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• Since Lockdowns, A 12% GDP Loss; Half Of US Dollar Purchasing Power Stolen

• California's 'Wealth' Tax Is Coming For Everyone

• Gold Overtakes US Treasuries as Reserve Asset

• Will the U.S. National Debt Ever be Paid Off?

• War for Bankocracy Ep IVa

• The UK's latest debanking should give everyone pause

• The Biggest Inflation Lie Exposed! Governments blame Business.

Many of us have had the intuition that the economic damage from 2020 – including industrial stoppages, monetary printing, supply-chain disruptions, extended school closures, and general population demoralization – was in fact far greater than official statistics indicate. 

What follows will shore up this intuition, using new techniques and numbers from an innovative project called RealityIndex.co. 

It’s true that official data is bad enough, showing a 26% loss in purchasing power, slow growth in output, and only marginal improvements in real income. The labor participation rate and worker/population ratio never fully recovered and continue to fall.

Output has been lackluster. It’s supposedly running 2.3% which is about half the postwar norm for US economic performance. It feels like a general downshift. Official data shows a brief recession in 2020 followed by gradual economic recovery overall. 

But is this even true? In 2024, Brownstone Institute commissioned a study (by E.J. Antoni and Peter St. Onge) that concluded that we have never really entered recovery after 2022. We’ve been in a technical recession since that time. They got this with some limited adjustments of price data bumped up against output data. That study was met with brutal attacks, with every critic falling back on official data and doubting the supposed extremism of the conclusion. 

That’s where matters have stood even as reports pour in concerning broken labor markets, no raises for 1 in 4 professional-class workers, and sketchy Gross Domestic Product (GDP) data that seems barely above zero thanks mainly to medical-sector subsidies, government spending, and social services. Then there are the learning losses showing dramatic declines in test scores among affected students. 

We are left with real questions. How can consumer sentiment be at historic lows given that the overall data seems to raise no loud alarms?

In the meantime, Artificial Intelligence has come along to make these complicated calculations possible, ones that seek to discern and delineate the huge gaps between official data and reality. The goal is to come up with real data concerning real prices, sans the many different methods that the Department of Labor uses to adjust price changes. 

For example, housing prices are not measured directly but rather converted to owners’ equivalent rent (OER). Medical service prices are adjusted for consumption, not premiums or final bills. When consumers substitute one good for another, that is also factored in. When the quality of a good or service improves, the statisticians apply what they called hedonic adjustments, which are invariably designed to minimize price increases and never run the other direction. 

Where does this leave those of us who are looking for a plain index of prices? A veil has been put over that basic question and answer, such that we don’t know for sure. This matters tremendously for issues like raises, examining cost of living increases, taxes, and pension payments. Everything is adjusted for inflation to convert it to real valuations but if we don’t have a clear number, what are we to do?

This is why we should be thrilled about a new study/service called the Reality Index. You are free to browse the site yourself and examine every aspect of the method. Essentially, the site owner, an independent intellectual in Madrid, Tom Elliott, has deployed tools of AI to wholly reconstruct price indices in a way that is consistent with actual prices. His results are absolutely eye-popping. I’ve examined the method here in detail and found no fault. 

The Wall Street Journal has also taken notice. This is good news and raises the possibility that we can finally get to the truth. 

The core of the problem is a constantly changing methodology in official data. The formula was changed eight times over 35 years. All the changes seem technical and vaguely justifiable, once explained. Adding them all up, you get wild distortions in the data that the index is supposed to reveal. All these changes came home to roost in the great inflation of 2021-2024, which might be entering a second wave right now. 

In 1983, owners’ equivalent rent replaced basic housing prices. The new formula was based on an estimate of what homeowners would have to pay to rent their own homes. But in real life, people pay mortgages, property taxes, and home prices. When home prices and mortgage rates rise faster than rents, the new formula understates the housing inflation real households face. 

In 1996, the Boskin Commission announced that the Consumer Price Index (CPI) was overstated because people substitute higher-priced goods for lower-priced goods which are too slow in being calculated. The agency made the correction to eliminate the bias in the fixed basket of goods. The problem is that every single adjustment ended up forcing the reported rate to be less than a plain addition of the same goods over time. 

In 1998, there was a new fashion for hedonic adjustments. This stemmed from an observation that quality is always improving, especially in digital goods and computer functioning. The idea is that you might be paying the same or even more but you are getting more bang for your buck with quality shifts. You guessed it: hedonic adjustments drew the inflation rate lower. Notably, hedonic adjustments never run the other way, raising prices when quality decreases. 

In 1999, a geometric mean formula replaced arithmetic mean for most CPI components. This was intended to capture substitution effects. This was the change that ended up disguising the increase in medical service costs. By looking at consumed services rather than actual prices, the inflation rate in this sector ended up burying inflationary trends. This highly technical adjustment completely ignored all the ways in which substitution is a behavioral adaptation to inflation, not a reduction in the inflation experienced. 

