Episode 80 – UNI’s for All with Ben Wilson and Scott Ferguson

Macro N Cheese Episode 80
UNIs for All with Ben Wilson and Scott Ferguson

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Ben Wilson [music/intro] (00:00:02):

As soon as you start talking about finance, right? People’s eyes roll back in their head. And they’re like, Oh my God, the fed, I don’t get that stuff. Well, no, here we’re spending. We’re doing. And you’re part of the process. So it’s encouraging democratic articulation of the monetary system. What it is that we’re doing when we issued the currency.

Scott Ferguson [music/intro] (00:00:24):

It is ridiculous that states and municipalities cannot issue credit, or at least in a way that is direct without mediating it through the bond market. And yet private banks can do it all throughout our states and municipalities. This is bonkers.

Geoff Ginter [music/intro] (00:01:27):

Now let’s see if we can avoid the apocalypse all together. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

Steve Grumbine (00:01:37):

All right. This is Steve with Macro N Cheese. Today’s show has got two of my longtime friends within the MMT community, Ben Wilson, who is an associate professor of economics at the State University of New York College Cortland and a research scholar with the Global Institute of Sustainable Prosperity. He has published in the American Review of Political Economy and the Forum for Social Economics.

Ben is also a Union area activist and delegate for the Cortland Chapter of United University Professions. Also joining us today is my friend Scott Ferguson. He’s an associate professor of film and media studies in the department of humanities and cultural studies at the University of South Florida. He co-directs the Modern Money Network Humanities Division, and serves as research scholar at the Global Institute for Sustainable Prosperity. He co-hosts the Money on the Left Podcast and his book Declarations of Dependence: Money, Aesthetics, and the Politics of Care was published by University of Nebraska Press in 2018.

Now, the reason why I am lucky enough to have these two gentlemen join me today is because of very dark times, quite frankly. We are in the midst of a pandemic. Hey, I think everybody’s aware of that by now. However, what we’re not aware of is there’s many, many avenues by which we can kind of work together to create solutions, to provide opportunities for prosperity amongst the people to survive, to thrive even.

And these two gentlemen have been part of a consortium of individuals pushing for a concept called the Uni, which is a operative or complimentary currency, if you will, to the US dollar within the University system. And in discussing this with various people within the movement, it became apparent that most people haven’t got a clue what this is and how important it could be to us making progress. So I invited these two on with us and without further ado, I’m going to welcome. Welcome both Ben and Scott. How are you all today?

Ben Wilson (00:03:47):

Very good, Steve. Thanks for having me on. Thanks.

Scott Ferguson (00:03:50):

Thanks.

Grumbine (00:03:52):

Absolutely. All right. So Ben, you been doing this for a lot longer. Why don’t you help set the stage for what this concept of the Uni even is?

Wilson (00:04:04):

Yeah, so the Uni and the idea of complimentary currencies and thinking about how we can address problems at the local level was something that I started working on with my dissertation research and was really informed by, you know, the broader interpretation of modern monetary theory and the tax driven circuit.

So one of the limitations that I observed in that is that in order for a jobs guarantee to occur, we’ve got to have significantly focus groups of the political agenda, such that members of Congress are on board, and that we can pass this sort of massive legislative shift in the way that Americans think about how money works and frustrated by, you know, kind of the long game. I wanted to kind of skip to the chase and see what we can do at a local level to model this so that people can start getting experience thinking about how money actually works as a promise to pay.

And how it circulates and really what the power of the purse actually affords. And so running sort of these complimentary currency programs in my classroom, I saw that students picked up on this much quicker, right? Getting the hands on experience of feeling and handling a different monetary system that was designed specifically for them to engage in social enterprise work and our local community. One of the things that we’ve focused on here in Cortland is the food system, right?

So what is it going to take to get a year round farmer’s market? Or what do we need to do to increase consumption of local food in restaurants and other vendors? How do we convince the University to purchase more local foods for their restaurants, et cetera, to address food insecurity on campus which is similar to many campuses across the United States is about 30 to 40% of the Cortland student population experiences, food insecurity during any given semester where they really don’t know where their next meal is going to come from.

So from there, I saw a tweet by Maximillian Seijo that was talking about why don’t Universities just issue bonds that the fed can buy, because the fed engaged in its new liquidity provisioning exercises that it engaged in during the ‘08 crisis through the opening of these facilities to purchase financial assets that they consider to be non-performing to allow these institutions to maintain solvency and continue their day to day business operations and stabilize wall street.

And I was really excited to see this and reached out to them. And we started talking about how we could actually implement this from this institutional perspective of the University as a large employer, a huge real estate owner, a massive holder of financial investments through their endowments, et cetera. So the University in many ways reflects a small state or municipality. We often hear that the University is frequently thought of is kind of like a miniature city, right?

We have our college towns, we have our living quarters, we have jobs and employment, et cetera. The University is also a unique space as an anchor institution because it also behaves like banks, right? Students have demand deposits where they place money into an account that they can draw from when they’re buying their meal plans and their books and all of these other sorts of items.

They have vast real estate holdings and are rent collectors, which is one of the biggest stresses. And one of the primary drivers why University administrators are calling students back to campus so that they can fill the dorms and generate those revenues. And it’s also in many ways, a social enterprise, right?

The public ethos and their mission statements is to, to contribute to the greater good, to produce strong and educated citizens and to be cooperative partners with the communities in which they reside. So they encompass a number of really prominent literatures in modern monetary theory, right? Neo- chartalism with the tax driven circuit, constitutional money with the design in which the money circulates and invest in et cetera, and then complimentary currencies in terms of its desire to do good and facing very similar constraints to those social enterprises that have to sacrifice some of their general large goals when they start to feel budgets sheet crunches, et cetera.

