Episode 294 – Euthanizing Rentier Capitalism with Daniel Conceição

[00:00:00] Steve Grumbine: All right, folks, this is Steve with Macro N Cheese. My friend, Daniel Conceicao is coming back to talk about, “Can MMT Euthanize Rentier¹ Capitalism?” And, obviously, this is a subject that is very important to a lot of us on the left, so we want to talk about that.

But those who do not know Daniel, Daniel is an associate professor at the Institute of Urban and Regional Planning and Research, IPPUR, at the Federal University of Rio de Janeiro, and one of the authors of the book, Modern Money Theory, The Key to an Economy at the Service of the People.

He is also former president of the Institute of Functional Finance for Development in Brazil. So without further ado, let me bring on my friend and guest, Daniel Conceição. Welcome to the show, sir.

[00:01:35] Daniel Conceição: Thank you. It’s always wonderful to talk to you.

[00:01:39] Steve Grumbine: Yeah, absolutely. So, when I came to you the other day, I was trying to get my arms wrapped around this concept of rentier capitalism. Because to me, capitalism always just sort of feels like rentier. I mean, it’s always about somebody owning something and someone else trying to get something from it. And then one person or a few people winning all the time. It seems like pretty much the entire schema of capitalism is about very, very small amounts of people winning while many, many others are subsidizing and losing. Let’s just start off with what is rentier capitalism? And then we can get into how MMT might euthanize it.

[00:02:22] Daniel Conceição: So, the first thing is to identify, you know, what it is and why it’s a problem. I think the key for us here is the distinction that Keynes tried to establish. It’s a different type of exploitation, right? So we have the basic conflict between capital and labor, and that’s because one is just exploiting the other in order to get value from production .

And Keynes pointed that, well, maybe that’s not even the worst type of conflict that we have in the economy? There’s another one between production itself and these other activities that can also be profit-seeking, right? So in capitalism, most productive activities are profit-seeking . Right? But sometimes there’s even worse.

So this is bad enough, right? Because profit-seeking requires for you to be able to exploit your workers in order to get a profit. But it can still be useful for society, as a whole, because you’re getting stuff. You’re getting material output that can be used to service human living. And, basically, if you can get enough stuff, enough goods and services for enough people, well, you at least get people to survive.

The real problem in capitalism really comes when different profit-seeking strategies starts to dominate. And this is what we call, the rentier activity, right? Finance, which becomes an alternative to the production of goods and services. It becomes another form of becoming wealthy without even having to do useful stuff for society.

So what are these activities? Well, basically it’s dealing with non producible things. Like, the properties of already produced stuff, right? When you shift already existing property back and forth, you’re really not producing anything new for society. You’re just shifting the command over those properties from one side to the other.

So existing property, even though it is useful, in order for society to survive, it needs to produce more stuff that can become property. If you’re just dealing property back and forth, that’s not useful at all. And that’s one of the activities that finance people do.

Those who we are calling here the rentier. Another thing is dealing with debts. And debts are just claims on commitments to receive something from someone else in a future day. And debts themselves are not things that we produce now. Then they can be used to allow for people to eventually get to produce stuff.

And that’s, a useful thing, right? When you use debt in order to acquire the funds to then go ahead and invest in the production of goods and services, that’s useful. But when you’re dealing only with debt and nothing else, right? The commitment to repay in a future date in and of itself is nothing of use for society.

So again, nothing good comes from it. And, basically, when you have people who become specialized and who prefer to seek profits by dealing with gambles on the variation of the prices of these types of things, right? The prices of bets, the prices of properties, rather than betting on the price of producible goods and services to become profitable.

If they are gambling just on those types of prices, then they’re doing nothing useful for society. It would be just as useful as real gambling, right? As, people who gamble in sports, right? Might be fun betting that my team will win, and I get a little enjoyment from getting money from whoever bet against my team. But other than that, what are we getting, in terms of stuff that people need for the survival of humanity? Nothing, right?

And that’s the same with finance. All of those gambles are just shifting funds back and forth from losers to winners, but doing nothing at all to increase standards of living.