In 2002, we got a continuation of this same method with new “chained CPI” which changes the basket weighting based on new purchasing patterns. Sure, if people buy less beef and more chicken, the household will experience inflation in a different way. But this ignores the manner in which the substitutions themselves are a response to higher prices. In 2017, the new calculation was applied to taxes causing people to pay more than they otherwise would have under the old method. 

In 2018, the hedonic adjustment strategy was expanded to a huge new range of products including smartphones, residential telephone services, internet services, and cable and satellite television. In 2020, at the same time the composition of M1 was changed and not retrospectively applied such that the data is essentially useless. Following money supply data became more difficult. Then in 2024, the Bureau of Labor Statistics stopped looking at the actual cost of medical services and started only looking at claims, completing the consumption-only bias against actual posted prices. In 2025, a month went by with no data collection at all. 

So what happens when we strip all this away and examine actual prices as reported by the Bureau of Labor Statistics, without all the many adjustments? We find that a basket of goods and services that cost $100 in 1980 costs $515 per the Reality Index in 2025. The official CPI reports only $391. 

That means that real prices have run 32% higher over 45 years than the government reports. Over a 55-year window, the Reality Index ran 54.4% faster than CPI. 

To put it another way, consider the loss of purchasing power since 1980. According to the CPI, the loss has been to make $1 in 1980 worth only 26 cents. According to the Reality Index, the loss is greater: $1 in 1980 is now worth only 19 cents. By any standard, that is a shocking devaluation. All of this became much worse starting with lockdowns. 

There is much more work to do with this method. The charts could be interactive. They can also be set for real-time updates. They will be if Elliott continues to develop this. He should. There might even be commercial value in this. 

Think about the implications. Isolating from the beginning of the Covid period to the present, Elliott’s data estimates as much as a 40% loss in purchasing power over six years. Or perhaps closer to 50%. Here is a zoom in of the above chart covering 2019 to the present.

This seems correct to me. Government data, meanwhile, logs only a 26% loss. That’s a massive gap between the official data and what prices actually reveal. With an AI re-rendering that tracks purchasing power – the flipside of the increase of prices – we get numbers closer to 50%. That means that Covid cut the value of the dollar in terms of goods and services to half its former value.

I asked AI to map this out in terms of year-over-year changes in prices. CPI shows a peak in 2022 followed by a decline in the rate of increase. Reality Index shows that the devaluation actually intensified and never fell below 6%. This explains so much about consumer sentiment and political shifts. People feel it even if official data never revealed it. This kind of chart forces a rethinking of the history of the last six years.

There are still larger implications. We measure national output with the Gross Domestic Product, a national income statistic used since the 1930s. For output data, it would make no sense to report it in nominal terms without factoring in inflation. As a result, the GDP is usually reported in real terms, with an inflation adjustment that is continually compounded on an annual basis. 

Elliott’s own data – which is shocking enough – did not go into the implications for GDP. But I was able to use a simple AI tool to make those adjustments, adding the corrected price index as the deflator metric. 

The result is rather astounding. The recession of 2020 never really ended in a sustained way. Charted by hard numbers and then by percent change, you gain a very different picture of present levels of output. It causes one to completely rethink the last six years. 

The official definition of recession is two quarters of declining real GDP. In revised data, we’ve had consistently negative GDP in all but three quarters since summer of 2022. In those three quarters, output barely rose above zero. Mostly real GDP has been falling, a recession without end. 

Overall, Grok AI estimates a loss of 5-12% of GDP from 2019 to present using Reality Index numbers. Sorry but read that again. Instead of any recovery, we’ve seen as much as double-digit declines in GDP overall since 2020. This is the cumulative loss spread out over six years. 

That’s roughly half of the losses of the full period of the Great Depression, which was more catastrophic than people know. Most research from the 1930s, for example by George Selgin, shows that this was not a normal business cycle but a structural hit tracing to the very coercive measures designed to fix the problem. Price controls and market disruptions made a bad situation far worse. This is precisely the sort of hit that should worry us the most. 

The lockdowns were a similar situation: a massive exogenous shock to commerce, accompanied by a huge devaluation of the currency. It amounted to a gigantic transfer of wealth to elites, the largest in history, followed by a destruction of wealth of the middle and lower classes. 

At least during the Great Depression, people knew it was happening. It was officially documented. Our times are different. We have heard nothing for six years except happy talk about economic recovery. Based on real data, the opposite has happened, most tracing to the disastrous lockdowns of 2020. 

The beauty of this data is that it is subject to replication. Anyone can look at the methodology and disagree. Be my guest. From what I can see, the actual picture is far closer to the reality that most people are experiencing. 

In other words, that only one in four workers has had a nominal raise in five years barely scratches the surface. The reality could be that we’ve lost as much as 12% of national output since the lockdown era, along with a halving of the currency value. It’s somehow worse that we are only now able to document this. 

Also, I would like to see his methods applied to my own concern over effective household income per hour of work. We keep hearing that household income is rising in real terms without considering that it generally takes two incomes to provide what one once did. It won’t do to pretend that two incomes in a single household is double the income when one person has been drafted into the workforce to sustain living standards. 