So the Uni, I think, and using Universities as a proxy for reformulating, sort of the macro economy at a micro scale is a really interesting way of kind of pushing the modern money agenda forward, giving people on the ground, some experience and thinking about how not only modern money views a financial services circulate, but if we add on top of that, that digital sort of framework, right, as an application on smartphones, et cetera, then it begins to prepare people for the idea that we should all be collectively and democratically designing the monetary system for the 21st century.

The way that money has been bestowed on populations through the tax circuits, that’s described by Mat Forstater and others historically through triangular trade and slavery and all those sorts of things. It’s really kind of the design was top down and implemented. But I think this is an opportunity for us all, to kind of take a deep breath and say, what do we actually want money to do for us?

And how can we utilize the current troubles that we’re in that is highlighting all of our systemic vulnerability as whether it’s our healthcare system, our impending doom in our education system as Betsy DeVos and others seem really eager to send their children into potentially very dangerous spaces, to mental health, to all the issues that are being explicitly defined and described by the black lives matter movement.

I think this is an opportunity to move forward in a way of monetary experimentation that doesn’t require us waiting around for the federal government to act. And in fact, I think if done properly, the Uni offers us the opportunity to have the federal government come to us and say, well, we want to be a part of this. This seems to be working well and giving for the first time, the people kind of the bargaining power in the structure of institutional money, right?

We’re not just going to sacrifice and let you bring us under the federal reserve fold. We’re only going to do that on our terms, because the way that we’ve started to orient this say here in central New York is working really well without you. And I think that’s the problem that we are observing right now with the municipal liquidity facility, right?

They’ve opened the door for doing some of the things that we’re describing with the Uni, but with really terrible terms. So we’re always negotiating from the back foot. And I think that this is an opportunity to gain some ground and thinking about how money is supposed to work and how it can be used for the public. Good.

Grumbine (00:11:44):

Let me ask you a question, Ben and Scott, you can weigh in on this as well. We obviously know that Stephanie is famous for saying anybody can create a currency. Think Mosler said this, everybody in the MMT community says that it’s easy to create a currency. The trick is getting it accepted.

Ferguson (00:12:00):

Yeah, that’s Hyman Minsky actually.

Grumbine (00:12:01):

Well, there you go. Why just saying for the people, thank you for the people that are sniffing for the backlog Hyman Minsky is a key backdrop here, for sure. My question to you is what is the driver here? We know that we have a tax driven currency today. The imposition of that obligation is what keeps the money flowing, so to speak what’s the hook with the Uni?

Wilson (00:12:28):

So the hook initially is tuition, right? So the Uni will always be accepted back in the payment of tuition or other receivables that are due to the University. But, you know, that’s a fairly limiting set of obligations, I think. And so in thinking about this further, one of the things that we’ve introduced and the upcoming global Institute working paper is the idea of property taxes. So the way that I’ve been thinking about this is Universities and the grand history of the United States, right?

Going back to the Morrill Act, received huge swaths of land in order to construct their spaces and to deliver for the public good. Right? And as part of that agreement, historically, they don’t pay any local property taxes. And so there’s this huge amount of growth and development that’s happened on these lands, right? So you look at Cornell, there’s these beautiful 150 year old buildings, and these are scattered all across the United States, right.

The Midwest and the Big 10 and the Big 12 and all of these venerable old schools and in doing so we’ve trapped a bunch of, what I would call a social energy in these places. And what we’re thinking in terms of the Uni is that we can release a lot of that, the capacity of this property to its surrounding communities, by providing the Uni to these local communities as a payment and property taxes. And by doing so these local communities, right?

Why would they refuse this influx of liquidity, especially when all of them are cutting their budgets right here in Ithica. You know, we’ve lost our youth bureaus. We’ve reduced the school district budget. We’re not seeing nearly as much maintenance in our parks, et cetera, right. It’s really problematic. So we influx the liquidity through the local property tax circuit. And because they’re accepting this from the University, they would be ostensibly accepting them from everybody that pays property taxes in the local area.

And that’s giving a grand receivability and accessibility across not just the local town, but the region more broadly. So in order to make this work, or we’re suggesting two different tax circuits, one is the University payment system, which make it receivable all across the state of New York and any SUNY institution potentially. And then if you add the local property tax angle, that will add the ability to make this liquidity full all across the state in massive numbers, right?

The overall property value of SUNY system institutional land is enormous in the state of New York. So this would be an immediate jumpstart of liquidity flows throughout the state that would satisfy the budget requirements of all of these local townships and communities and be widely acceptable and receivable almost immediately. I would hypothesize.

Grumbine (00:15:40):

So one quick question to piggyback on that, does this in any way, violate any US law or bring about any questions of US law? I know that there’s some issues in terms of currency in general, how do we bypass that? And maybe you can even speak to the thing I’m vaguely touching on in more certain terms.

Wilson (00:16:01):

So I think, you know, the short answer is I don’t think so. And the reason I don’t think so is because SUNY recently announced a very exciting memorandum of understanding what the state of New York for virtual currency banking license. Wow. Okay. So SUNY and the state have decided that they want to advance virtual currency development and technology as an important part of his development strategy in the 21st century.

And so I think, you know, the department of finance of New York state has essentially given SUNY a bit license to create their own virtual currencies. I mean, the view, the angle that they are presenting in the announcement is that I think that they’ve envisioned somebody like Google or Microsoft or Facebook, you know, kind of leading this charge and SUNY kind of being the research engine behind that. But why not just have it be SUNY?

Why not have it be some sort of our institutes of civic engagement, for example, being the investment arm of the virtual currency so that we’re supporting, you know, our community organizations that are open to alleviate poverty, that are providing mental health services to vulnerable communities, that are providing reading classes and sports programs and saving the environment and cleaning water systems, et cetera. Right?

So a research driven virtual currency for alleviating economic, social and environmental stresses. So we’re all feeling and building resilience, right? The scary thing about the pandemic is it’s exposing just how vulnerable we all are to impending climate change and the disasters that are being forecast by scientists writ large regarding flooding and temperature changes and food system catastrophe, et cetera.

