MMT for the Proles
Steve and Virginia talk with Proles Pod cohosts Jeremy and Justin about MMT and its value for socialists as a radicalizing tool.
Part of our mission is to introduce MMTers to socialism and socialists to MMT. We’ve had a few metaphorical doors slammed in our faces along the way. Former friends from the MMT community now delight in slinging accusations worthy of a HUAC hearing, while some socialists suspect modern monetary theory is just a sideshow of bourgeois economics. So, we didn’t know what to expect when we reached out to Justin and Jeremy, co-hosts of a podcast we’ve long admired. Compared to the vicious rejection we sometimes encounter, their good faith skepticism felt like a warm embrace. They invited Steve and Virginia to come onto Proles Pod and make a case for the radicalizing potential of MMT.
The conversation goes into the role of the state in currency issuance, the coercive nature of taxation, and how MMT can critique and unveil the inherent power dynamics within capitalism. Austerity, that devastating weapon of class warfare, is not a glitch; it’s a feature.
Virginia asks that listeners stop using the expression taxpayer money. “Even if you’re not ready to wrap your mind around MMT, just start calling it public money. You might not believe where it comes from but just stop. It’s public money.” Given the classist, racist implications of relying on taxpayers to fund the government, a change in language is a good first step. Steve adds: “Whatever you tax, you immortalize. Whatever you tax, if you believe it’s funding, you need forever.” The state is the source of currency; let’s stop elevating billionaires.
They look at the relationship between currency manipulation, inflation, and global economic dominance. They also touch on Gramsci and the impact of cultural hegemony. Ultimately, they agree on the necessity of a class-based analysis as a prerequisite for revolutionary change.
Proles Pod is a podcast about history, politics, and culture… without the liberalism
Find their work at prolespod.libsyn.com/
Support them at patreon.com/prolespod
Follow them @ProlesPod on X
FULL TRANSCRIPT with EXTRAS
Steve Grumbine:
00:00:43
Hi, this is Steve with Macro N Cheese.
Folks, this week’s episode is a discussion that my cohort and partner and friend and the editor-in-chief of Real Progressives and member of my leadership team, Virginia Cotts, her and I recorded with a leftist pod called Proles Pod who are true communists and focus on the study of communist thought, history, et cetera. And we asked them, said, “Hey listen, we would like an opportunity to present modern monetary theory to your audience. We would like to take a chance on presenting modern monetary theory to you all and we’d like to do it in our own unique Real Progressives Macro N Cheese kind of way. And that is to understand MMT through the lens of class and to understand what we’re up against and the radicalizing nature of modern monetary theory.”
You know, when you understand modern monetary theory, you understand the ability of the state to create its own unit of account and to enforce its unit of account by imposing a tax payable only in its unit of account. That awakening, and yes, it is an awakening, my friends. It’s not just an education. It’s an awakening. It’s an epiphany. It’s a moment. It’s an event that brings about a whole new set of possibilities.
And when you understand the realm of possibilities that could happen with a currency-issuing nation that actually represents the working class, serves the people as opposed to the bourgeois, you understand that we are being killed systematically through austerity and lies told as truths by the newspapers and the basically the propaganda wing of the parties and the oligarchy through mainstream media. They pollute our brains with lies about debt and austerity and oh my goodness, fear of really big numbers and stuff like that.
And Virginia and I were able to create the case, to make the case that learning MMT for socialists and communists and others who have given up, rightfully so, on the electoral system as a meaningful agent of change, that MMT provides a means of expressing to people we would likely call “normies”, regular people still pumping their knees and pumping their elbows and putting the “I voted” stickers on their middle of their forehead. And even in spite of the fact that we know it not just inherently, but empirically, that we do not live in a democracy, that the concept of democracy is fraught with lies, fraught with misrepresentations, fraught with all kinds of deceptive gaslighting techniques that have led us to believe that there is no alternative, there is no way out.
Well, in this podcast, we describe to them how, by showing rank and file people what is possible and then imposing the question of “How come it’s not happening?” to the socialist, to the communists, to the people that are aware of capitalism and really aware of the capital order and aware of the power dynamics of imperialism, etc. These are not shocking. The understanding of a fiat currency, however, is lost on them because thus saith the Marx, Marx didn’t really speak a whole lot to fiat currency. In fact, most of them have a commodity fetish at this point.