Adding that consideration in here, and the dramatic change in household remuneration between 1950 and 1990, would be very revealing. After all, only 1 in 5 households (with children under 18) had two income streams in 1950 where it is 3 in 5 today. That is effectively a diminution of wages per household hour and not an increase in income. Add that consideration and you would generate a chart of declining living standards in the decades before lockdowns delivered the final coup de grâce. 

And that is where we are today. Households are scrambling to keep the bills paid while juggling children and domestic life while running from job to job to keep the flow going as best they can. Meanwhile, they money they earn has less buying power than ever. It’s no wonder consumer sentiment is rock bottom. 

It is long past time for this technical work to be done. What Tom Elliott has provided is what index numbers should provide: clean and stable comparisons of the same or similar products over time, no adjustments, refinements, and manipulations. Run those numbers against conventional output numbers and you produce a very different picture of economic performance since 2020. 

We’ve lived so long with distorted statistics. It fascinates me that the person who finally did it is an independent data expert in Spain rather than an employed academic in the US. That itself is revealing.

The big picture is that the lockdowns, not only nationally but globally, were far more catastrophic for us economically than has been generally admitted or recognized. It is not unusual in the history of economics for the really bad news to emerge years and even decades after an exogenous shock such as war. 

We would rather not wait that long. The crisis is too real and the public knows, even if the official data does not admit the truth. 

Lockdowns were a kind of war on the population. The economic carnage might have sliced off half of the purchasing power of the dollar and cut output by as much as 12% over six years (in real terms, leaving aside missed counterfactual growth on the previous trajectory), even as labor participation never recovered and continues to fall. 

Did Covid kick off a kind of permanent recession? How many decades must pass before we admit what happened? More precisely, how much longer will it take before the public mind recognizes what they did to us? 

https://brownstone.org/articles/since-lockdowns-a-12-gdp-loss-half-of-us-dollar-purchasing-power-stolen/

As of right now, the U.S. national debt sits at 39 trillion (yes, trillion) dollars... how did we even get here? I don't think there's any realistic plan to actually pay this debt back at all. I think the strategy is just to keep inflating the currency so the debt becomes worthless over time.

Does anyone think there's actually an exit strategy here or are they just kicking the can down the road forever?

As someone who has lived most of their life working for just slightly above minimum wage, I don't believe raising minimum wage helps anyone in real world terms. First, you have those who are working at minimum wage. Lets say they go up from $20 to $30 an hour. The benefits of that increase are modest at first but only at first. If you haven't been laid off, prices due to inflation quickly eat away at those gains, not to mention the obvious increase in prices due to paying employees more. After a year, you are back to where you started.

Those above minimum wage are harmed even more if their wages don't go up by the same amount. Typically wages don't go up as fast as minimum wage so in that scenario where it goes from $20-$30, someone who made $35 an hour is now much closer to minimum wage which makes them worse off than they were before even though they are making the same amount. So you have those at minimum wage who are no better off in the end, those above minimum wage that adjust in tandem with the rise who are no better off in the end, and those above minimum wage who do not get a raise to match the minimum wage increase that are actually worse off.

Instead of asking for higher wages, people should be asking for the degradation of their currency to stop and maintain the value it had when they earned it. People who want a raise should be asking for an increase in purchasing power, not an ever increasing numerical amount that will always be outstripped by currency debasement(meaning your purchasing power is lower despite making a higher number) in which the value can never be recovered.

Nothing special but thought I'd share them!

No reporting by the mainstream media....

Is the Japanese carry trade about to unwind? If it unwinds, things will get bad.

Saw this being promoted and piqued my interest. Happy to be here.

Government is big. Elected and unelected officials wield enormous amounts of power. But lately I have found myself wondering whether we are paying attention to the wrong institution.

What if the most powerful institutions in America are not governments at all?

What if they are banks and payment processors?

A few years ago, during COVID-19, a friend of mine owned a small shop in Northern California. It was the kind of place many young mothers loved. They sold raw milk, organic cotton sheets, natural baby products, books, toys, and healthy foods. It felt like an old-fashioned mercantile reimagined for modern families.

One day, she made a comment on social media praising CBD. I do not remember the exact wording, but it was something along the lines of, “Of course, we can raise children without CBD, but why would we want to?”

Whether you think CBD is wonderful or terrible is beside the point. The issue is not whether she was right. The issue is whether she had the right to say it.

Not long afterward, her credit card processing company terminated her account.

The company processing her payments had nothing to do with the social media platform where she made the comment. Yet somehow, a statement made on one platform became a problem for an entirely different company that controlled her ability to process payments.

The fallout was immediate. Roughly $30,000 was frozen. She struggled to make payroll. Because the company handled other operational functions as well, portions of her business became difficult to run. It took months of legal back and forth before she finally regained access to her own money.

When this happened, I called my own credit card processing representative. Before I could even finish explaining the situation, he knew exactly what I was talking about.

He told me he had been flooded with calls from businesses looking to switch processors because similar things were happening across the country. Businesses were scrambling to regain access to money they believed was theirs.

It was part of a broader pattern that many people have already forgotten.