So if we want to get started figuring out these problems, then we should probably start with our institutions of higher learning and the people that are attempting to put these fires out on the ground, right, our first responders and the social and environmental enterprise space.

Grumbine (00:18:17):

Very good. So Scott, let’s get you in on this thing, man. Where are you seeing this going?

Ferguson (00:18:22):

Well, I think that the messier answer to your question is that this is politics, right? And money is politics. And that means it’s about interpreting the law. It’s about leveraging particular situations, right? So right now Congress is sitting on its hands and the fed is acting in a paradigm smashing totally unprecedented way, right?

So it’s about recognizing that and seeing what we can do about it. And I think Ben has touched on this already, but I think the way we see the Uni is actually as a kind of whole framework, that’s flexible and it’s a multipronged strategy. So there’s a kind of micro level community, bottom up dimension that starts with campuses, with students, with faculty and staff, with administration, with community partners and community members that need help and want to participate.

And there are what we in MMT world I’ll call fiscal tax circuits that we can use, right, to create a complimentary currency system that then we can give more purchasing power and receivability power by as what Ben was saying, you know, implore, demand that local cities and counties, except these Unis in partial tax payment, right? So that’s one dimension and that’s one fight.

On the other hand, we are in the middle of a pandemic depression, and we need massive liquidity relief immediately. So we’re also interested in bringing this fight to the federal level, to the fed, politicizing the fed, and saying, you’re recognizing all these other seemingly critical institutions, corporations, financial firms, the auto industry, the insurance industry, the fossil fuel industry, doesn’t the University, the public University count as a critical institution.

And I think if we can get a movement going, that’s demanding support from the fed, then what the Uni looks like can be a little bit different, right? I mean, the fed could just simply guarantee that liquidity right from the start and the Uni really isn’t exactly a complimentary currency, currency, it’s more like the finance franchise model that our friend Robert Hockett likes to talk about. Right.

So you don’t have to worry about the fiscal tax circuit at the local level in the same way, because you’ve got fed support. But our point is to say, let’s politicize from every which way, and the whole project should be a pedagogical one. The whole project should be about teaching and learning how money works so that we can actualize it for the people and the communities that need it. Right.

And so one of the fundamental lessons here comes from MMT, but I think the Uni project makes us rearticulate it. Or at least we articulate the emphasis, right? So in the MMT movement, we all know taxes don’t fund spending, right. Federal spending has to come first before it can be received in taxes. Right? So take this to the level of the public University, the public University system that thinks that it’s revenue constraint, right.

That thinks that it’s working on a model of recycling revenues. Well, you know, this is actually false. This is ideological neoliberal junk. What’s actually happens is that credit comes from first. There’s no such thing as revenue coming first. Credit always comes first. And then revenue comes second, right? There’s no reason why we need to have an economy let alone our public Universities that are revenue constrained in that kind of radically constricted way.

So if we can build a movement around Universities that say, Hey, credit comes first, it’s a legal construction. We can politicize that. Then we can get off, not just this horrible neoliberal, profit driven sort of model of higher ed that, you know, creates these ridiculous financial arms at Universities with their gigantic endowments that now they’re saying their hands are tied and they can’t spend any of that money to save us, but it totally revolutionizes the paradigm.

And it’s actually a great way of actualizing the MMT movement along a different vector, alongside let’s say, federal fiscal politics, et cetera. You know, it does trouble, a little bit of the MMT 101 talk about, you know, well, the federal government is the issuer where everybody else is the user. So all the users are kind of stuck with finite money recycling, but the issuer can always create more. You know, this is in MMT, it’s just that it’s not always foregrounded, right?

This is the endogenous money point, right? That money is just produced through a franchise on behalf of the U S government. The banking system creates money that are US dollars that are backs up by the fed. So if that’s the case, if money is produced, endogenously, why are we only letting private banks and financial firms, and these kinds of awful organizations create credit when the University can be doing it.

And in fact it does, it does create credit. It just sells it as debt to private bond markets. Well, we don’t need to do that. That’s a horrible idea. So, you know, I’m kind of going in multiple angles at once, but that’s the point. The point is that there’s not one size fits all Uni. It’s a kind of political paradigm and project that we can actualize a long sort of different vectors.

Grumbine (00:24:38):

I’ve got to intercede here for my own brain to not explode what I’m hearing here. And I’m going to butcher this, be gentle. What I’m hearing here is basically the concept that banks are federally chartered agents of the government, if you will, they operate from a charter. They been given the right, so to speak, to issue dollar denominated credit. You are suggesting that the right of chartering be expanded to Universities to bypass this bond market, so to speak and provide a University based currency. That’s backstopped by in essence, the full faith and credit of the United States. Am I close?

Ferguson (00:25:26):

Yes, that’s what we’re saying. And we’re saying that this isn’t just any old institution. These are, as Ben said, are regularly referred to these are anchor institutions. These are the number one or number two employers in most of our states, right? So banks, all they do is the finance part. They don’t actually like make stuff or educate people or go out into the community for the most part and like actually change the world. Right. And that’s what Universities do. So we would claim that Universities are actually much better equipped to do the project of chartered provisioning than banks are.

Grumbine (00:26:13):

So as I’m falling down this cliff into your world, this new thing here, I’m really falling deep into the hole with you. Cause I’m loving this. But what I’m hearing ultimately is you’ve got the concepts of public banking. You’ve got the concepts of negatively Libra and things like this. What we’re actually talking about here is defacto an expansion of the concept of public banking, but for the starting as a tip of the spear with these anchor institutions of the University system.

Wilson (00:26:48):

Yeah. The public banking literature’s terrific. And the ethos behind it is very good. But I think that we haven’t fully articulated what the investment arm of the public banking space looks like. And so this is opening up that imaginary, right? What does public investment look like and what do we need to invest in to deliver a green new deal, for example?

