the self driving car will be a game changer for real estate, and it will disrupt, to some extent, the three primary value drivers that real estate has always had location, location and location. So that’ll be an interesting talk. I can’t wait to hear some of the questions that I get when I talk about this stuff. And I will of course, share them with you likely next week on the podcast next week. So let’s go ahead and dive into this fascinating interview as we talk about mmt and learn more about that. But of course, before we do, be sure you get your tickets for our meet the masters of income property conference, coming up in La Jolla, California in January. This is definitely the most beautiful venue we’ve ever had. It is the longest we’ve ever done the event a full three days, and we are going to have some real celebrity speakers at this event. I can’t wait to announce them but I can’t announce them yet. I just can’t. But you’re going to be pleasantly impressed. I think with this year’s lineup. Early Bird Tickets are on sale. We’ve got probably about 100 people registered already and This will be our biggest meet the masters of income property event. So far, it’s our 20th one. So it’s kind of an anniversary. Again, we only hold these once a year now, we used to do them twice a year. So that’s how we got to 20 in less than 20 years. It’s kind of like, well, it’s kind of like compressing time, if you will. And so anyway, we are working on a great event for January and that is our next event. We will not have any other conferences or property tours or anything until January other than venture alliance of course, and I’m also happy to announce that we have a special venture Alliance trip coming up. That is not a normal retreat. Of course, with the venture Alliance mastermind group, we do four quarterly retreats every year on a weekend, we are doing our first special trip, in addition to those four events, and we also call this the ad venture Alliance, not just the venture Alliance, but adventure Alliance. And we will be going next year in April to the Ice Hotel in Sweden. Yes, the Ice Hotel where you this entire hotel. It only lasts for about 120 days. And they build it every year. And I believe this is the 28th year they’ve done it. And it is built out of ice. And maybe you saw the James Bond movie, where they featured a different rendition of an Ice Hotel probably a bit more spectacular than this one. But of course, hey, in the movies and with fiction, it’s a lot easier to do stuff like that. This is reality. But this hotel is just phenomenal. Look it up. You’ll see it on our website soon. This is just going to be a phenomenal ad venture Alliance trip. So that is coming up next year in April and yeah, we just got a lot of good stuff going on. So stay tuned for more info on all of that. This stuff. Let’s get to our guest today. And let’s learn a little bit about mmt. Here we go. It’s my pleasure to welcome Mike Norman to the show. You may know his name. He’s been in the media quite a bit. He’s been on Fox for about 10 years. I believe he is a Currency Trader and an economist who is a proponent of mmt. That is modern monetary theory. Mike, welcome. How are you? I’m great.
Mike Norman 9:30
Jason, thank you for having me on your show.
Jason Hartman 9:32
It’s our pleasure. Give our listeners a sense of geography where you’re located in New York.
Mike Norman 9:37
Yes, right in New York City in Manhattan in the Big Apple. Good stuff that Big Apple
Jason Hartman 9:41
will tell us about mmt what is mmt
Mike Norman 9:44
mmt stands for modern monetary theory and I wouldn’t even really classify it as a theory. It is a school of economic thought, and really a description of how our modern financial system And monetary system operates and not just it’s not just applicable to the United States monetary system, but most of the industrialized world and what it says or what it explains is that the governments, the states, the the authorities, which are the governments are the creators of money. The money is not linked to anything. There’s no gold standard, there’s no fixed exchange regime to some other currency. So basically, governments are the issuers of money and the non government which is us the public, we are the takers of that money. And the government is not constrained in any way in its capacity to issue that money. I mean, we might put political constraints on ourselves like things like the debt ceiling, and if you want to talk about that, at some point, I will, but the government has the power to issue money. And the question is, then what gives the money away? We call it fiat money, right? Money by decree. Congress just decides, hey, we’ll raise the debt ceiling, or we’ll you know, we’ll Inc will give 700 billion to the military. And boom, there it is. What gives the money value in a system like that? That would be the obvious question because people would think, well, if you just, you know, printing money, which is not really an accurate term, but if you want to use that that term, printing money, then the money basically would have no value what imparts value to the money. And mmt explains that when governments levy taxes in any form, it is only it only accepts their currency, their money for the settlement of tax liabilities. I mean, you could read you could look at $1 bill, it says right on there, you know, for the the payment of debts, all debts, public and private. It’s it’s really the public the word public in that statement. That’s important because there Everybody knows, you know, if you have a debt to the government, let’s say you owe taxes, you have to pay that if you don’t pay that bad things can happen to you. So that creates a demand for the money. also things like, you know, fines and fees and licenses, that also creates demand for the money. But basically, taxation is what imparts demand for the money. But let’s understand that because the government is the issuer. It does not need to collect taxes to spend, but there has to be taxes in some form in order to create demand for that money. So that’s
Jason Hartman 12:36
basically no good. You said that’s a very interesting thing that you said. The tax system is required to create demand for the money, can you that’s a fascinating statement. Can you smoke that out a little bit more for us?