During COVID-19, I lost count of the number of conferences, organizations, and educational programs that suddenly found themselves unable to process payments or fundraising. Then came the Canadian trucker protests. Regardless of where someone stood politically, a lot of people suddenly realized that modern power does not always arrive wearing a government uniform. Sometimes it arrives as an email informing you that access to financial services has been suspended.

What concerns me is that all of this happened before we have even become a truly cashless society.

Last weekend, I was in Austin speaking at an event for the Brownstone Institute. As I walked around the city, I noticed a surprising number of businesses no longer accepted cash.

The answers were remarkably consistent. Cash creates more work. Cash can be stolen. Cash requires counting. Cash requires bank deposits. Cash slows things down. Cash creates security concerns for employees.

These are all legitimate concerns. In fact, I understand them better than most people because I have lived them.

My brother owns restaurants in California and has chosen to operate cashless businesses. His reasoning is efficiency. Most business owners making these decisions are trying to reduce theft, simplify accounting, and protect employees. The incentives are understandable.

That is what makes this conversation so interesting.

Rarely do we lose freedom because someone announces they are taking it away. More often, we surrender small pieces of it because convenience, safety, and efficiency seem like fair trade-offs in the moment.

I found myself standing in one Austin business that displayed signs supporting inclusion, immigrant rights, and various social justice causes. I asked the young man behind the counter a simple question.

“If we are concerned about making society accessible to everyone, why require a bank account, a smartphone, a QR code, and a digital payment platform just to buy a cup of coffee?”

He looked genuinely surprised.

After thinking about it for a moment, he said, “Maybe you’re right.”

What struck me was not his answer. It was that the question had never occurred to him.

For all of our conversations about equity and access, we seem remarkably comfortable building systems that increasingly exclude anyone operating outside the banking system. Elderly people, recent immigrants, people who simply value privacy, and those who rely on cash all find themselves pushed a little further to the margins each year.

Most of us have enormous faith in the numbers displayed on our banking apps. We treat those numbers as though they are unquestionably ours, and most of the time they are.

But the people who had accounts frozen, payment processing terminated, or funds held during COVID-19 learned something the rest of us rarely think about. Access to your money increasingly depends on institutions you do not control.

We spent years arguing about who could post what online. Meanwhile, the institutions with the power to deny access to money received far less attention.

What is interesting is that while many businesses are moving away from cash, I am seeing people experiment with other forms of exchange.

At Sovereignty Ranch and The Barn, guests have paid in silver. We have accepted retreat deposits in silver coins. We have accepted festival sponsorships in silver. We also maintain cryptocurrency wallets and have accepted crypto payments.

Is it a large percentage of our business?

But it happens often enough that we added a silver calculator to our point-of-sale system and maintain the apps necessary to accept cryptocurrency.

People are quietly looking for options. Not because they necessarily distrust every bank or financial institution, but because they understand something previous generations understood instinctively. Resilience comes from having choices.

I am not arguing that cash is the only answer. In fact, I think there is value in preserving as many forms of voluntary exchange as possible.

A society with multiple ways to exchange value is more resilient than a society dependent on a single system.

What concerns me is not that people are using digital payments. I use them every day myself. What concerns me is that we are building a world where opting out becomes impossible.

The issue is not whether any particular form of money is perfect. The issue is whether we preserve enough alternatives that no single institution becomes the gatekeeper of economic life.

Because once every transaction requires an intermediary, power shifts. Once every purchase is digital, oversight becomes easier. Once every dollar exists inside systems controlled by institutions we did not elect, freedom begins to look a little different than we thought it did.

Maybe the most important lesson from those years is not about any particular company, politician, virus, or policy.

Freedom rarely disappears all at once. More often, it erodes through a series of reasonable justifications, emergencies, and conveniences.

Looking back, many of the things that happened during COVID-19 would have seemed unimaginable just a few years earlier. Yet they happened anyway.

That is why I think it is important that we do not forget.

Not because we should live in anger. Not because we should endlessly relitigate the past. But because freedom requires memory. The moment we forget what happened, we lose our ability to recognize it when it happens again.

We spend a great deal of time worrying about government power, and some of that concern is justified. But I increasingly wonder if we are overlooking institutions that possess just as much influence over our daily lives.

If an institution can freeze your money, deny your transactions, shut down your business, and exclude you from economic life, does it really matter whether that institution is a government agency or a financial corporation?

And if it does not, are banks actually the most powerful institutions in modern America?

https://www.theepochtimes.com/opinion/are-banks-more-powerful-than-governments-6045395?utm_source=partner&utm_campaign=ZeroHedge

Something I learned today by watching a Youtube video unrelated to financial topics is that there's a few states that don't have sales tax. I don't live in any of the states that don't have sales tax though. The states are Oregon, Alaska, Delaware, Montana, and New Hampshire. I've thought about moving to Oregon in the past too, but I'm sure the cost of living is way too high up there. Heck I even thought about wanting to live in Alaska as a kid lol. I'm glad Alaska doesn't have sales tax because it's already expensive to import goods into the state. Do you believe that other states should also eliminate the sales tax?