And what’s even worse, Steven, this is the key that Keynes identified. Is that in order for the rentier activities to thrive, production needs to suffer. Production needs to be sabotaged. Why? Because, in order for the opportunities to bet profitably to be plentiful. You actually need for prices to be more unstable and less generally predictable, right? Because if relative prices are not really fluctuating, you can’t really gamble that much, right?

You can only gamble if you think that the price of what you’re buying is really going up, or if the price of what you’re selling is really going down. If it’s just fluctuating a little bit, you don’t make a lot. And you also need to find some fools to bet on the opposite position, right? So if you want to gamble that the price is going up, you need to have someone who will believe that the price is going down in order for you to be able to make your bet.

And this requires for things to be , at least, not very predictable for everyone at the same time, right? And so these are the very things that are working against the production of goods and services. Why? Because the investment in the production of goods and services requires for you to make a huge long term commitment, right?

Let’s say you’re planning to build an oil refinery. That’s a huge investment. You’re going to commit a lot of your funds into it. And you need to be able to predict whether a few years from now, you’ll start making money by selling gas, right? So you want to sell gasoline? Well, you need to make sure that the price of gasoline will at least be sufficient in order for you to pay for your costs and make up for your investment.

And so that requires a lot more predictability than actually what allows for people to make short term gambles, which is what the rentier likes to do. So the conditions are just that in order for one to thrive, the other one has to go poorly.

The other thing is that will make a lot more money in finance if incomes are not expanding enough and at an equal rate for everyone, because, ultimately, finance also likes to lend a lot, right?

And in order for you to lend, at least some of the participants in the economy have to make just enough to pay interest payments, but not enough that they won’t require many borrowing operations in order for them to make big purchases, right? If everyone had enough money to buy their own house, imagine how frustrated the sellers of mortgage loans would become, right?

So, those are again things that work against a healthy economy. So this is why the existence off the rentier is so undesirable for even a well working capitalist economy that is focused on production rather than gambles.

[00:09:36] Steve Grumbine: So what is it about controlling, almost creating, intentional scarcity? What does that do? Is that all about being able to create the speculative bubble?

[00:09:49] Daniel Conceição: Well, it’s even more subtle than that, right? Because, and this, again, I think Keynes has been very useful here. One way of looking at this conflict between the rentier and the productive capitalist, right? Or the speculative activity versus the productive activity, is to look at what is actually the advantage of one against the other.

So what makes the rentier be able to actually exploit everyone else in the economy? And that’s their command on liquidity. And then, you’re right. They can only do that if we create an artificial scarcity of liquid assets because we’re not using our money-creating powers property. What do I mean by that?

Well, if we have an economy in which everyone has equal access to liquidity, Okay, in another word, if the premium on liquidity was very low or even zero, then nothing would ever keep anyone from being able to achieve a profitable, productive project differently from anyone else, right?

Everyone would have the same possibilities if they had a good idea. If they were competent enough. If the project was materially feasible and it was a project that would end up in the sale of something that people wanted. Well, you could do it because liquidity would not be artificially uh, commanded, made scarce by a group of people.

Right? Which would mean the premium liquidity would be actually close to zero. Now, why is it not the case? Well, because the only commanders of liquidity are the ones who have already accumulated tremendous wealth and can liquidate their wealth at will.

And so those people do have access to liquidity just by means of having wealth that they can transform in liquidity so they can pay for stuff if they want to invest. And commercial banks, right? Who we allow, we, I mean the state. I’m not the state, right? But I wish we could control the states so that we could say, well, the states allow commercial banks to be able to create liquidity at will. Because they actually allow states to have very easy access to perfectly liquid assets in order to guarantee the conversion of their own liabilities into perfect money.

So those are the ones that can deny access to liquidity to everyone else. And that causes liquidity to become a very valuable thing. And that allows for finance people, for the rentier, to earn a living out of their command over liquidity instead of allowing everyone to have access to liquidity and to try to produce stuff. So in a way, the scarcity of money, which is something scarce because you can’t produce it with labor, you have to issue it and then whoever issues money will be determining whether or not people can get it.