So these grassroots programs, right? One of the things that I liked seeing from my students when they’re working in these community organizations is through those efforts, they are exampling what kinds of jobs a green new deal would create, stabilize. And through this investment, right? One of the things that’s amazing about thinking about the investment sector, right?

And all of the commercial paper and credit default swaps and collateralized debt obligations and the shadow banking sector that emerges from this license to create paper is really an opaque, unstable, and dangerous form of money creation. Right? If we’re directly spending money into the community for educational purposes, then the secondary market isn’t the creation of a whole bunch of paper.

It’s the direct creation of stable and resilient communities, right? That’d be infinitely more transparent. And instead of discouraging people by sounding confusing, all right, nobody, as soon as you start talking about finance, right, people’s eyes roll back in their head. And they’re like, Oh my God, the fed, I don’t get that stuff. Well, no, here we’re spending, we’re doing. And you’re part of the process. So it’s encouraging democratic articulation of the monetary system and what it is that we’re doing when we issued new credits.

Grumbine (00:28:49):

Let me ask you both this question. So the 10th amendment has been haunting the United States probably before 1865, but definitely leading up to the civil war, et cetera. We’re living in a 10th amendment world, even now in, as you’re talking about this Uni, you’re talking about the state of New York in particular.

And as I think about the 14th amendment, and I think about equality and so forth, does this not start bringing up some serious constitutional? I don’t know if it’s a dilemma or if it’s an opportunity or both, but the concept of once you institute this thing and you bring about a whole new way of life in a state like New York and then the rest of the country’s looking on, you clearly want to see the benefits of the few good things that come out of the 10th amendment, which are the opportunity to watch an incubator state do something different than everybody adopted, but the opportunity of inequality creeping in.

And now you’ve got the University system in New York, creating a more vibrant community and bypassing the stranglehold of the centralization of the federal government that is basically ground to a halt. And now you’ve got all these other states languishing. What is your take on what the impacts of watching New York succeed would be or fail, both. We’ve got to look at both sides of that ledger, Scott?

Ferguson (00:30:19):

A few questions in there, right? I mean, yes. Is it a constitutional crisis or opportunity? Yes. Yes. And more pleased. I mean, that’s my answer to that. It is ridiculous, right? That states and municipalities cannot issue credit or at least in a way that is direct without mediating it to the bond markets. And yet private banks can do it all throughout our states and municipalities. Right.

I mean, this is bonkers. Well, and then I guess you’re thinking about, you know, if it takes off, what can I say? I think if you get a major system like SUNY or CUNY or the UCS or any number of these major public University systems, I think if they start trying it, I think others are going to jump on right away. So I don’t see there being that much of a problem.

And then I guess in general, I guess that the concern reminds me of like the concern trolling about debt forgiveness for student debt, let’s say right that, oh, but what about me? I already paid back my debt, you know, that’s unfair to me. Right? And it’s like the macro economic affects and the windfalls of this are going to make everybody’s life better. Everybody’s life better. So like, let’s just roll with this and like fight for more justice, not say, well, let’s not do this because there’s going to be a little bit more asymmetry in the, you know, benefits.

Wilson (00:31:54):

Success breeds imitation. The technology is there, the payment system technology, all of that stuff is available. So there’s nothing unique that prevents this from being reproduced quickly and effectively in multiple places. And I think that the constitutional question in the state’s rights question is an interesting one, because it really is explicitly explains MMTs capacity to completely change the political discussion and the paradigm and the state’s rights conservatives should be on board. Right?

Yeah. If you want the freedom at your state level to organize your resources, well, here’s a really powerful tool to start doing that. That’s the sort of way that we can engage a whole bunch of people in this discussion that maybe don’t see themselves as being part of this because it’s too progressive or whatnot. But no, I think this is fodder for everybody to be thinking about and arguing in and trying to organize.

Intermission [music] (00:33:05):

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Grumbine (00:33:54):

Well, I think that’s great. The concern trolling is funny because I was thinking back to the ACA discussions, ironically and remembering the legal debates, going back and forth about the commerce clause and interstate this. And where does the jurisdiction of the Uni start and end? And how does that extrapolate across the country? And again, it’s just me thinking, cause this is new for me.

I mean, I’ve read it and I’m still digesting it. You guys have been building. And to me, I suspect once we get outside of the bubble of people, such as myself who are eager to hear what you’re saying, there’ll be a different group of people that we know well, that will resist. And you wonder, what are the challenges you expect to face as you go beyond friendly trials, if you will, once you cross outside of the realm of people that agree with us now what? What are your expected battles? If you don’t mind me asking?

Ferguson (00:34:57):

Yeah. I mean, we’ve already begun to face them first and foremost, it’s actually understanding the paradigm that we’re proposing, right? I mean, when people read this and they flail and bark back, they say something like, Oh, well these crazy MMT people they’re crazy enough, but now they’re suggesting that Universities should borrow their way out of this crisis instead of tightening their belts and laying off contingent faculty and et cetera, et cetera. Right.

And our whole point is to say that in fact, public Universities are not revenue constrained. It’s that we treat them that way. And we have not designed a system that is set up to actualize their capacity. And that in fact, credit always comes before receipt, before revenue, before redemption. So that’s the thing that they don’t get. That’s the huge hurdle to get over or another way of putting it is they always go back to the private money frame, right. They always go back to that.

So, you know, we’ve gotten some anecdotal feedback from people, faculty members in faculty senates, an unnamed large University in the Midwest that starts complaining. This is like company script and it’s going to be totally unstable and it’s going to burden the people who receive it and come on. Yes. The University has problems. Yes. It’s been neoliberalized. Yes. It’s been financialized. Yes.

