RL105 – Modern Monetary Theory with Luigi Zingales and Bethany McLean

Today on the Retirement Lifestyle Show, Roshan Loungani, Erik Olson, and Adrian Nicholson debunk The Modern Monetary Theory (MMT) with Bethany McLean and Luigi Zingales, the hosts of the Capitalisn’t Podcast. Bethany is Vanity Fair’s contributing editor, while Luigi is a world-renowned economics professor. Listen now to learn more about Modern Monetary Theory with Luigi Zingales and Bethany McLean.

[03:50] Modern Monetary Theory Debunked

[09:10] Printing Money and Inflation

[11:06] Modern Monetary Theory in Japan

[12:50] Luigi’s Thoughts on Cryptocurrencies

[14:20] How MMT is Being Implemented Today

[17:30] MMT as the Ultimate Expression of Privilege

[23:06] The Numbers That Highlight the Fiscal Dominance of the US

[27:20] Bonds, Stocks, and the Low Interest-Rate Environment

[34:03] Understanding the Velocity of Money

[38:04] Is Inflation Here to Stay?

[41:00] MMT and Inflation

[50:20] The Moral Argument For and Against MMT

[53:10] Is There a Practical Solution for Inflation?

[56:10] How to Invest in a High-Interest Rate Environment

[58:40] Parting Thoughts

Links and Resources

 

To read the Full Show Notes scroll down or click here.

  • Roshan Loungani can be reached at roshan.loungani@aretewealth.com or at 202-536-4468.
  • Erik Olson can be reached at erik.olson@aretewealth.com or 815-940-4652.
  • Adrian Nicholson can be reached at adrian.nicholson@aretewealth.com or at 703-915-8905

 

Listen now to learn more about Modern Monetary Theory with Luigi Zingales and Bethany McLean.

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Full Show Notes:

Modern Monetary Theory Debunked

The Modern Monetary Theory (MMT) is a famous macroeconomic framework defined by how economically powerful countries like the US, Canada, Japan, and the UK do not have to worry about federal government spending. These countries can essentially print money whenever they like. Deficits don’t matter, neither does the national debt. In essence, such governments do not rely on taxes or borrowing for spending since and therefore, their policies are not shaped by fears of rising national debt. 

MMT is big on promises, the common ones being it would build a more just economy that works for the many and afford to invest in health care, education, and resilient infrastructure. Unfortunately, government deficit spending is never sustainable. It’s often a hindrance to economic growth and a death sentence to future generations. And printing huge sums of money will inevitably lead to inflation, despite what most MMT promoters claim.

Understanding Velocity of Money

Velocity of money refers to the average number of times a single unit of money goes through people’s hands in a given period of time. Simply put, it’s a measurement of the rate at which money moves from one entity to another or how consumers and businesses collectively spend money in an economy. The velocity of money is essential because it’s used to help financial experts gauge the health and vitality of an economy. Low velocity of money is often associated with contractions and recensions. On the other hand, high velocity of money can be linked to a healthy, expanding economy. For example, the velocity of money in the US was incredibly low in early to mid-2020. This was probably due to the diminished activity of fear and restrictions during the COVID-19 pandemic. An increase in consumer savings caused by economic uncertainty might also be a possible explanation.

 

Links and Resources

Disclaimer Welcome, you are now listening to the retirement lifestyle show with Roshan Loungani Erik Olson and Adrian Nicholson. This show is an exploration of ideas to help you work towards your ideal retirement. Roshan Loungani and Erik Olson serve clients across the US. They offer financial planning and investment advice through Arete Wealth Advisors, LLC, an SEC registered investment advisor and securities through Arete Wealth Management LLC, member FINRA, SIPC, and NFA. Get ready for the financial independence of your dreams. All opinions expressed by podcast hosts and guests are solely their own are based on information they believe is reliable. Neither Arete Wealth nor its affiliates, warrants its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only and should not be regarded as specific advice or recommendations for any individual. Before making any decisions consult a professional. Finally, our music is the chance by Jason Shaw and Audionautix. It’s part of the YouTube Audio Library and it’s licensed under a Creative Commons license.

Thank you for listening.

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