So this scarcity of money is ultimately what causes capitalism to get stuck into this, uh, less than efficient productive arrangements. It’s because you can’t really get the money flowing where it needs to flow in order for it to drive production as efficiently as possible.

[00:13:16] Steve Grumbine: One of the things that made me think about this is the YIMBY [Yes, in my backyard] kind of movement. This kind of weird, “we’re doing pretty daggone good” silicon-yuppie that has no problem with expensive houses and stuff like that. They just want to be able to have them. And they want to be able to rent them, and so forth, while main street, you know, a lot of people are living in tents.

And, so that idea of rentier capitalism in terms of, you know, just in the housing market. And I’ll use the United States, but you can pick another place and you can pick a different industry. But within that space, there is capture of the supply. The supply is captured by a few people. There are big groups like BlackRock and others who have bought up a lot of the properties and they are holding on them. They’re sitting on the squatting on them and driving the prices up. And you’ve got people living in tent cities, and so forth.

Help me understand this arrangement. Because, you know, obviously there has to be a desire to put that to bed, right? You know, the government itself creates markets. The laws, all the regulations, putting the money where its mouth is. It creates the conditions that allow for these to happen.

So you have to assume by the way these markets behave, that this is exactly the way the government itself wants it to behave. Written laws, probably by lobbyists, that are in those areas and these puppets that we call representatives don’t understand the issues well enough to really direct it one way or the other. They’re dependent on these lobbyists to write the things. Help me understand how this impacts rentier, rent-seeking and property, as well.

[00:14:59] Daniel Conceição: That’s actually a very good topic for us to understand what we mean. So, what should a housing market do first for humanity? It should allow us to allocate houses, right? Housing to the people who need it. This is what we should achieve. This is the desirable result. But once you allow private profit-seeking entities to control the supply of houses, then you have all of these, results that are far from what we would desire.

So let’s think of house bubbles. So you might have a movement that causes house prices to spike a little and then that causes people to say, Oh, maybe, buying houses is good just because I’ll get something that is becoming more valuable. I don’t even need the house. If I’m a rich person. I already have a house. But I’m buying the house just because it’s good investment. Because I think that the price is going up.

And I’ll keep the house just as a speculative asset. I’m not even using it. And then you get things as crazy as during the housing bubble. Where you would produce all of this huge housing complexes, that are basically good for nothing, right in the middle of the desert, just because people were seeking houses purely as speculative assets.

On the other hand, right, you also allow people who command houses that could be useful to keep them from servicing people because they’re trying to get their prices to stay up or to go up. They’re just denying people access on the houses until the price is sufficiently interesting for them.

And this would be so easy to fix if you actually applied the power of a money-creating state, properly, right? So in order for you to solve the housing problem in terms of getting people houses, all you have to do, as long as you have productive capacities, is build houses. This is something that Brazil actually did for a while in the past with a huge, construction program for the poor. And it worked, right? It gave people a lot easier access to houses in Brazil. And it also caused those rent -seeking speculators not to be able to charge as much. Because now I don’t need it.

[00:17:17] Steve Grumbine: Just for a second. Because this is a point that I think needs to be made and I want to make it. And I don’t know if I’m going to make it eloquently, but I’m going to give it a shot. Because intent, right? When I do something with intention, I intend to cut my grass. I intend to clean my bathroom. I intend to enable rentier capitalism and rent-seeking in the housing market. If my intention is to do that, what you’re talking about is a solution to a problem they intentionally created.

So my point is that, and this is where I think people get lost on MMT, especially on the Left. They’re looking for solutions to problems. And when we don’t speak to the intentionality, and sometimes it’s hard to know what the intention is. But it’s not hard to see that almost 100 percent, every single time connection. And if you see something happen more than once, more than twice, more than 50 times . . . over and over and over again . . . That’s not an accident. That’s a, that’s a method of doing business. That’s a way they want it done.