Mike Norman 12:50
Yeah. So for example, you know, when the government levies taxes, and you know, we have a tax liability that we need to pay Hey, we can only satisfy that tax liability in the government’s own currency in dollars, right? If you went down to the IRS with, you know, a sack of gold or if you went down to the IRS with a bunch of Euro or a bunch of yen, the IRS would tell you all or you went to the Treasury, let’s say the Treasury would tell you that’s really nice. You know, Jason, but why don’t you go spicy, go cash that gold in for dollars and give us the dollars because that’s all we accept? Yeah,
Jason Hartman 13:31
yeah. Go go sell the gold to Peter Schiff. And give us the dollars.
Mike Norman 13:34
Mike Norman 13:36
Even if so what happens is then the the demand and even if, you know, there may be some in the society who don’t have tax liabilities, but the fact that most of us do in one form or another, it creates a demand for the money. The money is ubiquitous. It is used for transaction, right and everybody holds a certain amount of it and that is, you know, basically how the system functions? Um, so yeah, that that’s the way the taxation impacts the value into the money.
Jason Hartman 14:08
Yeah, that’s fascinating. So, so as a thought experiment and Mike, like if if we had, if we have the, the system we have now where the government, you know, issues the currency, and there’s, you know, there’s a central bank and they do their thing together that they do, and we didn’t have an IRS, would it not work? I mean, it seems like it would still work,
Mike Norman 14:31
it would still work to a degree but without, without the government, let’s say draining away some of that currency in the form of taxation or in some other form. Then then you’d have the the the value of the currency would lessen, okay. So when tax a taxes are levied, you know, it creates that demand and that demand and keeps the value of the currency real tively stable. Now, of course, you know, things could fluctuate, but it’s within the control of the policymakers of the government as to really the value of that money. I mean, higher taxation generally causes the dollar to appreciate all right, because it becomes harder to get less taxation, basically allows the currency to circulate more freely in the economy, you ordinarily have usually a stronger economy under that condition, people have more money to consume and invest. And so it can be regulated in that manner. I know a lot of people who are critical of this type of a system, let’s say people who would like to go back on a gold standard or some sort of a fixed exchange rate. The trade off in a system like that is under a gold standard. Your Money is finite, there is a finite quantity of money in effect, how does the gold standard work? It limits the quantity of money. You need to have physical Gold to back your money. So under a system like this with which we have had, you know, various times throughout history and basically, which has never really held up over long periods of time, because of the finite nature, you get people who are powerful, connected, influential, who tend to be able to accumulate larger amounts of the money. So when you have a fine, I think of a pizza, you only have a certain number of slices in there. You know, maybe the bigger people get more, and the smaller people get less under a system of fiat money. The government has the ability to make the national investments and spend in the public purpose to the degree that it wants. I mean, if you think about some of the great things of our country take the interstate highway system that was created under President Eisenhower That was financed through deficit spending. So and that created real wealth, I mean, the roads and the highways of the nation, everything that you have everything that anyone has came to them in one form or another over a highway or a road. So you know, that’s real wealth. That’s real capital. That brings us the goods and services that we need to consume and use in our everyday lives, which define our level, our standard of living, very important to make those investments as a nation. When you have when you have a fixed monetary system, it becomes a little bit harder, you know, under the old system of the gold standard, the government needed gold to back the issuance of money, and if it did not have that gold, what we saw during the period of the 19th century was with such regularity, rolling depressions and recessions almost like clockwork every 10 years. You know, just because there wasn’t enough money, there wasn’t enough money in circulation, there wasn’t enough liquidity to keep the economy sustained to keep people employed. And you had these crashes and these sort of boom and bust cycles with unbelievable regularity during the 19th century when we were on the gold standard.