But in this discussion, Virginia and I were able to, I believe, effectively make the case that learning MMT is absolutely vital to radicalizing a nation and bringing about the kind of meaningful change that will save us from climate destruction, eliminate the oppressive chains of capitalism, and provide a pathway to sustained success for the working class. Without further ado, I give you our discussion with Proles Pod. Enjoy.
Jeremy:
00:05:07
Hello and welcome to Proles Pod, your bi-weekly dose of history, politics and culture without the liberalism. Today, we’ll be talking about modern monetary theory. But first, who do we have with us today? It’s a small crew. Just me, Jeremy,
Justin:
00:05:22
and our subject matter experts are
Steve Grumbine:
00:05:25
Steve Grumbine. I am the host of Macro N Cheese podcast and the founder of Real Progressives.
Virginia Cotts:
00:05:32
And I’m Virginia Cotts. I’m on the leadership of Real Progressives, the editor-in-chief, and Steve’s left hand.
Steve Grumbine:
00:05:39
The Momrade.
Virginia Cotts:
00:05:41
The momrade. Yeah.
Justin:
00:05:43
Also the Forrest Gump of communism.
Virginia Cotts:
00:05:47
Exactly.
Justin:
00:05:49
All right. And I’m your host, Justin. So where do you guys want to begin?
Virginia Cotts:
00:05:52
Well, I just want to tell you a little bit about why we’re here. Because MMT was developed by capitalist economists, but not traditional – heterodox economists. But we believe that it is even better for socialism.
So you can use… MMT doesn’t have an ideology. It’s very limited in scope and we believe very important. It’s a tool for radicalizing people.
Money is such an important utility, and like I say, it will apply under socialism as well as under capitalism. Most of the people involved in MMT think that they can use it to tweak capitalism. “Just teach it to Congress and we’ll have healthcare, and we’ll have… And we believe that by showing people that all these things are possible, that the state can afford to give us all those social services.” That leads to the question, “Why won’t they?” [ Right, yeah,] they won’t. And why is it? Where is the power?
Jeremy:
00:06:59
Interesting.
Virginia Cotts:
00:07:00
So that’s where we come in. It’s an important radicalizing tool that is overlooked and misunderstood by a lot of leftists and we’re trying to remedy that.
Steve Grumbine:
00:07:12
Fact of the matter is that I started as a radical right-wing Republican and there was no socialism in me at all. And learning this has been part of my story in moving to becoming a full, full on socialist at this point, many, many years later.
But the transformation is huge and the utility is great.
Jeremy:
00:07:31
Excellent.
Virginia Cotts:
00:07:32
May I also add that one of the criticisms of MMT is that it focuses on the developed nations, like monetarily sovereign nations, US, Australia, UK. But the important thing is monetary sovereignty is one of the ways in which imperialism is conducted.
Justin:
00:07:54
Oh yeah, for sure.
Virginia Cotts:
00:07:55
So again, to understand that, and I think Steve is better at explaining the nuts and bolts of MMT, but as a socialist, I came into it as a socialist and I don’t understand why all socialists aren’t drawn to it, so.
Justin:
00:08:09
Yeah, well, we will see and maybe we’ll give you some pushback. We’re very ideologically pure over here.
All right, so I guess the biggest first question should be, and something that is probably impossible to exhaustively cover in one episode, let alone one question. But for the listeners that don’t know “What is MMT?”
Steve Grumbine:
00:08:34
MMT is a description of the way a fiat regime operates. Fiat meaning by decree, the sovereign, back in the day. You think about early England and you think about early days of Rome and you know, you had the sovereign that would issue these coins, these tokens and say, “Hey, we need to provision the state. How are we going to provision the state?”
And you can either do it as slaves by the tip of a spear, or you can do it through subtle coercion, through tax. And so it’s not so subtle at times.
You could put a massive tax on someone’s home and say, “Now you know, if you don’t pay this tax, you’re not going to keep your home.” So these kinds of coercive strategies have been there since Mesopotamia. We’re talking about recording credit between two people, really.
Justin:
00:09:21
Right.
Steve Grumbine:
00:09:22
And in this case, MMT represents the state. It shows the state as the sovereign, as the currency issuer.
And for all of our time as folks in the US and this is not a US thing, this is international, this is everywhere. But in the US in particular, we have never seen a socialist government. We have never seen a socialist run…
Jeremy:
00:09:44
Then what was Obama?