And so my question is, How do we take these great ideas of what you’re speaking to within the framework of believing that the intentionality of the laws that created these is ideologically opposed to the fix? The fix is government intervention, but they’re ideologically against the fix.

[00:18:43] Daniel Conceição: The question we should be asking is, and telling people, and  stimulating them into asking these questions is, well if people need housing, why is it that the government doesn’t build houses or pay for the construction of houses and make them more affordable?

Either distributes them, uh, you know, at a very accessiblee price. Or at least create something that allows people to pay for these houses with their current incomes. And, you know, we know that the government could even charge nothing at all as long as we have productive capacity. But, at least having some program of construction of affordable houses would be the solution.

So once we allow people to ask for these things. What is the answer that the professional liars that actually work for the rentier give us? Well, they’ll say, ah, that would be great. We would love to be able to afford these. But unfortunately, money doesn’t grow on trees. Unfortunately, the government doesn’t have the spending capacity to do that because we can’t collect enough taxes, right?

So the tax lie is actually something that enables those who try to control our government and sometimes they, become the government. But that’s what enables them to resist, our pressures on such a policy, right? So we’re asking for the policy. They say, well, I wish I could, but I can’t because we have no money.

And that’s a key lie. Uh, that’s a lie that is actually so dear, so dear to the rentier that they actually see MMT’ers today as more of a threat against them than any other economist. You will see no attacks on economists that are more aggressive and violent as the ones that the mainstreamers are levying against uh, MMT’ers. Here in Brazil, for instance, they’ll even allow for Marxists to participate in the debate. But once you come out as an MMT’er, they say, no. This is the most dangerous idea of them.

They’re calling for inflation. They want to destroy the economy. They want to bankrupt the government. And they don’t even let us speak. Why is that? Because they know that we have the most powerful arguments against them. And so they have all these professional liars working for them. Occupying the debate spaces, uh, so that only, the beatable economists get to say something and work for governments and all that.  We have the truth in our hand. Yeah.

[00:21:16] Steve Grumbine: Absolutely

[00:21:17] Daniel Conceição: We can claim, well you don’t know money at all.

[00:21:19] Steve Grumbine: They don’t invite us to the table, do they?

[00:21:22] Daniel Conceição: Yeah

[00:21:22] Steve Grumbine: They did not invite MMT’ers to the table, at all. They’re always left on the sideline answering it in Twitter versus actually being in the room when decisions are made. We saw this big-time in the state-by-state healthcare debates out here in the US. We were trying to explain to them, look, the federal government is the currency issuer, not the states. So you’re trying to do a massive program that, if we have something like a pandemic, for example, the only one that could really take care of that is the currency issuing federal government. But they wouldn’t hear about it. And so they had people that were not MMT-informed being the economic advisors for these plans that were destined to fail. Set up to fail. And just more of the same.

[00:22:05] Daniel Conceição: It’s always the same story I’m dealing with the same shit here right now when we’re going to have the elections for mayors here in Brazil. A lot of candidates are coming up with free transport programs, right? So no-fare buses, for instance. No-fare trains, and all of that.

And there’s a few experiences there, but they’re all trying to come up with taxing solutions. And I tried to tell them no, that’s not how you do it at all. You call for the federal government to fund whatever program you want for the entire country. And then they’ll fund those mayorships, those municipalities without the challenges that a municipality would have. Don’t just give up on asking for the federal government to do what it needs to do. And because these are not MMT-informed, they say, well, but we need to be responsible. We can’t just say that the federal government can spend unlimited funds because it can create money. That’d be inflationary. Are you crazy?

No, we have to explain that we can tax the rich. We can tax wherever, and then we’ll pay for it. No, you won’t pay for it because you won’t find the money in a poor economy to do things that are more ambitious. Because very few people can pay enough taxes. And so if you said, if I can’t get taxes, I can’t do anything. Well, screw them. We’ll never do anything.

And so these people don’t know that they’re working against themselves by promising that they’ll have taxes, to pay for some very desirable plans. And I’ve been going crazy. Because they’re so sure that taxes are, the financing operation. They won’t even indulge when you say, well, where does the money that you used to pay for taxes come from?