Jason Hartman 18:20
So are the cycles less severe or less regular now than they were back then? I mean, were they because because back then you have this fixed system, this kind of closed system, if you will, and we don’t have that anymore. So was it was it worse, I mean, people would complain that there are cycles now. It’s bad, but it wasn’t worse than
Mike Norman 18:40
it was. It was much worse than it was much worse than I think between, you know, the early 1800s till about 1913. With the establishment of the Fed, you know, we probably went through a dozen or more major depressions really, I mean, they we can’t even really call them recessions, they were major depression. What’s interesting too is that if you look at, I think it was a motivator 1907, the Panic of 1907. And at that time, it was a pre Federal Reserve. And we’ll get into talking about the Fed in a second. But that was a pre Federal Reserve, when we had that panic. Some of the big finance ears of the time, like JP Morgan, and some of the bigger banks here in New York, they got together in concert to kind of support the economy to pump liquidity into the economy. So in effect, even when we did not have the Fed, we saw the big actors in the financial system come together and behave almost like a central bank. It was like a natural instinct
Jason Hartman 19:50
to do that to be a lender of last resort, right? Yes, yes. Yeah, very interesting. So this seems like a good argument for me. big government and you know, more government intervention in the economy. And maybe it’s not so so please correct me if I’m wrong there. But if it is, then it seems like you know, why isn’t Bernie Sanders out there talking about mmt? You know, it seems like it would support his position more than it would support like a Reagan position, for example,
Mike Norman 20:21
but Bernie Sanders, you know, he was quite close to the mmt line. As a matter of fact, his his chief economist, who I know this this lady by the name of Stephanie Kelton, she’s a professor at University of Missouri at Kansas City. And that’s like a hotbed of mmt teaching and thought, I mean, she was his chief economist, you know, Bernie went only so far with the mmt proposals and ideas but yeah, he went off course. I mean, he did talk about he did say things, unfortunately, I thought which You know, we’re not correct. But things about, you know, he wanted to do like, let’s say free education. But if we give it too much it’s going to bankrupt the country. I want to Medicare for All. He’s still proposing Medicare for all, which I think is a fantastic idea. And I think that’s what most people in America want. But you know, you don’t say things like it’s going to bankrupt the country, because that’s just patently false. You cannot I mean, when you talk about a currency issuing nation that spends its own money and where all of its obligations and by the way, what is the obligation when we talk about debt, the United States debt? What is that right? People don’t really have an understanding of what that is. The only liability The only obligation The only promise that the government makes to you to anyone is that it will accept its own currency for the payment and settlement of tax liabilities and that is a promise that it can always keep. All right. That’s not like a promise of well, we will pay you back Gold, because if that under those conditions, there could arise a situation where the government was insolvent or had an inability to pay you back in gold. But the only true promise, the only true debt that the government makes to anybody is that it will accept its own currency as the payment for the payment of taxes for the settlement of tax liabilities. And that’s a promise that it can always keep. You know, when we talk about the national debt, it is not a debt in the sense that most people think of debt like, you know, if you have a debt to the bank or whatever, to a creditor, you are not an issuer of currency, you need to get that money or whatever it is to satisfy that debt. Right. You have to physically have that to satisfy the debt. The 20 trillion that we hear all the time that’s thrown around. That is the sum total of all the spending of the United States government Since 1789, since our creation, minus all the money that was taken away in taxes, so like, whatever the government spent over that, whatever, you know, 228 years or something like that, mine is what was taken away. 20 trillion is held by the citizens and people around the world. So that is not