After reading that other article about how bad it would be to audit Fort Knox and find the gold missing, do you think it's still in there? There's been no thorough audit since the 1950s. POLL TIME!

Update (9:00pm): just a few minutes after the initial post, the squeeze is accelerating and SPCX hit just shy of $230, or $3 trillion in market cap, surpassing MSFT in value.

Space X is a pretty cool company, doing lots for space exploration, but is it(or any company) worth 3 trillion?

From 1264-1931 after the crisis of war governments always went back to sound money. After the wars currency debasement got out of control. 1968 the London gold pool collapsed and things really started to unravel and 1971 the gold window was closed.

Today's average wage paid in gold is 50% less than in 1913. In nominal terms you make way more, averaging 70k, but that requires two wage earners to raise a family. If you got paid in gold ounces same as people did in 1913, before the Federal Reserve was authorized, your dollar denominated wage would be a little over $175k.

Hey everyone, just wanted to pop in and say a quick hello! My name is Eclipse, I'm 28 years old living in Virginia. I'm a huge fan of tracking, saving, and managing my money to prepare for emergencies, large purchases, and future planning. It's been way harder than I thought when I started so glad to see a forum like this exist!

Welcome to the 5th episode of Michael Maloney's Hidden Secrets Of Money. In this instalment, we travel to Berlin and Frankfurt, where we were able to film the money museum inside the Bundesbank...one of the world's largest Central Banks.

This episode serves as an ideal primer for those waking up to the monetary matrix around them, as it clearly shows the history of true money and why it so important to our freedom. The quality of a society is directly proportional to the quality of its money. Debase a currency for long enough, and you end up with dangerous deficits, debt driven disasters, and eventually...delusional dictators. History proves this to be true.

In episode 9 of Hidden Secrets of Money, Mike Maloney draws eerie parallels to the misguided leaders and monetary policies that doomed civilizations from Ancient Rome to modern-day America.

Can President Trump save America? Will the Federal Reserve Board be able to pull off yet another round of extremist interference and postpone a crisis?

Find out how Mike he believes it will play out.

Hey everyone my username is Ravenfreak but feel free to call me Raven for short. I'm a 36 year old man who's been using forums for a while now. I wanted to learn more about finances and how it all works so I decided to join. :D My hobbies include playing video games, programming from time to time, ROM hacking, and listening to music.

Personal thoughts here: many of our economic and societal problems stem from the distortion of money itself. Currency represents one half of every economic transaction, and when it is manipulated, the consequences extend far beyond wages failing to keep pace with inflation. It distorts incentives, misallocates resources, and creates conditions in which fraud and corruption can spread throughout virtually every sector of society.

Here we learn the flaws of Modern Monetary Theory. This is, IMO, a radical version of the Keynesian economics that we already have.

Modern Monetary Theory isn't modern at all and has been around a long time. It simply does not work. Here we will see why:

Interview with Emanuel Majori

On his book If You Can Just Print Money, Why Do I Pay Taxes? — Modern Monetary Theory Distilled and Debunked in Plain English

Hosted by Dr. Bob Murphy on the Human Action Podcast

Bob Murphy: Emanuel, welcome to the Human Action Podcast.

Emanuel Majori: Thank you for having me.

Bob Murphy: Folks, the reason we have Emanuel here is that he has a new book titled If You Can Just Print Money, Why Do I Pay Taxes? with the subtitle Modern Monetary Theory Distilled and Debunked in Plain English, published by W.Y.

I had seen Emanuel give an interview talking about the book. We’re going to get into the substance where he goes through how MMT, when Stephanie Kelton and others describe what happens right now when the U.S. government buys a fighter jet, is simply wrong. It’s not that you disagree ideologically — it’s that what they say happens is not true, and that matters. They put a lot of weight on the claim that “we’re just telling you how the world works.”

I’ve debated Warren Mosler and have been going at loggerheads from an Austrian perspective against the MMTers for a while. That always stunned me — their trump card is always “this isn’t ideological; we’re just saying how the world works” — and yet when it comes to something as basic as walking through government purchases, it’s wrong.

Given the title of your book, I saw some MMTers treat it as if that was your mic-drop: “If we can just print money, then why do we pay taxes, idiots?” I want to assure people that your treatment is extremely fair. You cite them, you don’t set up straw men. This is not some bomb-throwing polemic or low-IQ criticism of MMT. Do you want to respond to those general points before we dig into the meat?

Emanuel Majori: Yes. First, I wanted to write a book that was well-researched and fair to MMT, because I did not approach it trying to debunk it. I actually wanted to learn MMT. I only discovered that it didn’t make much sense as I learned it.

My book even gives MMT the benefit of the doubt. I tried to be generous at the beginning — let’s imagine a world in which things work the way MMT says, and let’s walk through the arguments. The criticisms I describe are usually not just me; they come from academics who have gone through MMT and criticized it. Many of those critics are themselves big-government people. They want bigger government, like the MMTers, but they don’t think this theory is a good foundation for that.