Steve Grumbine:
00:09:47
Yeah, right. Obama was Ronald Reagan with a slightly different complexion.
But in reality, though, you think about it, it’s like MMT is a description of the way currency works in general. It can describe the gold standard, it describes all of it. But MMT in general shows us what is possible. And it shows that money is a creature of the state. And so the state is the currency issuer. It talks about currency issuers and currency users.
And, you know, in the United States, for a framework, we’ve got 50 states, and those 50 states and territories are currency users. They are not the creators of the currency. The federal government is.
Jeremy:
00:10:24
Right.
Steve Grumbine:
00:10:25
And so in this space, it talks about the federal government as God of the dollar. It created the dollar by law, by its own desire to provision itself. And most developed nations, pretty much all nations, have their own currency.
So this is not unique to the United States. There are some unique qualities about the United States post-World War II that we can talk about.
But in general, what it shows is that taxation, which is something we all have been raised in this society to believe is a funding mechanism for the federal government, is really more a matter of a coercive play to create an obligation payable only in the government’s unit of account, to create that monopoly power that allows the state to provision itself.
Justin:
00:11:10
So let me stop you there for a minute. Two questions. First of all, I imagine most people listening already know the answer to this because of our unfortunate interactions with libertarians and ANCAP [Anarcho-capitalists]. But what is a fiat currency?
Steve Grumbine:
00:11:24
A fiat currency is a currency that is by decree. In other words, it’s created at the will of the state, it’s spent at the will of the state. The currency itself comes forth from the state.
And so when you think about what currency even is, it’s really just a series of debits and credits, right? It’s not… it doesn’t have any physical manifestation. It’s a unit of measure. So we think of inches in one way. You never run out of inches. We think about pounds. Unfortunately, we never run out of pounds either it appears as I look down at my midsection. And you think about the state can never run out of its own unit of account. It’s just a unit of measure. But we think of it as like “my own, my precious,” so, you know, it’s like this eternal thing that lives in infamy and they just print more and more of it. And that’s not the way it works at all.
Jeremy:
00:12:13
Right.
Steve Grumbine:
00:12:14
So fiat currency is a state’s ability to say, “this is my desire to do, and therefore I’m spending this money into society to do this thing that I want done.” Now that’s. You think about a monarchy, they had a fiat currency. You think about an anarchist, whatever. I mean you could imagine a, I don’t know if you can imagine an anarchist group doing this, but you could easily imagine eco-socialists or socialist government doing this where they say, “hey, we would like to create state-run institutions that solve these problems for society.”
And they would then go ahead and spend that money into the economy to the various entities or people or co-ops or worker groups or whatever. In this day and age it would be a corporation, it’d be a conglomerate, it’d be a multinational like Halliburton and Boeing and all these places that we don’t like.
But it’s ultimately the government’s currency that it maintains to provision itself. And it’s spent into existence by decree. It is not something they get from private banks. They could choose to use private banks as their agent, but that’s not how it works.
Jeremy:
00:13:24
Okay, and how does that. So I guess I’m going to tack a question onto that before I ask my other question. How does that tie into like the gold standard?
Steve Grumbine:
00:13:33
So the gold standard, when you’re an underdeveloped nation or you’re a nation trying to get off the ground, you cannot just issue fiat, typically. It takes a lot to get a currency accepted. It takes a lot to get people to agree to transact in a given currency.
Even in today’s world, Bitcoin and things like that, trying to imitate a gold standard. But in reality, what is Bitcoin. It is nothing but an envelope full of fiat dollars. Right? It’s not a real thing. It’s a libertarian teen angst kind of…
Justin:
00:14:00
Pipe dream.
Steve Grumbine:
00:14:01
Now I will say this, there are some good left socialists out there trying to create bread chain and stuff like that, to leverage these things, to try to create, you know, a socialist utopia using it. But it’s still nothing more than an envelope with fiat currency backing it.
But the gold standard was an attempt at creating a peg, a limiting factor to create some sort of trust that “hey, if you take this piece of paper, you can convert this piece of paper to gold at any time at this set rate that we arbitrarily decide.” And so you’ll hear libertarians, of course, the bane of all of our existence, but you’ll hear them say something along the lines of, “hey, you’re debasing the currency, you’re just printing money” right? This is the famous claim that why they want to go back to the gold standard.