what we owe. That is what we own. Okay, that’s money we hold on to right now, which has not been turned back in for the payment of taxes, and it might never be turned back in for the payment of taxes. That is part of our wealth. That is not a debt. And that wealth is held in the form of a government security simply because the government security what is government security, what is it Treasury, a treasury is a US dollar that pays some interest. They’re interchangeable. Alright, so we Like, it’s like if you have a checking account at the bank and you want to earn some interest, then you switch it into your savings account to earn some interest that Treasury is like a savings account of the US government denominated in its own money. So the debt that’s why all these people, these Doomsday predictors, people like Schiff, well, you mentioned, I’ve been talking for so many years, years and years and years and wrong and wrong. And it’s why it’s never happened. Okay. The reason why it’s never happened is because it is not a debt in the sense that everyone thinks it’s a debt where the government has to go get that resource to pay it back. It is the monopoly issuer of that resource and it could never be insolvent and its own currency. So basically, it’s $20 trillion that people hold are here and around the world. That is part of their net wealth that is part of their financial wealth,
Jason Hartman 24:55
right. So does this only work for the US Having a reserve currency or does it work forever? Can every country do this simultaneously? Because it seems like the US is obviously in a very enviable position. You know, when you talk about the treasuries, I mean, other countries have our treasuries. So China has her treasuries. And, and you seem to be saying, well, we can we never need to default in our own currency because all the Treasury is, is that instrument that says will, you know, turn it into dollars and or it is dollars really pay interest? I mean, how does it work on a global scale?
Mike Norman 25:32
And, you know, this is this another thing that we hear all the time that oh, you know, China’s financing us and this and that, or Japan, they hold all our debt. You got to understand like, you know, what comes first the chicken or the egg, you could only buy a treasury with dollars, okay? The dollars have to exist first before anyone can buy a treasury. Try to understand this concept. You know, it’s not that hard on Understand, but it’s like filling up a swimming pool. If you want to drain a swimming pool, you got to fill it up first, right? So if you want to sell treasuries, if the government wants to sell treasuries, the dollars have to exist first, to be able to buy them. So the fact of the matter is China is not financing the US by buying treasuries, China, we are literally financing China by buying their goods, which causes them to earn dollars, and then they take those dollars and just shift them over into an account called a treasury. So the dollars have to exist first, how do the dollars exist? The government spends the dollars into existence through its spending activity, okay. When when the government spends it literally creates the dollars in the system and those are the dollars that are used to buy Treasury. So it’s not like hey, What if nobody bought our treasuries? That could never happen because the dollars exist before the treasuries can ever be created and sold. So somebody’s going to buy the church because it pays an interest rate right there’s always
Jason Hartman 27:16
an entitled The Treasury it’s better for them to own the treasuries than the dollars because they’re gonna get Yeah, they greater interest
Mike Norman 27:24
a little bit more you know, normally,
Jason Hartman 27:27
okay, so the dollars existed first.
Mike Norman 27:30
You understand that all right. This is very important because this is this is actually a simple concept, but it goes most people don’t you know, go they don’t they don’t get it or they don’t think about it first. And the same thing, let’s say this to the same thing with taxation, like people say, well, it’s my tax dollars that are paying for everything, okay? Like Social Security, it’s my tax. It’s not because look, you cannot eat and let’s go back to the very original concept, right? You cannot even pay your taxes until you have the dollars to pay them right and where the dollars come from the government has to spend the dollars into the economy first has to create the dollars for you to even have the dollar to pay your taxes.