It includes predatory practices around athletes and more, but it also is this amazing institution that does a lot of good and has actually a lot of power and hold a lot of, even as it’s privatized, holds the power of those contracts. Right. And it’s this just ridiculous privatized neoliberal worldview. That’s what I feel like we have to get over, at least with the left. I mean, we’re not even talking about the right wing. Maybe Ben wants to take that on.

Wilson (00:37:07):

Well, yeah, it can be a little bit astonishing. I mean, the overall depth at which the current paradigm just seeps into, everybody’s the fact of thinking, right? That it’s very hard to think outside of the box. That’s why giving people the opportunity to experience it and to participate in the construction of the design of the currency from the bottom up, I think is, you know, learning by doing.

And it’s a very powerful way of understanding the money in the monetary system. I think one of the big challenges that we’ve faced is if we are going to instrumentalize the Uni out of what office does it happen, who are we going to give the credit creation power to? Is it the office of civic engagement? Does it come out of our research and sponsored programs offices?

Does it become a partnership with credit unions and many Universities are already engaged with, right. So that sort of nitty gritty detail and fine tuning are questions to certainly be asking in terms of what the next steps are. But yeah, like Scott said, just the overall discussion politically, you know, to get people to engage in it in a way that isn’t just fighting back kind of the default mechanisms and starts moving the conversation forward in a way where we’re all moving from the same page, I think, would be an enormous victory.

Ferguson (00:38:37):

Yeah, that’s the fight. Just like we have all the critiques of MMT that just reassert the old like neoclassical crap. And they describe MMT from a neoclassical point of view. And what we say is, no, you don’t understand, right. Those are your assumptions. They don’t apply here, right. It’s the same battle, but refigured for a different community in a certain way.

Wilson (00:39:03):

Yeah. I think to that end, one of the things that I keep coming back to in my mind is the interview with Scott Pelley of Kashkari when he says one of the big failures that we had in 2008 was that we weren’t generous enough. And I think marginalism, and the Orthodox way of thinking about production and distribution is always done at the margin, right?

We’re always just barely getting by whether it’s the number of doctors that we have in our hospitals and the number of ventilators and the investment that we’re doing in PPE to the number of courses that we’re offering and the number of students that we’re cramming into classrooms. We’re always just getting by at the margin.

So we really need to break free from that sort of mental constraint and start thinking about if we’re going to be generous, right. If we’re kind of start being a United States of America for a we, the people that is generous with one another, how are we going to do that? And what do we want to provision? Healthcare is an education is a science and knowledge, right?

Let’s start being generous there instead of just dumping liquidity and purchasing of equities on wall street and start doing things that actually activate people’s imagination and get them doing work in the spaces that are solving problems that are real and demand our attention moving forward.

Grumbine (00:40:27):

Let me ask you a question. When you’re looking at the circuits, if you will. I often times think of the MMT side as a circuit where you’ve got a magnet there in the tax and it pulls the spin through around and drains it out there. In this particular case, I’m envisioning multiple circuits here.

And I guess my question is that when you’re crossing domains, when you’re leaving the USD and going to the Uni, is there a conversion or are they totally separate? What would be your expectation to be able to go back and forth between the circuits or would they be completely self contained?

Ferguson (00:41:04):

Okay. I have a few answers. One is I think for me or four of us, I should actually name the folks that are involved in working on this. Actually there’s more than four of us, right? So there’s, Maximillian Seijo, there’s William Saas. There’s Yaakov Finnick. And then Ben and myself and our friend and now rockstar Nathan Tankus has kind of got the ball rolling with an initial sub stack post that introduced the idea. So what I think is that we can’t be messing around in a depression, in a depression.

You know, if we’re going to get a movement going, if we’re going to have students and faculty and community members and admin getting on board for this, they need to be going to the biggest source around. And that’s the fed and demanding support in which case it’s just the U S dollar. It’s just an extension and an elaboration of the US dollar. And there’s no problem, right.

If you know, we’re not going to say no to kind of more micro and mezzo level experiments with the Uni, even if it’s not ideal during a depression, in which case, yes, you’ll have to deal with questions of receivability and you know, what can a University actually spend Unis on versus what shouldn’t they spend Unis on?

So we often use the example of graduate student housing for graduate students who work on campus, right, who are teaching assistants or research assistants, graders, et cetera. If they are living on campus in campus dorms, you can give essentially a lot of their salary to them in Unis that they’ll give right back in order to pay for their housing. Right?

So that’s a tight fiscal circuit, as long as it’s something that the University can provide or even has like the power of contract and to force private contractors to also accept as long as there is that provisioning capacity, a local, non fed supported Uni can work. But the truth is, is that right? We, as a society are fighting, negotiating, reorganizing these questions, these boundaries, these questions of receivability all the time, right? I mean, that’s what Facebook is doing with Libra right now, right? There’s tokenization going all over the place.

We have rewards programs. We have millions of dollars in Amazon gift cards, right? Like there’s all kinds of forms of credit being made, right. So I know you’re not playing devil’s advocate or anything, but I want to make the point that like, to single out the Uni as if it’s some weird, crazy different thing, as opposed to just what we’re always doing, except here we’re actually politicizing it for the public purpose. That’s problematic. Right.

So I think my sense would be to say, like, bring it on, bring on the issues, right. Let’s talk about receivability right. And who this is for and who it’s serving and whose interests are being served by blocking receivability.

Grumbine (00:44:13):

Absolutely. In fact, I want to jump on that because I am pseudo playing devil’s advocate. I’m also shamefully prepping us for defending this because these are the kinds of things that are going to come at us when we’re out there in the wilderness, holding hands with one another, trying to fend off the people that are pushing against it, because I see all kinds of very important things happening here. And I remember back when I first started talking to MMT, I would get in a lot of trouble from various people saying, well, you’re being imprecise, Steve you’re being imprecise.