I researched thoroughly. I read the whole MMT textbook Macroeconomics. I read their papers defending MMT from criticism, then the responses to those defenses, and the back-and-forth. I printed it all, went through it with a highlighter, and wanted to write a well-informed critique. You can think of it as an antidote to Stephanie Kelton’s book in a way.

The book has been accused of straw-man arguments, but those people have not read it. The moment it was published — about three weeks ago — something astonishing happened. I was attacked by the MMT mob. I’ve been called names; someone said I was a friend of Jeffrey Epstein’s; I’ve been called a dumbass. People are trying to boycott the book, leaving one-star reviews on Amazon that just copy-paste a tweet written by somebody else.

But I do justice to MMT. I explain it by quoting the people who developed it. When I criticize it, I also quote their responses so you can see the ping-pong. Ultimately the book ends up critical of MMT because MMT is not good — that’s not merely my opinion. I also wanted to write a fun book to read. Stephanie Kelton’s book is quite a lot of fun, and I wanted to include anecdotes and make it palatable, because otherwise economics is very dull. You can’t respond to her book by just saying “this is all BS — ignore it,” because that fuels the conspiratorial sentiment that MMTers have: that they’ve found some holy grail of prosperity that people refuse to see for ideological reasons. I wanted to acknowledge MMT properly.

Bob Murphy: Just a few things before we start going through the substance. It’s not the case that every interventionist economist likes MMT as Keynesianism on steroids. Paul Krugman had a public clash with Stephanie Kelton and walked away from it. He was arguing from a New Keynesian framework, making standard points — the central bank can buy bonds and “control” interest rates, but then inflation becomes a free variable. Kelton kept responding on one particular thing and ignoring what she had said earlier. Krugman said she was playing “Calvinball” — from the Calvin and Hobbes comic, where the kid keeps changing the rules so he always wins. I actually sympathized with him.

I’ve noticed this: they have a playbook with answers to everything, but when you prove them wrong they come back with something that is technically true — even obvious — but they’ve often changed a definition, so it’s a different conversation. They jump from “this is how things are” to, once proven wrong, “this is how things could be.” It’s very difficult to have a constructive conversation.

Emanuel Majori: Exactly. They don’t know how to reason properly in that sense. It’s almost impossible to have a constructive conversation with them.

Bob Murphy: Even though you’re trying to make the book accessible and fun, this is not a lowbrow breezy read. You mention Kelton, Bill Mitchell, and Randall Wray as the leading scholarly figures, and you even get into people like Eric Tymoigne and others that the standard person wouldn’t know. Your book is a lot more thorough than I expected, and it’s very fair. You don’t just speculate about what an MMTer might say — you quote what they say and then quote the counter-response.

Someone might ask: if this is such a goofy theory, and even people like Paul Krugman don’t take them seriously, why spend so much time on it? In your introduction you mention at least three major events that propelled interest in MMT: economists failed to predict the 2008 financial crisis; central banks responded with unprecedented unconventional policies including QE; and the response to the COVID-19 pandemic reminded a lot of people of MMT. In your own words, why write the book?

Emanuel Majori: It’s a very seductive theory, and public opinion matters. MMTers have done a very good job of convincing people. I’ve noticed a change in the language people use. On LinkedIn, someone in my professional network who doesn’t work in economics commented on the DOGE program in a pure MMT way: if you believe the government can run out of money, you’re a sadist — you like suffering. They often use the word “self-imposed,” which sounds a lot like self-flagellation. They’ve explicitly said politicians know MMT policies could be used but don’t want to admit it because they’re mean and don’t want to help people.

I live in the UK, and here Zach Polanski, leader of the Green Party, has been learning MMT and answering questions from an MMT lens. The ideas are seeping into public opinion, and that is potentially dangerous.

I grew up in Argentina, where we have experience with MMT-like policies. MMTers will say it has nothing to do with MMT, but the rhetoric they use has been used a lot in South America. It sounded familiar. The idea that there is enormous idleness in the economy — so many resources lying around that we can just mobilize them with money creation, like a free lunch — I’ve heard that before. I found quotes from the 1970s in Chile where ministers, before a big bout of inflation, were saying the economy was running at 30% below capacity, so money creation would just reactivate it. A presidential candidate in Argentina a few years ago said something very similar: the machines and factories are off; we need to reignite the country. Then came a disastrous bout of inflation.

More recently, a newer generation of MMTers — Eric Tymoigne and Yeva Nersisyan — are promoting price controls and currency exchange controls. I’ve seen that in Argentina. The shelves were empty; we didn’t get cheaper products. The government used the controlled prices to calculate the CPI, but nobody could actually buy those products. When I left Argentina in 2014 there were capital controls. You couldn’t freely buy foreign currency. There was a gigantic black market — the “blue” market — with people on the street yelling “cambio, cambio.” You go into an alley and buy U.S. dollars, which is how people save.

That perpetual inflation hurt the country badly. People who defended the money-printing regime always used those sound bites — “greed inflation,” “we just need price controls because of greedy supermarkets.” It doesn’t end well. I moved to the UK where institutions are solid, and I don’t want those institutions to erode in advanced economies. I’ve seen the process; it pushed me and a lot of people I know out as economic migrants.