They’ll say, that’s a silly question. Okay, then if it’s silly, answer it. Right? They can’t. If you’re saying that taxes have to come before spending, where does the money come from that you used for taxes?  I’m not going to answer that. That’s what they’ll give me .

[00:24:29] Steve Grumbine: Yeah, let’s go to the next step, because, you know, MMT is the study of macroeconomics. The study of money creation. It’s a study of flows, macro aggregates, things like that. But one of the core components of MMT as told by the leading voices of MMT is that all we need to do, it’s not that we have to find the money, it’s that we have to source the votes.

Okay. And the people that are passing these bills, they’re not answering to the people. We see evidence, constantly, of the people being completely silenced, ignored, et cetera. What is the motivation of politicians to flow through rentier capitalism? What is it about them and their approach that makes that appealing?

Because ultimately, to euthanize rentier capitalism . . . I mean, we could do it on paper. We can demonstrate the flows and how money-creation spent into the right ways can do these things. But there appears to be a fundamental gap between what society wants and needs, and what actually is delivered. Even though we’re sold, constantly, this is democracy. We’re saving it. We’re doing all these great things. But we’re not. Nothing good’s coming from it.

And so is it, they don’t understand the issues. So these lobbyists are able to basically control them? Or is it that they’re bought or, I mean, is it just pure ignorance? I don’t know money, so I’m just going with whatever they tell me.

So for a country like Brazil, the fear on the part of even, who I believe be honest policy-making economists, right? The people who are in this government, in particular. I don’t think that they have sold themselves, at least not all of them, to the rentier. To finance. But I think that they’re scared of the rentier. So that they’re willing to go with the lie, because they think that if they tell the truth, the rentier will come back at them and will mess up with something in the economy.

Usually they say, well, the rentier will force the currency to devalue too much, and that will cause inflation and we’ll become too unpopular to politically survive. That’s one of the fears. The other one would be, uh, that it will force us to increase interest rates tremendously. Either because, and this is a little bit more stupid, because they will convince everyone that the government will go bankrupt so that the markets will ask for a higher compensation by government debt.

But the other one is also attached to the exchange rate problem. Where and . . . If the rentier starts speculating against the real² and buying dollars, that would force the central bank to increase interest rates to keep dollars from flowing out. And that would also have an undesirable economic effect. So these are their fears. And this is why I think we should talk about what the rentier can actually do. And what we should do to keep them from attacking us. And this is what I’m bringing you today, is ways in which a state should never be weaker than any private actor within the economy.

A money-creating state should be always, always, always more powerful. If you have an arm wrestle against a rentier. The most powerful one. Within your own economy. If you’re the central bank. If you’re the money-creating state. You can always beat them. You can always make them the losing party. And you can always make their strategy, their terrorism, lose their money so that they will eventually give up.

And the only reason why we don’t do it is because we either don’t understand everything or maybe we are defending interests of the rentier. Which is actually what the Brazilian central banker currently does, right? He is a representative of those worst kinds of speculators in the financial markets.

But he will be replaced. And what I’m trying to tell the government, what I would like to tell Lula, is pick someone you can trust. Don’t get another market person , right? Why would you get a poker champ to be your economic advisor? To be your economic minister? They might be the most successful poker players in the world. They know nothing [about] running an economy. And this is what we do. We ask for the equivalent of poker players, who might be very successful in money, misleading other people into buying crap, uh, when they’re trying to get their prices to go up. So how would we actually kill these types of behaviors? Kill the rentier and have them not be able to terrorize our government?

And, you know, this actually came to me, when I was thinking about this exercise that we do with the buckaroo. Have you heard of it?

[00:30:17] Steve Grumbine: Oh absolutely…! Yes.

[00:30:18] Daniel Conceição: It was developed by Mosler. We did it a lot at UMKC, right? So basically it’s a classroom currency that our professors would issue. And they would use the currency to buy our services like community service or things that they wanted us to do.