Jason Hartman 28:15
Yeah, yeah, it’s draining. If you got to fill the pool before you drain it, I get it. That’s it. You This is a very interesting theory. Mike, I gotta tell you, I were maybe not theory, as you say. But actual descriptions. Yeah, fair, that descriptions a better word. But it just makes me think, Well, why don’t we just raise taxes more? And why don’t we just spend more money into the economy and everything will be even better? No, no.
Mike Norman 28:40
It’s getting into ideology. It’s getting into belief. It’s getting into politics. You know, let’s face it. Jason, and I’m sure you would agree with me on this. Most people, they’re going to listen to me talking to you, and they’re gonna say this guy, Mike Norman is crazy. He doesn’t know what we’re talking about. I write out To check to the IRS every year and I pay my taxes and that’s what is the government is using to spend this Mike Norman is an idiot. He’s crazy. So you see what I’m saying? It’s a belief system. This, this belief system goes back to the days when we were on a gold standard, on a go under a gold standard or a fixed exchange regime where like we our money is fixed to some other currency at some rate of exchange, and we need to have that currency all the time. It’s sort of backing our own money. Under those conditions which have existed for a long time over history. All of the things that we fear, like going bankrupt and insolvency and not having enough money, all those things could happen. Okay, but we went off of that. I mean, in 1971, we broke up we really got off of that in 1933. FDR took us off the gold standard domestically, but the mentality is still there. You know, I’ll tell you about a very interesting exchange that happened, I think was back in 2005. When Ron Paul, Congressman, father of Rand Paul, he was still in Congress. He was in a hearing with Alan Greenspan, who was the chairman of the Federal Reserve at the time. And Ron Paul, you know, he’s a big gold bug this Ron Paul, he’s always got to go back on the gold standard. We got to go back on the go. So he asked, Greenspan, don’t you think we ought to go back on the gold standard? And here’s what Greenspan said. He said, No, I don’t think so. Because anyway, we still behave as if we are, we get that we still act even though we have unlimited capacity to make the investments, the National investments, we rebuild our infrastructure, right. Do health care, on education, basic science and research, all the things that that make a great country and a high standard of living. We have the capacity to do that and by By the way, none of that is inflationary. Because when you’re creating new capital, when you’re creating real things stuff, a new supply a greater supply of things, you know, then the prices stay level. I mean, they don’t go up, right? If you create more output, even if you even if it takes more money, if more output is created at the same time, right, the supply grows, the price is not going to go up everybody understand supply and demand. If there’s more supply of whatever bananas in the supermarket, what happens the price goes down, it doesn’t go up. Right? So we have that capacity. But you asked the question, Well, why don’t we just do it? We don’t just do it. Because our deeply held beliefs. Most people and I’m sure if you go around and you ask people and people are gonna, they’re gonna comment on this interview. They’re gonna write in, they’re gonna call him whatever. And they’re gonna say this guy, Mike Norman, Mike Norman’s crazy, but they’re gonna say that because They’re still stuck sort of in that gold standard mentality when they think, you know, we’re digging our money up out of the ground. And hey, if we’re not digging on money up out of the ground, then we’re going to end up being why Mar Germany or Zimbabwe, and both of those analogies are completely inapplicable to our situation. I mean, you’re talking about very rare rare. You want to know something? Look at Japan. You asked me before, you know, do you have to be any of Japan’s got mountains of