Bob Murphy: I agree. That’s why I went after it too. It wasn’t just like standard Keynesianism. Stephanie Kelton has a great anecdote early in her book: she’s in a room of serious people and asks, “If you could press a button and magically get rid of all the government bonds, would you do that?” Most people raise their hands. Then she asks, “If you could press a button and get rid of all the assets in pension funds that are treasury securities, would you do it?” No one raises a hand. She says, “But those are the same thing.” That’s a true statement, and for people who never thought of it that way it seems powerful. A lot of their accounting statements — “the government’s red ink is the private sector’s black ink” — are technically true but extremely misleading when deployed in policy discussion. That’s why this is a different animal and why I’ve spent so much time on it.

Emanuel Majori: It’s very sly. They say something that is technically true but economically untrue — which is possible in economics. The idea that you can wipe out the debt by creating money and replacing outstanding government bonds with newly created money is technically possible. Everybody knows that. MMT essentially boils down to the idea that if the government can create money, it cannot run out of money — a truism. Every economist knows the problem is not whether it’s technically possible; they just think it’s a bad idea for a number of reasons, and there’s nothing to be gained economically from it.

They use those truisms. One is the sectoral balances: when one sector is in deficit the other is in surplus. That’s a truism. They try to imply that if the government runs a deficit then the non-government has a surplus, and that this is good for someone — “every deficit is good for somebody else.” Some MMTers have been even less subtle and said the public becomes wealthier. That is categorically untrue from an economic point of view.

Look at Argentina. The government ran very high deficits by printing money and made the public financially richer. An average Argentine might have a million pesos in savings — they’ve all become millionaires on paper. But that doesn’t mean they’re rich, because you’re ignoring the value of money. It’s paper wealth, not real wealth. Stephanie Kelton always uses the qualifier “financial” — people become “financially better off.” She never explains what that means. The reader gets the impression that a government deficit makes other people richer. Technically true in nominal terms; economically false in real terms. That’s dangerous.

Bob Murphy: Let’s jump to the title of your book. Why do we pay taxes? I’ve even seen this MMT framework spill over into critics of big government in a cynical way: “Since we left the gold standard they can pay for whatever they want; the reason they tax us is just to keep us down.” The notion that with a printing press the sky is the limit has bled all over the place. So, head-on: in MMT land, given that the government can’t run out of money, why bother taxing people?

Emanuel Majori: If we give MMT the benefit of the doubt and accept their framework, taxes still serve several purposes in their own theory. They create demand for the currency — people need the government’s money to pay the tax, so they accept it. Taxes also help control inflation by removing money from circulation. And they can be used for social or distributional goals.

But the deeper point is that the slogan “taxes don’t fund spending” is highly misleading once you look at how the system actually operates. The U.S. Treasury cannot simply spend without having a positive balance in its account at the Fed. It is illegal for the Treasury to run an overdraft on the Treasury General Account. When the government spends, money moves from the Treasury’s account to the recipient’s account. That is a transfer, not pure money creation in the way Kelton describes it.

Bob Murphy: Let’s dig into that specific claim, because it’s central. Kelton has been saying since at least 1998, and still in her 2020 book, that every time the federal government spends it creates new money — it tells the central bank to create new money to pay for that. She states it as a fact. People believe it because she’s an economist writing authoritatively. A lot of people have told me, “But this is how it works — why would Stephanie Kelton say that otherwise?”

Emanuel Majori: What she wrote is categorically wrong, and she’s been told it’s wrong. She keeps saying the same thing. When the Treasury spends, new money appears in the recipient’s bank account, yes — but she forgets to say that the Treasury needs a sufficient balance in its own account, and that balance goes down by the amount of the payment. It’s the same as if I send you money from my HSBC account to your Bank of America account: I instruct my bank to credit your account, but I need to have the money and it is debited from mine. Any money transfer can be described as “creation” in one place and “destruction” in another.

In the U.S. it is illegal for the Treasury to have an overdraft. It must replenish its account with enough money to cover its spending. What MMTers have done for decades is look only at the credit side and ignore the debit. I think they were originally misled by how statisticians calculate money aggregates — M1, M2, and so on. Those aggregates only count private-sector bank accounts. Government accounts are excluded. So when money moves from the public sector to the private sector, measured M1 goes up even though the total amount of money in existence has not changed.

Critics pointed this out clearly. The MMT response was a series of new arguments claiming that even though the government must have a funded account, it somehow doesn’t matter — temporary loans from the central bank to bond dealers, the trillion-dollar coin, “the Fed would never let a government check bounce,” and so on. None of those arguments change the fact that under current law and procedure the Treasury does not simply create money every time it spends. Money moves from account to account.

Steve Keen, in The New Economics, says the government does not need taxes or bonds to fund itself. Later he acknowledges that yes, the government does have a bank account that needs to be replenished, but then points to the Bank of England allowing an overdraft during COVID as if that proves the original claim. It’s the same pattern: proven wrong on the description of current reality, then shift to “but it doesn’t matter” or “the rules could change.”