Uh, they could have us, you know, clean up their offices or, mow the lawn or something like that. But they would have us do more admirable things like community service. But the key was, well, why is it that we would accept those classroom currencies in exchange for our work? And that’s because part of our grades depended on paying a tax in that currency.

And so, because the grades were valuable to us, so would the currency. That’s how we learned that taxes drove the value of money, and all of that. And so I started doing this exercise with my students. And I did the version of it at Knox College some 10 years ago in which I did . . . I tried to simulate a very complete economy with, uh, private banks that were controlled by students. And with a financial market so that they could see funds being shifted from things that we call production. Like the production of essays and and tasks and pure finance, like, you know, the speculation with stocks, for instance.

So these students needed to earn classroom currency because they needed to pay some tax in order to get their grades. And I called it, the currency, “Knapp.” And I had George Friedrich Knapp’s, picture on the bill, and all of that. And so what I allowed them to do was to invest in American stocks that would be traded at the New York exchange and NASDAQ. And they would buy those stocks trying to earn the classroom money, right?

So I would tell them, well, you will give me the classroom money. You will give me the Knapps and I will be the one buying the stocks for you guys. And I’ll issue a document here. I’ll write down a contract with you guys so that when it comes time for you to sell the stocks that I’m holding, I will buy them back from you at the same exchange rate.

So that basically they were able to buy American stocks using classroom money and they would get paid in classroom money for those stocks. I was just pretending that I would buy the stocks. Because, ultimately, I didn’t have to buy the stocks in order to resell them and get the money to pay them because the money I was using to pay them was just the money that I created, right?

Eventually I told them that. I said, well, I’m not even buying the stocks. I’m basically selling you guys fake stocks. But I will give you the payments in our own classroom currency. So basically, those fake stocks are as good as stocks for you guys, because what you want to get is the classroom currency.

And they all realized that they had no reason not to buy the fake stocks, because they were still getting paid in classroom money. And what that allowed me to do is to satisfy all of their demand for American stocks by issuing my own version of stocks without having to get any stocks for myself. You see what I mean?

So, I have to get no stocks at all. I could have them buy no stocks whatsoever and still be able to satisfy what they were trying to buy. Now, obviously, their demand for stocks was irrelevant in order to determine the actual price of American stocks. But I was able to eliminate all of their demand for stocks.

And so that allowed me to think of something else. Well, what about instances in which Brazilians are trying to purchase dollars because they want to be able to earn R$ from the sale of appreciating dollars,  right? This, this happened very recently in Brazil. And this is one of the reasons why the government felt like he had to redouble its commitment to austerity.

And what happened was, those professional liars that work for the rentier, they were able to shift the debate in Brazil towards the supposed insustainability of Lula’s program. They were basically saying, well, Lula is not going to be able to deliver on his commitment on a primary surplus. Which is basically just having more taxes than primary spending. The spending without financial payments.

And so, if they don’t get that, the debt will actually rise by more than we expected, and eventually the government will go bankrupt. Well, we should all sell off our reais [the plural of real] position because this will lead to everyone mistrusting Brazil and leaving. Or it will lead to inflation. And then, again, we should buy something other than Brazilian-denominated assets. So let’s sell off and buy dollars.

And so by spreading this bullshit, they actually got people to start buying dollars and the dollar started spiking. right? They wanted that because they were also buying dollars and having the dollar spike even more. And eventually. they knew that they would get to a point where they could sell the dollars and make a huge amount of money. Uh, Now they also knew that their threats of an ever increasing dollars were a lot weaker than in Argentina, for instance. Because in Argentina, you can’t actually drive the dollar because most of the demand for dollars is actually not exchange rate elastic. It is not affected by a rise in exchange rate because it is a demand for dollars to pay for debt.

So you can’t really replace debt payments with other things. So if the exchange rate increases, you still need to get those dollars, no matter how expensive they get in pesos. But in Brazil, much of our demand for dollars is for imports. And if the dollar gets too expensive, you’re not going to keep importing if you’re paying double, right?