Well, I’m just trying to make it easy for these other folk over here to understand, tell me how I can do that. And I know that precision on some of these things is very important, especially in light of history, in light of the way we’ve had the battles back and forth about the federal reserve. We had battles back and forth about all these different things that have been a mystery they’ve been hidden and shrouded behind secrecy and clouds of conspiracy-laden nonsense.

And all of a sudden you bring this in and you’ve got the folks that have been pushing things like Bitcoin. And they’re like, well, wait a minute, hold on. You’ve been telling us that Bitcoin can’t solve green energy. It can’t solve a green new deal, but now you’re telling me that we can work out a green new deal by leveraging the Uni. How’s that work, Steve.

And so I’m thinking forward in terms of who are the typical detractors. And it brings me to one very funny thing that just happened the other day, as I was debating in a libertarian area, they said, you know, we don’t really have a problem with them empty. We actually agree with it. The problem we have is the central authority of MMT that you grant this thing to the federal currency issuer, so and so forth.

And so, as I’m thinking about this, and I’m listening to you all talk, I’m saying, well, you know what? You may just a bought a bunch of libertarians that are willing to listen to you as well. In this scenario to Ben’s point earlier, this could be a great way of bringing on people that were previously not really willing to listen. Maybe they are willing to listen.

Maybe this is a game changer. It feels like it’s got the potential to be a hardcore game changer. Ben, since you were the one that made the point, what are your thoughts on that?

Wilson (00:46:24):

The Bitcoin example is a good one because Bitcoin and its invention, right? The spirit of it was to topple the existing monetary hierarchy that MMT points out, right? So a decentralized currency system and that sort of program and is running into significant problems, right? So as soon as the Bitcoin project began to work, right, that people were buying coffee and using it for day to day transactions, people started to buy it, not as a currency, but as an investment vehicle.

So it became impossible to separate its investment track from its actual purpose as a currency. And now does neither very well, Right? The Uni On the other hand, right? We’re structuring the Uni with an understanding of the monetary hierarchy and its structure, but diversifying that structure in such a way that allows it some experimentation and some utilization and context-specific spaces, whether it’s here in Cortland or next door in Ithaca or down in Tampa or in Baton Rouge, Louisiana, or in California, right.

To begin building it out from the ground up, right. What did the people in these communities need? How would we begin to solve some of the issues that are being created by the pandemic and that are being made explicit by its economic, social and environmental tragedies that it’s just shining lights on. So yeah, I think it opens a door for thinking about what money is, how it operates in a way that doesn’t root you in this sort of big government space or place you in this limited ideology of the individual, right?

In order for this to work, there has to be some democracy. There has to be some collaborative vision. There has to be a desire to do something different with our monetary system. So it’s really a reflexive sort of process of understanding that we are interconnected and it gives us the power to begin addressing collective action problems in a collective way, rather than relying on some next level of government or some next level of leadership to solve our problems or to help us solve their problems. Right? That’s the balance sheet trickle down effect that doesn’t happen, right? We can satisfy our balance sheets at JP Morgan, but that money is not finding its way to Cortland, New York maybe ever.

Grumbine (00:48:54):

Right on. When I think about some of the current situations we’re facing, I mean, you see what’s happening in Portland right now. You see unrest throughout the country, you see the cash cliff that’s getting ready to hit as a result of them not extending the unemployment benefits, and the foreclosures that are about to happen and so forth.

I guess it would be interesting to hear at a macro level how we can position that so that people understand how maybe this could be a great way of mitigating some of the disaster that seems to be coming our way. Can we talk about that for a second?

Ferguson (00:49:32):

Absolutely. In many ways, what the Uni is, is the University channel of what Ben and I and our colleagues see as a much broader project that the current political circumstances have opened up. Right. And again, to come back to it, it’s a do nothing Congress, right? And a do so much more than you’ve ever done before fed, right.

We don’t want to just praise the fed, right. They’re still not doing enough. And they’re still a highly problematic institution, but they are acting and they are breaking with the playbook as Ben likes to say, and they’re improvising and they’re opening up all kinds of possibilities for more negotiations. And the more demands that come from the public, the more pressure they will have to respond. Right? So the central institution that we’ve already talked about earlier in this conversation is the feds new municipal liquidity facility.

And this facility is basically enabled to fulfill the Fed’s mandate of full employment and price stability by directly purchasing a whole menu of debt instruments up to what is it been 20% of 2017? What was it, revenue, right. And there’s all kinds of problems with this MLF because the terms are problematic and there’s interest rates to be repaid. And you have to be a municipality of a certain size, and this has tremendous racial implications, racist implications.

But that said our broader project where we’re focusing the most is trying to stir the public imagination around the MLF and getting municipalities to open their eyes to this political opportunity and not just say, Oh, please, can we have a bailout, but go at the fed, go at the fed with your lawyers and your lobbyists and demand great terms, right? And maybe full on credit issuance, right?

We’ve talked to Jessica Vaughn, who is a progressive in the Tampa Bay area. She started the Hillsborough County democratic progressive caucus brought me in to expose that community to MMT for the very first time. I owe her tremendously for this. Now she’s running for school board in Hillsborough County and I contacted her and I said, look, you know, we’re facing county budgets and school budget cuts in the middle of this crisis.

What we need actually more spending, less spending. And you know, there’s this MLS thing. And do you want to talk about it? And she was open and Ben and I went on her podcast and chatted to her and the voters about this. So yeah, I think this is a extremely dystopian, awful moment in so many ways. But on the other hand, there are these cracks with these tremendous shafts of light pouring through that I don’t think we should let go to waste.

Grumbine (00:53:00):

Agree with that a thousand percent. And I want to say this, see if you all agree with me here. Times like this are ugly. And our immediate urge is to assuage the pain, to stop it, to put us into remission, whatever it is we want to stop the pain. The flip side to that is, is that it’s times like this, where we peel back the curtain and we see the ugly underbelly that we actually take the steps to make change in this horrible situation. And there’s no way of making this good.