Jason Hartman 32:27
debt, right? And it’s
Mike Norman 32:28
it’s all Yeah, right. Japan has literally printed quadrillions of yen. We’re not even trillions, quads, but you can’t even imagine the number and they’re dying to get a little bit of inflation. They’re like, we want some inflation. Why can’t we get because they’re not. The money’s just be just piling up in the banking system. It’s not really being spent into use. Okay. Same thing like remember what happened here in the financial crisis. In 2007 to 2009, and the Fed started to engage in all these extraordinary monetary operations, you
Jason Hartman 33:06
know, this operation was,
Mike Norman 33:08
yeah, QE, QE and all these people like Schiff again and everybody else and even let me tell you even some very, very well known, you know, economists, they were predicting inflation and even hyperinflation at the time I said, it’s never gonna happen. It’s never going to happen because what the Fed was doing really was a gigantic asset swap, right? They were they were taking these high yielding assets treasuries out of the economy, they were buying it for themselves. So they was stripping away that income. And they were replacing it with reserves in the banking system, which earned nothing. And you could actually see in that period of time, that income interest income porns way down and it was not an insignificant amount, it was like 200 billion was sucked out of the economy taken away. That’s like a gigantic tax. So when people thought, oh, there’s going to be hyperinflation, they didn’t understand that what the Fed was actually doing was like a gigantic tax on the economy. And that’s why we never even went all that trillions that they printed, whatever you want to say. We never even got economic growth above 3%. annually. We kind of crawled along the whole time, you know, because that’s exactly what happened. And now, when they’re going to do the reverse, and everybody’s freaking out, because oh, my god, they’re gonna, they’re going to sell their mountain of treasuries. No, they’re not. They’re going to replace those high yielding assets back into the economy, and take away the low paying reserves. So this is actually going to be a little bit more inflationary or way more inflationary, I should say. Then their activities and their operations from 2007 until what 2000 15 Yeah, very,
Jason Hartman 35:00
very interesting. You know, Mike, just to kind of wrap things up, first of all, you have a YouTube channel. Where can people find that?
Mike Norman 35:07
Yeah, just YouTube slash Michael Norman.
Jason Hartman 35:10
Okay. Michael Norman. It’s what seemed like your view of the future. I just gotta ask you what you think is like coming next, you know, your view of the future sounds pretty optimistic. I’m thinking, right? I mean, you believe in the system we have, and it seems to be serving us. Well, it sounds like Right,
Mike Norman 35:27
well, monetarily, I would love to see policy move or embrace mmt where we’re not there. And I think, you know, in spite of all of our efforts in the mmt community, over the years, you know, we still have a long way to go to get it into higher policy circles. So, from an economic or a monetary standpoint, you know, we’re moving slowly in the right direction, but it’s agonizingly slow from a geopolitical standpoint, and you know, we could have a whole other show On this, but I’m very concerned because, you know, the wars, the the Russia phobia which, which I think is just insanity and dangerous. The Deep State situation that we have going on here. I mean, that’s that’s a whole separate worry. But from from an economic point of view, I’m frustrated, let me be honest, I’m frustrated because these are not hard concepts to grasp. And I thought after the crash, you know, we’d start to see more of this infiltrate into the policy level. But it’s been a it’s been a tough slog, you know, and I do everything every day to try to get these concepts and these ideas out there. And I’m not gonna stop and I appreciate you know, you have me on the show to talk about it.