Eventually you can even substitute some of that with costlier production in Brazil. And so you can’t really drive the exchange rate in Brazil forever as you could do in Argentina. And speculators know that. So they knew that their exchange rate spike would not be very prolonged. But still, that was enough for the government to fold, and to give up and to accept that it had to cut a whole bunch of other spending. Gut education again. And I’m very pissed because of that.

Now, here’s the kicker. We could have done something to immediately stop the speculation on dollars. Which is the central bank already has the capacity to sell. Basically, exchange rate devaluation paying instruments that are called exchange rate swaps, right? So, basically what the central bank does is, well, if you want dollars to earn, the devaluation of the real, I’ll pay you something close to it. But the instrument itself is not as interesting because it will force you to give up the basic select rate in exchange for just the exchange rate devaluation, right?

And if you bought the dollar, you would still invest in something else and get a little more. So, actually, for those swaps to be useful, they would have to pay a little bit over just the exchange rate devaluation, which is their premium. And if they were being sold in the market, the central bank would eventually pay that premium in order for buyers to accept them.

So if they had a quantity that they wanted to sell, they would eventually get to the correct price. But the central bank will not do that in Brazil because it wants to see the shit hit the fan, right? Our central bankster, working against the government, is the grandson of a hero of the ultra liberal right, called Roberto Campos.

So he’s Roberto Campos grandson, and he’s the worst. He actually announced that he will be working for Bolsonaro’s substitute because Bolsonaro can’t be elected for a while. So we know that he is not going to do that, but some other central banker could, right? And he could pay just enough on anything in order to produce what I would call Brazilian dollars.

That would fully replace all dollars that anyone would want to buy in order to earn reais. So if you want dollars just to make money in reais because you can resell your dollars, first you’re going to buy, perhaps, a Fed fund -paying asset. And then you’re going to sell that and sell the dollars and make money.

I can give that to you in reais if I’m the central bank. So the central bank would always offer whatever people ask in order for them to not buy dollars. And this is something interesting, right, Steve? Our leftists also don’t understand this quite well because they’re not MMT informed. So when I talk about this, they say, well, wait a minute. Are you saying that you’re going to give a lot of money for speculators to stop buying dollars? What the hell? You know, you’re, catering to the rentier. the beautiful thing is that they wouldn’t actually make a killing.

Because if I eliminated the speculative demand for dollars, all I would have left is the natural demand that comes from our current account. Demand for imports. And then the dollars would come from exports and whatever other transfers we get. But all the speculative movement would actually be killed. It would be more profitable for you to buy the central bank issued dollars, right? The Brazilian dollars. Because I’d say they pay a little bit more or they’re safe. Whatever it is, don’t buy dollars, buy those.

And by doing that, the dollar would actually not rise as much. And I would end up paying them even less, perhaps, than the selling rate. So what the hell? Just let’s do it, right? And and would a very easy way of killing speculation in the exchange rate markets that we don’t use because we don’t understand money.

Now, here’s something that you will love. We would still not have the price of dollars go to zero because there’s still demand for dollars for other stuff. It’s not just speculation, right? Just like, uh, stocks, there’s still a fundamental demand for stocks because stocks give you the right to dividends and all of that. But things that are purely speculative, I could kill them completely if I wanted. Like crypto craps. Crypto, whatever. Bitcoins and all of that crap that is worse than tulips. Digital tulips³.

I could instantly kill them. Because all I’d have to do is issue a domestic currency denominated crypto substitute. Like a public bitcoin. And say, whatever the price of bitcoin is in the future, I’ll pay you a little bit more if you give me the price the bitcoin today. No one would ever buy bitcoins anymore.

The price of bitcoin would go to zero and then even this asset would be worthless, right? But because I killed something that is good for nothing. Now, obviously the Brazilian central bank possibly would only eliminate the demand for bitcoins from its own nationals, which would be a good thing.

But imagine if the central bank of China did that. You’d have a reason for everyone in the world to stop buying crypto craps and buy the central bank issued whatever, right? And in that sense, no one would do what’s killing our economies. Which is speculating on the most useless crap that we could have invented. Which this crypto shit.