It’s horrible on every level from a maniacal man in the white house to police violence at an extreme level to people getting ready to lose their homes, no healthcare and a pandemic. I mean, I can go on. We got tsunamis of crises coming from every direction, including climate change. In this moment, it would be easy to bury our head in the sand and pray for calmer times and ignore all these things, but they’re not changing. And to quote, Bill McKibben, climate change is not negotiating with us. Physics is not negotiating with us. Things are happening, period.

There’s a part of me that says that this is how diamonds are made. This is the pressure that creates diamonds. This might be exactly what it takes to take this horrible situation. I hate to quote Rahm Emanuel, but never let a good crisis go to waste. This is an opportunity if you choose to be productive in it. This is an opportunity to bring about radical, widespread change. And I would consider this to be part of that mix.

I know that we all want to make the pain go away, but the flip side to that is, is that this pain is bringing about an acute willingness to hear new ideas. So just talk to me about the pain and pressure kind of thing here. How do you see that playing out, making this more and more viable?

Wilson (00:54:57):

The great depression and the transitions that occurred through the new deal are a great view into what is possible here. One of the things that, you know, made the reconstruction and the expansion of the American project possible was the changing of the structure of the American mortgage, which was made possible by experimental approaches to guaranteed purchase of these instruments. So very much in the same vein that we’re seeing of the MLF was previously done in order to allow us to build suburban America.

And so instead of building suburban America, we can reimagine our neighborhoods and our communities and socially just and equitable, sustainable vision moving forward. Right? So an opportunity to change the way we think about investing in ourselves and investing in our livelihoods and our day to day operations, that we haven’t really done systematically since the great depression.

So yeah, I think your analogy of the parallels between that time with the pandemic, the Spanish flu leading into one disaster after another, and now we have all these disasters that are occurring, you know, in the span of the last six months. So hopefully we’ll be able to respond. And that, that opening up the door, the purchase of public instruments, I think is a huge step and really allowing for us to take ownership of this in a very meaningful way.

Grumbine (00:56:34):

Can we do the MLF thing here real quick to top that off? I think that’s an important point. I’ve heard you all talk about it. I’ve heard Bob Hockett talk about it. I’ve read about it, but for people that really don’t know what that three letter acronym means, can you all break down what that actually does and does not do and why it’s suddenly a new thing why it’s being talked about now?

Wilson (00:56:58):

Well, I think it’s being talked about because the fed, you know, recognized the failures of the 2008 response, right? They weren’t able to create a recovery. Well, they created what they call a jobless recovery, which is not a recovery if you asked me, and in trying to prevent those mistakes from happening again, the MLF has been instituted such that they can stabilize the balance sheets of states and local governments, right?

So right now state and local governments are all cash strapped because they’re spending more money on the pandemic, right? The cost of operating are going up. And at the same time, their revenue streams are going down, right? People have lost their jobs. People aren’t spending money. So the tax revenues are drying up, et cetera. So their balance sheets are getting crunched. So the federal reserve, in order to allow those balance sheets some liquidity, some cashflow has said, you guys we’ll buy directly from you, debt issuances bonds.

So there’s no need to go onto the private market. And so these, we’ll buy them. Cash will hit your balance sheets, and you’ll be able to operate and stop gap these cash flow measures, which is a tremendous idea, right? Because if we’re still keeping people in their jobs in state and local governments and allowing them to operate and spending is occurring, and we’re hopefully able to stabilize, you know, local businesses and things of this nature as well.

But the terms as Scott mentioned before are not terribly good in terms of the term limit, you know, three years, the interest rate, the arbitrary caps on populations of access, right? All of these things make it problematic. But if we want to change those terms, then you’ve got to act right. Big states like the state of New York and California need to publicly make it clear that they want to engage in this, to support all of their members of their community.

From the Adirondacks to the Southern tier here in New York, to the streets of Buffalo, in rural Kansas, right? They should be arguing with the fed to change the terms, just that it’s more receivable in that broad rural space where I’m from, but that’s not going to happen unless people begin to act. And the action, I’m not exactly why it’s not taking place on why this isn’t becoming more publicly engaged.

I think it’s people tend to rely on failing conventionally to save face rather than taking these sorts of risk and stepping into new waters. I think this is one of the things that we’re seeing with administrators at Universities, right? There’s sticking to their finance playbook and not exploring alternative options. And this is going to come at a great cost, right?

We need to act and we need to act boldly and we need some leadership to take those steps for us to really prevent this from being ugly. Right. If we don’t stop the decline of the economy before it really falls off a cliff and digging ourselves out of that, It’s going to be exponentially harder than it needs to be.

Ferguson (01:00:10):

Steve, I want to do a little show and tell if you don’t mind. No, please. So we’ve been talking to a lot of folks, right? Sometimes we have breezy, you know, DM conversations with some folks and they come and they go and nothing comes of it. You know, we’ve gotten into some email chains with some University admin places, you know, feeling stuff out, you know, framing it for them and faculty members here and there at different Universities.

But I think it’s telling that the group, or it’s kind of two groups that have actually taken up the Uni and tried to run with this are young people and students. So I was contacted by this student activist at the University of Massachusetts at Amherst named James Codero. And James was interested in the Uni and we worked together to put together a language.

And he, along with approved by his entire resident assistants and peer mentors Union at UMass, Amhurst created a set of demands and it sort of culminates in a demand for the Uni and it is powerful language and I helped, but he’s the one who really put it together. I don’t know. Maybe you can link to this document in the show notes. It’s incredible. So this resident assistants and peer mentors Union is a undergraduate Union and it actually is under the UAW.

And then they’re connected to a graduate employee organization. Another Union also under the UAW at UMass Amherst and they too put it into their list of demands. The last I heard, they brought it to the higher UAW leadership. And on that particular point unsurprisingly, that leadership said, no, we will not bargain for the Uni on your behalf.

