Saturday, March 31, 2012

Mike's Latest Bloomberg Hit: "US Budget Deficit is a Virtue"

Video below from after the market close yesterday of Mike shredding on the topic of the true nature of US "debt" and fiscal deficits.

Mike is able to reveal the truth of these issues through the use of professionally recognized terms and procedures of accounting and economics.  Mike's professionalism is played off in the piece against the metaphoric rantings of two politicians, Simpson and Bowles, who here are made manifestly morons and blind on these issues, with Simpson first referring to the debt as "16T babies" and later Bowles using the word "cancer" on the deficit.  Unfortunately "Moe and Larry" here have been selected to co-chair a US government committee on the deficit.


In contrast to these two government stooges, the Bloomberg host Ms. Massar seems legitimately intrigued and interested in the fresh, hopeful, positive and truthful MMT based economic perspective expertly communicated by Mike in this piece.  Here's hoping that  this interest continues at Bloomberg, and will lead to more appearances by Mike, and more reporting there that keeps the insights of MMT in view.

h/t the 'Deus ex Machina' ;)

Video streaming by Ustream


NeilW said...

Good last line Mike. That's what we need to be banging away at.

Nice work.

Chewitup said...

Do you get a chance to talk to her off camera? She seemed receptive to learning.

paul meli said...


Great Job Mike I've never heard it said better.

Anonymous said...

Great job on both sides. She asked tough questions but also allowed you to articulate your answers.

John T said...

Good job, Mike, you are spreading knowledge in a world full of misinformation. Now, if we could only get the people in Congress to understand.

Anonymous said...

You didn't really answer her point about growth being possible with a govt surplus though... This is where MMt gets more complicated and more contentious.
Overall I don't think she got it/ bought it.

Maybe you need to boil down your MMT explanation into a really tight formulation which covers all the main points, answers all the main questions, and can be quickly trotted out in any circumstance. So for example you could have said "ok give me a minute to fully explain my point", and then roll out the logic.
I feel that in this interview too many questions were left hanging in the air unanswered. I'm sure a lot of people watching would have thought you were wrong or mad. The question of the "affordability" of government debt wasn't fully explained... Good job overall though.

Anonymous said...

Everyone watching who didn't understand what you were saying would have been thinking to themselves "what about Europe then?" The difference between the US and the Eurozone needs to be clearly explained at the very beginning, otherwise people just won't get it.

Vassilis Serafimakis said...

After a whole morning of arguing with ignorance, to me that's like a breath of fresh air.

mike norman said...


That's EXACTLY why I need my own show. You just can't cover all these points in four minutes and she doesn't know what questions to ask to lead the conversation so that it covers all these points.

I am pitching Bloomberg on a show and the producer let me come to as a "test" but they're far, far, far from agreeing to let me do anything other than come on as a guest once in a while.

That's simply not good enough. Email them. Everybody, email them!!!

AndyCFC said...

Excellent stuff Mike, by TV journo standards nowadays she let you get long enough answers in.

Anonymous said...

Never ceases to amaze me that people who are in a position to educate the public know nothing about the topic over which they have influence (speaking about the interviewer).

Very good on Mikes' end. Keep hitting them hard with facts, as often as possible, although it can be exhausting to educate people who are such planks (of wood).

Trixie said...

Great job here, Mike. You packed in quite a bit in a few short minutes. Good job staying focused with key talking points.

Lord Keynes said...

This was a great interview. The hysteria on the deficit is absurd beyond words.

I have re-posted it on my blog.

Another point:

The US could have higher deficits, say, by doing a large program of public works.

US public infrastructure has been underfunded for years.
The American Society of Civil Engineers (ASCE) has been warning about it for a long time:

The nation's roads, bridges, levees, schools, water supply and other infrastructure are in such bad shape that it would take $2.2 trillion over five years to bring them up to speed.

Anonymous said...

It would probably be worth pointingout to these people that much of the government debt is simply owed to the fed.

Unforgiven said...

Lord Keynes -

"US public infrastructure has been underfunded for years."

Almost like some interested party had intended it to be so. But they wouldn't actually promote disinformation about our economy or go so far as to lobby to that end. I can't believe they would stoop to that. Or convince our elected officials to sell off public assets. I just can't believe it of them.

Tom Hickey said...

@ Unforgiven

It's in the playbook going back to Reagan, who wanted to impose Thatcherism in the US. That's still the goal. It is the basis of neoliberalism as a global strategy that transfers the commons to private property, making ownership the chief social, political and economic factor. The goal is to create a modern aristocracy of wealth and power.

PeterP said...

She thought you were crazy, but you held well to your line.