But the truth of the matter is that even when we were on a gold standard, they always just “printed money.” But they never printed money. I think this is such a super important thing. When you think about gold standard logic. It was really a peg to provide people with some sort of confidence that, okay, at any given time, this piece of paper, this coupon can be redeemed, force redeemed, for whatever amount of gold. That doesn’t exist anymore. And it’s important to understand it was always arbitrary. It was always by fiat, even when it was a gold standard.
The difference is, is that all the people that have that weird kind of fetish about faith in the dollar or faith in the this or faith in the that the gold standard was there to accommodate that -ism. Right? Whatever that -ism is that they had, it accommodates that. But as you mature, as you grow, you notice no real developed country even thinks of using a gold standard, because why in the world would you want to create an external constraint on your currency that could be manipulated by a foreign actor? Now, all of a sudden, we’ve got to go plunder Britain, we got to go plunder Germany, we got to plunder South Africa or whatever to get our gold.
Justin:
00:15:56
Yeah, we do, anyway, just for lithium.
Steve Grumbine:
00:15:58
And yeah, that’s the new… It’s sad, but true.
And that’s exactly where, once you understand the power of fiat, once you understand the power that this opens up, you can start to see, okay, I can see the negative side clearly. We’ve lived that for a long time. ’71, when Richard Nixon took us off the kind of world dollar standard, which was a loose gold standard called the Bretton Woods Accord. It was not the gold standard – the gold standard ended in like ’34, I believe it was. But if you think about the Bretton Woods Accord, which was, “hey, we’ve destroyed the rest of the world, the US Is still standing. Let’s go ahead and let them back us up while we rebuild society” okay?
The dollar matriculated throughout the world and it just entered into everyone’s space, because after all, in order to rebuild your country, you need to have assets. And the only way to do that was with this strong currency. And so they leveraged the US dollar. They used it, obviously, with the oil to create the “petrodollar” which is nothing more than a numeraire. But ultimately, at the end of the day, with it not being a gold standard, you’re no longer pegging the economy to an ounce of gold.
You’re now pegging it to the full faith and credit and the productive capacity of the United States. And so every country, including China, Japan, Australia, Russia, and all these other countries, except for Europe, Europe did something crazy. They went ahead and voluntarily gave up their own monetary sovereignty to a kind of, a weird kind of pooling. Like they re-did the United States. And so all those countries gave up their ability to create currency to meet social needs.
Justin:
00:17:36
Now they’re beholden to the rich countries.
Steve Grumbine:
00:17:38
All in the name of “creating this block.” Yeah, totally screwed them up, man.
Justin:
00:17:43
Yeah, we’re going to get way off track here.
So let me bring it back to what you were talking about when I interrupted you, which is, can you just expand a little bit more on what you mean by taxes being a way to basically force people to use the dollar?
Steve Grumbine:
00:17:59
So, Virginia, I’m sure you love this one. Obviously most people say, well, it can’t possibly be socialist or communist if we’ve got money. Because Marx, thus saith the Marx, there’s no such thing as money, right? We don’t have money in communism. There’s no such thing as that. But clearly there were moments where Marx mentioned that there would be fiat currency.
He didn’t really go into it. He talked largely about commodities in most of his writings. But the tax itself has always been a coercive approach to maintaining a monopoly. Because think about it. If you’re a government and you create coupons, right, you’re not going to need to fund yourself with the coupons that you freely create. You need other people to need your coupons. And the only way to get people to monopolize, instead of using Joey Bucks, Billy Bucks, Johnny Bucks – and that was what happened before the Federal Reserve Act honestly, there were a million different competing bank kind of currencies in the United States.
And to normalize and bring about stability – at least that’s the way it was sold – they created the Federal Reserve, and that thus created the dollar as the hegemon, the US Dollar, the US Reserve note. And as a result of that, they had to find a way to make sure that it was the only currency that you could do business in. And the Constitution, no matter how flawed it is, says in Article 1, Section 8, that Congress has the power of the purse.
And it goes deeper into Article 1, Section 10, that kind of points to the fact that states can tax, but they can’t create currency.
So the tax has always been a way for the federal government, the central government, to apply whatever whims and desires and needs it has through leveraging its currency. And the only way to do that is to create a monopoly. And by doing that, the only way you can pay your tax obligation is with the dollar. You can’t pay it with an alternative currency. You can’t do some work for it and barter for it. The purpose of the tax is to make you need its currency.