Jason Hartman 36:49
Yeah, fascinating talk. I mean, you know, few few of my guests have anything really kind of new to say about this stuff. It’s kind of like rehashing the same thing. Over and over, and, you know, they all have a different take on it and so forth. I know you’re not you’re definitely not a gold bug. Neither am I, you’re probably not a cryptocurrency guy, neither am I, but stop me when I’m wrong about any of these. What do you think of like Harry dent, for example, you know, he would have said that Japan problems a demographic problem, you know, for example, yeah,
Mike Norman 37:18
his thing, his big thing is demographics. Right. Right. You know, I don’t know what, to me the Japan problem, in a nutshell, is that they have sort of embraced this junk Western economics, where they have convinced themselves that, you know, they’re out of money. You know, it’s a fascinating thing to watch. I mean, here’s a monopolist sovereign currency issuing nation which has all the power and capacity and ability in the world to lift itself up. It’s been, what, 25 years in this kind of perpetual recession and all they want to do is try to create inflation. You know, you want growth. There’s a difference between inflation and growth. That’s another thing like these economists, they’re like, they’re like begging or you know, so desirous of inflation, you want growth, okay? You don’t just want prices to go up because they’re down. Now you want prices to stay down, but you want growth, there’s a difference. and Japan has the ability to do that. But, you know, if you listen to their leadership, if you listen to their leaders, both in the in the central bank and also you know, all their prime minister, Shinzo Avi now, it’s like, okay, we’re going to spend a little bit more money, but we’re going to raise taxes at the same time to pay for it. Like they don’t understand like, that’s zero, okay? If I if I’m the government, and if I spend $10, but at the same time, I’m taking $10 away from you in taxes. What is the net increase? It’s 00. So this this whole thing and by the way, you asked me Well, you know, am I sanguine about The outlook Am I optimistic? You know, I happen to think in this country, we’re going to make the fatal mistake, and I see it coming. We’re going to make the fatal mistake of passing a balanced budget amendment. And basically a balanced budget amendment will put us that’ll make us like Europe with the euro. It will, it will preclude Yeah, preclude our capacity to spend, and it’s going to make it really tough for a lot of people, ironically, probably a lot of people who think it’s a good thing. It’s so against their interest.
Jason Hartman 39:34
Right. Right. You know, I would I would argue that those who are and I used to be when I didn’t know much in favor of a balanced budget amendment and like conceptually, you know, I would say, Well, I think the government’s spending too much, you know, which you address that already. Right. But But I would say that right, if you’re responsible government spending, I would be one of those people. But if try a balanced budget amendment in your own life, you know, and see if you can buy a house without Going into some debt and taking some risks. That’s what helps you grow leveraged as a great tool. Of course, it needs to be respected, not abused. But it’s a phenomenal tool. I mean, you can do, you know, you can do things 10 times faster if you get 90% leverage, right? So you know, it’s not all
Mike Norman 40:18
bad, that’s growth. And none of us by the way, it not only is it not all bad, it’s good, as you pointed out, in addition, none of us when we go into debt, we don’t issue our own money. So we don’t have that that additional benefit of the monopoly issuer that the issuer of the money the government, so they’re in an even better position. And by the way, it’s necessary, just because if there again, if they’re going to levy taxes on us, they have to create the dollars for us to be able to pay the taxes if not, then you have massive unemployment. You have a finite amount of money, but then you have people who you know have tax liabilities, what happens you get kind of this, this cannibalistic economy. I mean, it’s almost you can almost see it happening right now, like with the, you know, it leads to this kind of very acute income inequality that we’re seeing now it leads to malinvestment. Like what are we doing now? Like, I can’t even drive my car here in New York, it’s the roads are terrible, but yet, you know, there there’s a wall street’s going crazy. It’s all paper transaction, we need the real stuff. Because that’s the stuff we live on. Okay. The stuff we consume, the stuff we use every day that that is the definition of our standard of living. I mean, you know, trading stocks, you know, it’s nice to have a stock market, but to raise that up as the focal point of the economy when a lot of the rest of the economy needs attention needs investment, you know, with basically reducing our standard of living, Visa v the rest of the world, at least, Visa v other cards. trees that are making those investments.
Jason Hartman 42:01
interesting discussion. Very interesting. Well, I can’t wait to check out your YouTube channel and learn more about mmt. Mike Norman, thank you so much for joining us today really appreciate, you know, some some truly new ideas here. I mean, at least knew for my show because the people that come on are either on the side of I hate the Fed, be a gold bug type type philosophy. And that one never seems to really work right? Or the other side of that equation, which is, you know, spend, spend, spend, and then you interesting approach. I really liked this mmt stuff. I want to learn more about it. So thank you. Hi, Jason.
Mike Norman 42:36
Thanks so much for having me on. It was a pleasure. I really appreciate it talking to you.
Jason Hartman 42:42
Yep. Pleasure was all mine. Thanks, Mike.
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