[00:42:36] Steve Grumbine: That is brilliant. But assuming this, right now. I am one of the people on the other side of that game. And I’m saying, Hey, wait a minute, look what they’re doing over there. Now, what is the counter to that? ‘Cause you know, every time you do something revolutionary, or even a big sea change like this, there’s a backlash. There’s something else.

What would be the pushback? What would happen? What would they need to look out for? You know, is there a recourse? I mean, if you call it the enemy, but is the enemy able to fight back in any way, or are they done?

[00:43:10] Daniel Conceição: So, I’m not even kidding here. If this is something that is achievable. If we could convince central banks to do that. Uh, we should get this recording out as soon as possible. And already tell people that if we end up dying in the near future, these people did it. Because we’re actually giving people a tool to finally face these professional liars. These vampires that finance people really are.

We can now face them with way more power than they can ever muster. If we can control our central banks. Which we should, because we’re the ones who vote. We should be the ones who say, well, I will only vote for a president who says I will use money creation to achieve what’s good for the people and to fight the interests of the rentier.

So, in a sense, let’s try to protect ourselves. This is something that they will surely not want to get out. So I’m already saying, if I appear dead in the near future, you can bet that they did something . I’m very healthy. I try to be very safe. I look both ways every time I cross the streets. So don’t believe whatever they tell you.

[00:44:32] Steve Grumbine: Amen. All right. So, Daniel, you know, as we’re approaching the end here, help everybody better understand. Like, give us the come-to-Jesus here. What is the big takeaway with understanding Keynes and the power of money creation at the state level and the ability to counter rentier capitalism?

[00:44:50] Daniel Conceição: The key here is to understand the amount of power that really should be available to our states. And the fact that we should be the ones controlling what the state does and doesn’t, right? So the state has its governments and they should answer to us. So, what I’m saying is, we should not fear the rentier as much as we do.

If we control the government . . . For instance, right now, Lula⁴ is the president. Why the hell is Lula cowing to the rentier rather than getting ready to, uh, put some, someone that he trusts in the central bank and using everything in his power to stop this sabotaging rentier has been doing against him?

We do have the tool. Lula has the tool. Kamala Harris, if she ever wants to be more than just a less evil version of the same crap that has been controlling the US. She should be embracing something like that, or if she doesn’t, someone should push her to that direction, right?

So this I think should be the lesson here. Let’s use our knowledge to tell people what we can do. Everything that we can do to make our economies work for us, not against us. And if they all understand what everything that we can do, I think we should be able to control the decision making powers. Because we should have the votes.

[00:46:25] Steve Grumbine: Amen. All right. So Daniel, with that, tell everybody where we can find more of your work and thank you so much for your time. This is wonderful.

[00:46:33] Daniel Conceição: Well, I will be trying to get these ideas out in the near future. Most of it, I will be doing it in Portuguese, right? Trying to get back to some podcasting and some YouTube stuff with the Institute. We’re going to try to do that. So, go visit us, online at the Institute for Functional Finance and Development in Brazil. The website is IFFDbrazil.org. We try to have all of our stuff there.

[00:47:07] Steve Grumbine: Awesome. Daniel, this has been wonderful for me. I appreciate it so much. I’m so glad to have you. You’re like in an arms distance, even though you’re all the way in Brazil. So it means a lot that you just come on with me. And, uh, I really appreciate your knowledge.

Folks, this is Steve Grumbine, host of Macro N Cheese. My guest, Daniel Conceição. The podcast is Macro N Cheese. We are a 501c3 non profit at Real Progressives. We survive by your donations. Please, if you consider this information worth your time. You think podcasts like these help people better organize, better understand the world they’re in. Please consider becoming a monthly donor at our Patreon, Real Progressives.

Daniel, once again, thank you so much for joining me today. It was an honor.

[00:47:54] Daniel Conceição: It’s always my pleasure. Talk to you soon.

[00:47:56] Steve Grumbine: Absolutely brother. All right, man, we are out of here.