Bob Murphy: Exactly. The Treasury is not allowed to spend one dime more than it already has in the account. I sometimes joke that I’m more of a monetary sovereign than the Treasury, because my bank will cover a small overdraft; the U.S. government literally cannot. MMTers respond, “Those rules are self-imposed.” Yes — everybody knows they’re self-imposed. Congress could change them tomorrow. That does not mean the current system already works the way they describe.

I think their political goal is to pretend things are easier than they are — that we’re already halfway to full MMT, so we can start budgeting the MMT way with no friction. Randall Wray or Bill Mitchell has said that if the U.S. hits the debt ceiling it can continue to spend the way it does now, by just creating new money. That is categorically wrong and dangerous.

Emanuel Majori: Yes. They want to say the procedures don’t need to change. That’s why they insist so hard on this part of the theory.

Bob Murphy: There’s also a serious empirical problem for MMT. They say the economy has been running well below capacity for decades, and they have a theory of inflation that says inflation can’t really happen unless you try to spend beyond that capacity. Yet we have had positive 2–3% inflation for decades after the big inflation of the 1970s–80s. How is that possible under their own framework?

Emanuel Majori: It’s a big problem for them. Randall Wray has pages dedicated to it. One answer is that there hasn’t really been inflation — it’s just an error in calculating the CPI because of quality improvements. Another is Baumol’s cost disease (services become relatively more expensive). But relative-price shifts don’t explain a persistent rise in the overall price level. If the economy is so underutilized, why has there been steady positive inflation? At the end of the day they do want more spending. If we already have positive inflation, doesn’t that imply, on their own terms, that we are closer to capacity than they claim?

Bob Murphy: Last question. Can you speak to the job guarantee? A lot of the leading MMTers propose it. The pitch is attractive: the government has a printing press, it can’t run out of dollars, so it can offer a standing job at a living wage (minimum wage plus benefits) to anyone who wants one. They argue it would maintain the productive capacity of the workforce during downturns so skills don’t atrophy.

Emanuel Majori: There are several angles of critique.

First, inflation. If you give everyone a job that pays minimum wage plus benefits, it competes with the private sector. Private employers may have to raise wages to pull people out of the program, which can feed a wage-price spiral. MMT denies this, but the risk has not been adequately addressed.

Second, the claim that people become more productive and more employable. Employers are supposedly more willing to hire someone who has been in the job-guarantee program than someone who has been unemployed. But what kind of work does the program actually offer? Reading books to the elderly in care homes is one example they give. It’s not particularly challenging. Who is going to believe that holding the cushiest job in America signals high productivity?

Third, practical implementation. The program is supposed to be a flexible buffer that expands and contracts with private-sector unemployment. You therefore cannot give people serious work that requires long-term commitment or specialized skills. Critics (many of them on the left who actually want bigger government) point out that only unimportant work can be assigned.

I was surprised when MMTers cited a program in Argentina after the 2001 crisis as an example of success. I was alive then and did not remember it as a success or as a genuine job guarantee. It was restricted (only one person per certain types of household), paid very little (you couldn’t live on it), and a huge number of people never actually did any work — they were just paid not to work. It was eventually replaced by a pure subsidy without a work requirement because that was easier. It was nothing like the ambitious program MMTers propose, yet they present it as supporting evidence.

Bob Murphy: Exactly. If it becomes well known that the federal job guarantee is light work (or often no real work) and you still get paid, then “I spent three years on the federal job guarantee after the crisis” is not a strong signal to a private employer. It may not even solve the very problem they claim it solves.

We’ve reached the end of our time. My guest has been Emanuel Majori. The book is If You Can Just Print Money, Why Do I Pay Taxes? It’s well-researched, fair, and useful for both scholars and lay readers. Emanuel, thanks for writing it and for taking the time to talk.

Emanuel Majori: Thank you for having me. And please leave an honest review — the MMTers are leaving one-star reviews without reading the book.

Bob Murphy: Thanks everybody for tuning in. Check back next week for a new episode of the Human Action Podcast. In the meantime, more content like this is available at mises.org.

Hey-o! I never really introduced myself here. I'll give a little background what got me into economics.

I've always been fascinated with inflation since hearing my dad tell me he could buy for 5 cents as a kid for what cost a full dollar when I was a kid. As someone whose wages as a young adult never kept up with inflation or minimum wage, I wanted to know why. My first path down the rabbit trail was right after covid when I read an article stating 20% of all dollars ever created were created in 2020. I knew that wasn't good at all so I started reading a lot more about it. My eyes were opened big time when I watched Mike Maloney's Hidden Secrets of Money Episode 4. After that I read Creature from Jekyll Island and I was really exposed and understanding of the farce of our current monetary system.

How long have you been using the internet for? I used it back in the 90's but I didn't get a computer until 2006, even then it was an old Windows 98 PC that I was only able to get online using dial up for about a month or so. The first time I used it was in 1998, I was only 8 and at my cousins house so my aunt and uncle monitored what we were allowed to look up which is smart. My aunt would always stay in the computer room while we used the computer. I finally got a laptop once I graduated high school 18 years ago and was able to browse the internet.