So it’s disappointing, but it’s also inspiring to see young people who want to take on new, big ideas and say no to austerity. And it it’s a privilege to work alongside them. And I just hope that we get a lot more of these opportunities.

Grumbine (01:02:31):

This is beautiful. I am far from a young guy, but I’m not quite pushing up daisies. And I feel so much hope coming from the youth and watching their rejection of the status quo and literally taking on systems of oppression. Be it racism, be it mass incarceration, be it austerity. Watching the shift and no small part due to the MMT communities, continuous advocacy, including the most recent book by Stephanie Kelton, The Deficit Myth, which I believe is going to be a world changer.

On top of all this, we have seen some tremendous strides. And I kind of say, you guys are the epicenter. You’re the straw that stirs the drink. And I feel very humbled and very blessed to be even remotely tied to it, much less seeing it all unfold. I guess I want to thank both of you in particular for all this hard work that I don’t think very many people would do, and you all are committed to it.

Your day in, day out lives are centered and focused around this and you’ve inspired me and I love you all for it. I would like very much for both of you guys to give us kind of like a parting statement, not only where we can find you, but any last words of hope that you can give everyone, we’ll start with you, Ben.

Wilson (01:03:52):

Oh, wow. I’ve got to gather myself here right back at you. I mean an enormous presence and force and voice. So your work is also a tireless and very much appreciated by all of us. Thank you. So, yeah, I’m at the State University in New York College at Cortland. I’m also a research scholar at the Global Institute for Sustainable Prosperity. So easiest way to reach me is by email usually and Facebook, Twitter, whatever. I blame Scott for bringing me into the Twitter fold, finally.

Ferguson (01:04:32):

Tell them your Twitter handle because it’s not Ben Wilson.

Wilson (01:04:36):

No. So see, I wouldn’t have even thought to do. @autogestion77. So auto gestion is in honor of the phrase for grassroots activism and social change. Wow. But yeah, I would say that parting words, This is hard this time, period.

I mean, I’m exhausted like these constant waves of just bad news and terrible choices, right, right now, you know, in the household where there’s no end a wrestling with the thought of schools opening in the fall, not only at the University level, but at the public school level and questions of safety for our children, our loved ones are just creating so much stress and anxiety and really not presenting very good choices, right?

Every choice has just riddled with so much uncertainty and risk that it becomes extraordinarily difficult. But at the same time, you know, one of the really unique things about this time period has just been the opportunity. If you’ve been fortunate enough to have family and loved ones, you know, is the ability to spend so much more time with them to savor the moments and to take those points of deep breath and play catch with your boys in the backyard and start to let them teach you how to play video games and nature have created some beautiful moments of memory and family that you have to remind yourself of as you’re working toward and trying to fight through these difficult times, hopefully some systemic change, the types of visions and the opportunities.

So we’re fighting for with the Uni and our broader research agendas. Hopefully some of this will start to really take root and start making our lives much better in the months, years, and decades to come.

Grumbine (01:06:27):

Very good. And you Scott.

Ferguson (01:06:30):

All right. I teach at the University of South Florida. You can find me on Twitter at @videotroph, which basically means like video eater and Facebook, of course, a little bit of Instagram, but not too much. Also GISP, Global Institute for Sustainable Prosperity. I’m over there. And what else? Oh yeah, I should plug my podcast Money on the Left. Right, which is featured by Monthly Review Online, check it out.

So I guess parting thoughts. I definitely second everything that Ben said. Steve Grumbine, you know, you’re not on the outside, barely connected. You’re the beating heart of this movement right back at you. I think for me what the power of this politicization around the MLF, which doesn’t sound sexy, the MLF, but pursuing these politics and around the Uni, I think we can really foreground something that I’ve actually learned more and more about from working with Ben more and more recently, which is the idea of a grant economy, especially the sciences, but the arts and the sciences.

We all apply for grants all the time and grants come with obligations, right? They’re not just free money to F off and do whatever you want. Right. You have to produce a report or do a study or write a book or write an article or engage the community in some way. Right. And they’re going to follow up, make sure that you did that work, but it’s not a quantified monetary debt that you have to then pay back. Right.

And I think we spend a lot of time in MMT community talking about the need for robust federal fiscal spending, essentially granting money into the economy. And this is, you know, some of my colleagues, there are critiques of some of the public banking, literature and movements, right, is that they’re not being critical enough of the debt economy, right? We don’t want to produce a lot more private debt for individuals who want to help, right.

We want to grant individuals credit so that they can labor with one another in their communities and be involved and be supported and be healthy and eat well, et cetera. So what I think the Uni does, and if we really politicize this MLF for our municipalities is it opens up our entire economy to much more of a grant forward process.

And I just want to leave listeners with that thought and to encourage your listeners to join us in meditating on that, because we’re not used to thinking in that way. Right. And even the let’s have a generous federal government doesn’t fully go there. I think that’s a really powerful model and powerful vision. And Ben’s work has really made that palpable for me.

Grumbine (01:09:27):

I love it. Yeah. If I could round up enough money to send you guys to Greece, you might be able to help the Greeks out of the Euro with this. I mean, this is a great opportunity to save a bunch of lives there too. My goodness. Alright, well gentlemen, thank you so much for taking the time and what a time it was. I normally am really blessed to have one of you.

I’m grateful to have both of you and please make sure you pass on to Max and Billy and the rest of the gang, including I think Bob Hockett as well, everybody, the Modern Money Network, make sure you pass on my sincere gratitude for the work every one of you is doing.

And I mean this from the bottom of my heart, you all are my hope. I really love y’all immensely. And I really thank you so much for everything you’re doing. So with that Macro N Cheese. Want to thank everybody for listening. We’re out of here. We’ll talk to you next time.

Ferguson (01:10:17):

Thanks Steve.

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