And so by doing that, it also creates the – I don’t want to call it the value, but it creates the strength. The tax creates the strength and the power. The backing. It’s the new gold, right? The tax, the power of the tax.
And you know, as an example, going back to Civil War times, the Confederacy couldn’t enforce a tax. And so they literally went into hyperinflation, which was not something about printing money, it was about them not being able to enforce a tax. And so they, they lost their ability to compete with the North. And as a result of that, thank God, maybe, whatever, I think they’ve won again later.
But at that point in time, their currency betrayed them because they didn’t have the willingness. They had an ideological proclivity against taxation. So thank you, libertarians, right?
Jeremy:
00:20:56
Nice. Radical self ownership.
Justin:
00:21:00
Yeah, so, so the first thing that popped in my head was, couldn’t they do the same thing by just putting fees or taxes on foreign currency exchange and then just make it so that like you have to use the dollar without doing that?
Steve Grumbine:
00:21:15
They have fines, fees, penalties, tributes, tithes, all kinds of things that have been used. Remember the church used to use, I mean, they were the center of all things back in the, the old days. Right? And so all of those kinds of tributes were payable only in the king’s currency. And they used to stamp their face on it. They’d stamp the Pope’s face on it, they stamp somebody’s face on it. And really, at the end of the day, they would also introduce this into their conquered territories to get them as part of the gang. Here you go. You gotta, you gotta do something to earn, to pay this tax. And thus you can only pay it in shekels or rubles or pesos or whatever the unit of account is for that country. You know, that’s empire right there. That’s how empires grow. And you saw the US dollar kind of do that.
And to your point, and I think it’s a really important point, is that the US didn’t have taxation authority in the Global South. It didn’t have taxation authority in Europe. It didn’t have taxation to all these places. So what did it do?
It created things after World War II, like the IMF [International Monetary Fund] and World Bank and all these other tools of empire. And they use structural adjustments and things like that to create a pseudo tax on these countries down South that created conditions that allowed free markets/not really free markets at all. Right? But markets that the US companies could demolish and they would literally create situations where those countries were now creating goods and services simply to pay their external foreign debt at the expense of feeding their own people. I think you can look back at Thomas Sankara dropping the bomb on that one.
Justin:
00:22:53
Absolutely.
Virginia Cotts:
00:22:54
May I just say that when you are thinking about the Global South and the fact that they lack the monetary sovereignty, they also lack energy sovereignty, industrial sovereignty, and all of these things are manipulated through the hegemon, through the US use of the dollar.
Steve Grumbine:
00:23:15
That’s correct.
Jeremy:
00:23:16
Yeah, man, I could go a whole episode just on that concept.
Virginia Cotts:
00:23:19
Exactly.
Justin:
00:23:20
All right, so I guess the next question would be, what does it mean in the context of macroeconomics of the United States or the world at large by the concept of MMT?
Steve Grumbine:
00:23:31
When you think about this, let’s look at a very here and now example with China. Right? I think China is a really great case study.
And we can even look at Russia as a great case study as well of how the myth of sovereignty or the myth of US dominance was crushed.
When you saw a country like Russia have its own sovereign currency, the ruble. It’s like you cut off our dollar holdings, but that just means we can’t do dollar asset stuff. We’ve still got our own currency that we can buy anything that’s available for sale in rubles. So go away, US we don’t care about you anymore. Right?
Well, with it comes to China, China sells so much goods and services into the US and what do they get? They get US dollars for their transactions. So China’s looking at these dollars and they’re saying, “What do I need these dollars for?” You know?
And so they may decide to keep some of them in the US Federal Reserve, which is where all money lives. Never leaves – the real money never leaves the US. It’s always right there in that ledger.
It’s all these representations of that ledger that are out there that we call money that people are considering. But in reality, it’s just sitting there at the Fed. So the US has a payment system called the SWIFT system, and the SWIFT system is the dollar system.
And that dollar system gives them absolute dominion over the dollar, which is how they were able to cut off Russia. Just “We’re seizing all your dollar assets. Nothing you can do about it. You’re out of luck.”
But with China, China has amassed so many dollar assets by choosing, literally making the choice of buying bonds, earning a nominal interest from them. And at the end of the day China is sitting there saying “Do we really need dollars? You guys are putting all these tariffs on us and stuff. I think you need us more than we need you. We produce the things you need. We produce the semiconductors and we produce all the parts for your high-tech industry. We produce your laptops, your televisions, your everything. So why in the world do we need you?”
