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Is Money Even Real? An Economist Explains | The Problem With Jon Stewart Podcast | Apple TV+ - YouTube
Channel: The Problem With Jon Stewart
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How much currency that has been sort of
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created out of thin air
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has been added into this economy through the Fed?
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What would you put as a figure?
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Would it be $6 trillion?
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Is that too much?
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It would be, yeah, $6 trillion in terms of deposits
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with the banks and currency.
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It'd be $6 to $7 trillion.
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OK. That they're just injecting into it
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sort of out of nothing?
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Out of nothing.
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The central bank of the United States.
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Oh my god.
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No. Think about it.
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The central Bank of the United States
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Uh huh.
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is the only institution on Earth
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that can create dollars
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- and pay for assets out of nothing.
- Out of nothing.
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It's alchemy. They're Rumpelstiltskin.
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Well, if yes, in that sense, yes.
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And and
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and they've been given that authority
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by the Congress of the United States for purposes
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of dealing with crises, for example.
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What's to stop us from creating $10 trillion –
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You know,
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I used to make fun of Paul Krugman for his idea
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of a trillion dollar coin.
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Yeah. Right.
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You know, and now I feel I feel myself saying,
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"Hey man."
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"Well- let's just get $10 trillion coins.
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Give one to China, one to Europe.
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Are we square? Good."
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And then we start again because this whole thing
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seems manufactured?
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OK, who receives the money?
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All the people that own the debt of the United States.
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So, that money would be received by China, by Europe
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and all the debt holders.
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OK all you're doing there is changing one debt for another.
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Because the printing of the money is a liability --
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It's a debt of the Federal Reserve system.
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That dollar, that liability that the Fed created
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it's now owed to China.
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No, we give it to them --
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What I'm saying is we're giving it to them now and saying,
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we don't owe you that anymore.
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Here it is.
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Yeah, but they have.
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What do they have?
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- What do they have?
- They have the--
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A trillion dollars.
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A trillion dollars of Fed liabilities.
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Of money.
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- Money that we printed? Yeah.
- Right.
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And that's a liability of the Federal Reserve.
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- That's debt.
- And then they forgive themselves
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and then they just say, you're you're OK?
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We like you?
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Good luck.
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I don't think China's in the business
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of doing us any favors right now,
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and I don't think
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Europe is either for that kind of thing
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because why would they take the loss?
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Why would they
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why would they take the loss?
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I guess I'm confused as... if we can print money,
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you just said we're the only-
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We can buy an asset.
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OK.
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Any asset by printing money.
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That is we-
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But you can't pay debt by printing money?
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You can buy debt by printing money.
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So what if you just buy back our debt?
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Well, because
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all you're doing is-
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I feel like -- I feel like you're having trouble.
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It's like talking to a monkey.
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No, no.
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You're like talking to a monkey trying to figure out-
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- No, no. Look it--
- "How do I communicate with this monkey?"
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No, no, no.
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"I don't know what to do!"
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No, no. It - I totally.
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I totally get it's confusing.
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Yeah.
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But remember creating money,
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it means that the Federal Reserve creates a liability -- debt
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to buy debt or buy other assets.
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Right.
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OK,
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so if they go out and say, well to China,
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"We want the government debt."
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And they say, "OK."
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and and we say,
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"We'll give you our deposit, our money."
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That we've printed?
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Right so China says fine.
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"What kind of interest are you going to pay me?"
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It's just another form of government debt.
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Am I making sense?
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You know, it makes sense in the make-believe world of
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conjuring.
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Like there is a certain part of this that all feels like
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a mirage to some extent.
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So it's, you know,
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when you think about fundamentals, right?
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So when I think about the fundamentals of the banking system,
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it makes sense to me.
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You have a central clearinghouse
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that their business model is,
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I'm going to trust you with my savings.
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You're going to give me interest on that
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and you're going to make a little money on that
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by loaning that money out to somebody else
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for a little bit more money.
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Right.
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It's a business model that makes sense.
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Right.
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When we start to get into, I'm printing money
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to buy bonds to artificially keep those interest rates low.
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It makes less sense.
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So it's hard for me not to think of,
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well, why can't we just buy back our own debt
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so that we owe it to ourselves?
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And if you owe it to yourself,
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then it no longer can be weaponized
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by a foreign power or even by us,
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because you can
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create a different paradigm
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of what that debt looks like.
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Right.
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So it's hard for me
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when sometimes the rules of the Fed are explained,
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it's a little like saying,
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"Yes. You can levitate, but you cannot spin around."
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Do you know what I mean?
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It all seems sort of fake.
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Well, it is --
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It's a fiduciary system.
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It's all faith-based.
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Right?
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Oh my lord.
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Yes, you've got to have confidence
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in that currency, in that dollar
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because there's nothing backing it, there's no gold backing it.
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So it's in some ways -- it's a mass delusion.
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Well, that's a harsh word.
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But
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so long as you have faith.
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Yeah, well,
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you might see it today -
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Right.
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- in terms of, with all this printing,
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you see these cryptocurrencies. These Bitcoins.
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Right.
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Which are basically virtual currencies.
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And faith-based,
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- to some extent.
- And faith-based.
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