May 27, 2020
Welcome to episode 30 of Activist #MMT. Today is a special three-part episode with Joe Firestone and Graham Elwood. In parts one and two, I talk with PhD political scientist, author, and MMT-er Joe Firestone about the basics of the Federal Reserve (the Fed), and its two major roles in our monetary system. Part three is my latest appearance on progressive video journalist and stand up comedian Graham Elwood's YouTube show, where I apply the lessons that Joe assisted me with.
The catalyst for this episode was two videos recently released by Graham discussing the actions of the Federal Reserve in response to the coronavirus health crisis (links for which can be found in the show notes). The spirit of Graham's overall assessment in these videos is correct: the elite and their banks and corporations steal from us as individuals, then steal from us again as a collective by getting massive bail outs from our government – all so they can steal from us again.
However, the videos incorrectly assume that:
- first: the Federal Reserve is the center of government,
- second: that the Fed – outside of its role in implementing new laws – has the ability to unilaterally decide to put money in the hands of individual Americans, and
- third: that the Fed chooses to use this power to put money into the hands of bank executives and not into the hands of the millions of Americans who are desperate and suffering all the time – not just during this crisis.
As I now understand, the Federal Reserve has two major roles in our economy:
- The first is as part of a larger process, to provide the spending that is required to implement a new federal law. This role often result in money indeed being placed directly into the hands of individual Americans in exchange for the labor and the resources necessary to make that law a reality. In other words, this role has a direct effect on the real economy.
- The Fed also plays a second role, mostly outside of the awareness of average people, and largely irrelevant to our daily lives. This role is to maintain the stability of our underground plumbing of our financial system, called the Federal Reserve System, or the banking reserve system. This role is critical to avoid catastrophic failure of our entire financial system, including the real economy.
I introduced MMT to Graham in June of 2018. Since then, he has come a long, long way, now expressing basic macroeconomic concepts with confidence. My latest represents our journey in now going deeper and learning together.
Resources:
- The livestream with Joe: Facebook and YouTube archive
- Graham Elwood video: Fed Gives Banks $1 5T & Americans Zero During Pandemic
- Graham Elwood video: Fed Reserve Pays Banks Overnight While America Starves
- Articles the Graham-Fed videos refer to: one, two, three
#LearnMMT
For an overview of Modern Monetary Theory (MMT) with many reliable sources to learn more, here is a good place to start:
- On the web: My layperson intro with many expert sources listed at the bottom.
- On Twitter: My massive pinned tweet with expert sources and layperson tutorials.
- On Facebook: Follow this podcast :) The pinned post contains the above web-article. Also, the pinned post on Modern Monetary for Real Progressives contains a wealth of information.
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