When we talk about debt, we’re not simply referring to what is owed by one person, it’s also that someone else has something owed to them. That’s the absurdity of the World Debt Clock. If the entire planet is in debt, who shall we pay? Jupiter?
In the second half of our interview with Rohan Grey, he begins with the fact that all money is debt, but the cash in our pockets is not recorded as part of the national debt, which is concerned with debt instruments. He compares a $100 bill and a Treasury note to a checking account and a savings account. Only the latter pays interest.
When Rohan goes through the realities of this secondary market for government debt — wholly a creature of the Fed — it is clear that all worries are for naught. Most T bonds are rolled over, and if someone wants to cash out, there’s always someone else who wants them. If there arises a situation in which nobody wants to buy them, the central bank itself will do so.
The question of government debt comes up whenever there’s talk of the Green New Deal. Some have suggested it be financed by public banks, either because of political calculations or because those proposing it do not understand how money is created and believe we should take advantage of the huge pools of private wealth. Rohan points out the danger of both of those approaches. “Lending rather than spending” is a trap. If you need to be convinced of that, look no further than the student debt crisis. Rather than fund higher education, we said “let them eat loans!” As for the second option, well, the marrying of corporate financing and the public purpose is a good definition of fascism.
Asking the Green New Deal to give a return on the investment is entirely misguided. Do we ask school children to pay back the cost of their education by the time they turn 18? Do we insist that the military to turn a profit? When we try to turn public service into a revenue-generating endeavor, we distort the entire industry. Profit itself becomes the motive force, and the actual service takes a back seat.
Nowadays it’s impossible to have a conversation with a Modern Money Theorist without talking about the ubiquitous Yang gang and the UBI. Our objection can be summed up in the words of C. H. Douglas, an early creator of the UBI. His goal was to create “a democracy of consumers and an aristocracy of producers.” That says it all, doesn’t it? In their debate with Matt Bruenig in “In These Times,” Raul Carrillo and Rohan Grey expressed the demand for a world where the production process is as democratic and empowering for workers and average people as the consumption process.
Steve Grumbine often speaks of the job guarantee as a democracy enhancer; the community determines which work needs to be done. Democracy at the workplace is just as important as at the ballot box. Steve and Rohan talk about democratizing the fruits of intellectual labor as well as more traditional concepts of work. They address the hysteria about robots replacing all the workers. Certain jobs can be automated, but any job that requires human beings to interact with other human beings, by definition cannot be automated.
Some of our listeners may be surprised to learn that Rohan’s view of the job guarantee is significantly different from Warren Mosler’s. Tune in to find out how.
Rohan Grey is the founder and president of the Modern Money Network, a research scholar at the Global Institute for Sustainable Prosperity, and a J.S.D. candidate at Cornell Law School, where his research focuses on the law of money in the internet society.