I would suggest a line (or three) when talking about retirees: "it is not about the money but the real goods we will need for them to be able to consume, imagine we do have the money in the future, but no goods. What are we going to do, feed them the money? We need goods and productive capacity in the future, which means we can't be wasting them today. And, as it happens, the government can provide the money for this thing to work, as long as the real economy can provide the real productive capacity"

miller B said...

great job mike. Love the look on her face around 4:00 looking down, presumably looking for a question to cut you off. She completely avoided the 32 trillion dollar fact and it's implications. She must not of made the connection between that and how "we pat for our retires"

Unforgiven said...

@Tom Hickey -

Now, it might just be my imagination, but it seems that most everything the neolibs are screaming and accusing about, they are busy doing hand-over-fist themselves, with all the yelling going towards desperately trying to divert attention from "he who dealt it".

Bart said...

Mike, great job given the limited time and scope of the interview. You maybe should hook up with Steve Major, who is Head of Fixed Income Research at HSBC in London and a regular and much-favored guest on Bloomberg. He's a real bond market practitioner. Steve is also a firm proponent of MMT and has been for some years.

Anonymous said...

That $32 trillion figure doesn't make sense. I thought the national debt was $15 trillion. How did the govt end up paying $32 trillion in just 1 year? Are you sure you're not confusing millions, or billions, with trillions?

Letsgetitdone said...

Anonymous, No Mike's right about the $32T. A large portion of the debt is in short term securities, so it gets rolled over multiple times per year. See this one: and the link in it to Ben Strubel's piece.

Btw, the debt's a faux problem See:

I know what you're going to say: "inflation." It's discussed in this last piece, and a more complete discussion is here:

Letsgetitdone said...

Nice job Mike. I didn't think you persuaded her, or that she was open-minded. But I think your strong oppositional approach did show her that there's another position out there that she can't blow away with a few silly questions based on what the austerity crowd is saying.

Wish you could be on Meet the Press. Today they have Harold Ford, Bobo, Tom Friedman, Mika Brzezinski, and Joe Scarborough, everyone an arrogant deficit/debt moron.

Tom Hickey said...

The 32T is similar to Randy Wray's 30T bailout figure. It's cumulative liquidity provision.

The difference is in circumstance. No problem with government rolling over debt short term since govt cannot become insolvent. But Wray questions whether govt should provide liquidity on that scale to banks. He holds that the unlimited liquidity provision is used to mask insolvency. An insolvent firm can continue forever as long as it has the cash flow. This is called "extend and pretend."

rge said...

Why is it so hard to differentiate what "budget" means for the issuer and users of a "fiat" currency?

A currency issuer maintains an input/output real-products/services budget, and issues fiat currency as internal bookkeeping.

Currency users maintain local currency budgets as an accurate proxy for their local input/output budgets.

Fiat currency is bookkeeping, and the monopoly issuer is the chief accountant. It's that simple.

There is - semantically - simply no such thing as a "deficit" in fiat.

That use of the word, fiat "deficit," is entirely a semantic miscue.

There's no need to even discuss the amount of numerals involved - that's just distracting.

Even this interview - which Mike handled better than most - is extremely frustrating to watch. The interviewer obviously doesn't have the slightest idea how a fiat monetary system actually works - and still doesn't at the end of the interview.

Tom Hickey said...

What is so hard to get is that money is not a thing like physical things. It's just scorekeeping. This a common logical mistake that lies at the root of many philosophical problems, which when seen correctly are discovered to be pseudo-problems.

The problem arises from using money-things like coins and then bills. Then the illusion gets generated that one thing is being exchanged for another thing, when that is not actually the case. A claim is being exchanged for real stuff or financial claims of other types.

This will all be cleared up when electronic aka "digital" money replaces other forms of moneyness. Then it will be obvious that all that is happening is shifting of numbers in accounting records, and that whoever controls the spreadsheet has to ensure that the appropriate entries get made to facilitate transactions.

The really hard concept for most to grasp is that there is a "right" amount of money to facilitate the desired exchanges of goods, and that too little slows down the process, making it underperform, and too much gums up the works.

It's so simple it is mind-boggling.

Anonymous said...

That was a great show, Mike. I still think, however, that they just can't wrap their heads around a simple truth. Why not? Because their minds are reifying the dollar. It is a "thing" in their minds. They simply do not conceive that it can be "created out of thin air" because it is supposed to be a physical thing--or at least represent a thing, such as gold, which is what is really "worth" something "intrinsically.". They don't understand that it is a simple conception, an abstract unit of account on a spreadsheet system of accounting. They don't get that the word "debt" in this context refers to a debit column on the spreadsheet and is matched by the credit columns for the private sector. They don't get there no dollars even exist outside the government spending them into existence. So they don't get how we can "afford" social security, etc. If you don't get the initial premise of the system, then you can't possibly go on to discuss anything further with any degree of coherence. Hence the painful experience of watching that lady simply not understand.