So at the end of the day, ultimately the dollar, as long as people are willing to play by this and their debts are denominated in dollars, it’ll maintain its hegemon status with those countries. China however, is saying, “Hey, you know what? I think you need us more than we need you. We’re looking at an alternative payment system. It’s not an alternative currency. We’re looking at alternative payment system through the BRICS alliance, right?”
And so they’re looking at ways it’s not so much to de-dollarize, although that’s certainly going to happen with Humpty Dumpty Trumpy here with the things he’s done here recently. But in reality, I think all of us have been crying out for an end of empire.
So there’s some weird perverse way of life, if you will, that we’ve been accustomed to, has been above most other countries for a long time and that has been in strong decline for a while now as other countries are developing peer-to-peer relationships, regional trade agreements, getting away from US dominance. And the US is self-owning right here by trying to create these tariffs that created a weird barrier to actually doing business.
But the SWIFT system is the key there. The matriculation of dollars into all these countries is key.
And so the death of the dollar is like a far-fetched way off in the future kind of arrangement. But if you think about it right now you can think of the US as a dying empire and you can watch its dollar lose its validity. Not as much, it’s not going to be an overnight thing, it’s going to take a long time, but it really is about the indebtedness, it’s about debts denominated in a currency that are not yours that you can create freely. And I think a really great example you could even look at is Weimar Republic [Germany]. Weimar Republic came out of the Treaty of Versailles [1919]. That was devastating to them. Why? Because they couldn’t print Reichmarks against the debt. That didn’t mean anything because they were only payable in these gold francs. And so that was a currency. They couldn’t create them on their own.
So when you have foreign debt denominated in a currency outside yourself, you really are a debt slave at that point, regardless of whether you create your own currency. And so in the United States right now, we have an absolute privilege of being the primary. There’s a basket of reserve currencies, but in the US we have the primary reserve currency. So that allows us to do pretty well, actually. And Trump’s killing the golden goose. I don’t know if that helps.
Jeremy:
00:28:00
Good.
Virginia Cotts:
00:28:03
But understanding MMT allows us to expose austerity itself, that it’s somehow this natural occurring, “Oh my God, we don’t have enough.” It is entirely created and produced in the service of capital. And it doesn’t have to be. We could have full employment. As Steve said, the state can make it all about servicing the people, the society, whatever is needed and can pay for that.
As long as there are workers to hire, the state can do it. Also, inflation. Understanding MMT exposes how inflation is used as a weapon against the working class.
And there’s a lot of Federal Reserve interest rate stuff in there. But in general, to even understand that I think is crucial.
Justin:
00:28:55
With that in mind, a government can only exist for as long as its people support it. So if that is true, why wouldn’t the government work harder to provide as many needs as possible? All these things that people want, right?
Free health care, better public transport, all that kind of stuff. Why don’t they do that if they can do it at essentially no penalty?
Virginia Cotts:
00:29:18
Well, that’s what most people say when they learn MMT. “Oh, let’s go and teach Congress this. Of course they want to be popular.” Somehow they don’t depend on being popular with us.
Yeah, somehow that doesn’t work. We could all be clamoring for health care, and I’m not smart enough to know where that critical mass is. Where’s that tipping point for revolution, basically, in whatever form it takes. But the more people who are educated, the quicker we’ll get there, I believe.
Steve Grumbine:
00:29:48
I would just add that, first of all, I don’t believe we even have a democracy in this country. I think it’s almost like mother’s milk to believe that we’re in a democracy we need to save and all this other nonsense.
Jeremy:
00:30:00
This is the freest country in the world.
Steve Grumbine:
00:30:04
They hate us for our freedoms. Right?
Jeremy:
00:30:05
Yeah.
Steve Grumbine:
00:30:06
And I was a Bernie guy. I’m not gonna lie, I was a heavy Berner for the first two tries. I was desperate to have something I believed. I wanted to believe. Right?
What’s wrong with wanting to believe? I think that’s a natural hope. Right? And yet at the same time, I think it’s also the very thing that is destroying progress, is hope.
Yeah, I know it sounds counterintuitive, but it’s like…
Jeremy:
00:30:27
No, you’re right.
Steve Grumbine:
00:30:28
You have hope in the wrong things. Right?
Jeremy:
00:30:30
Right. There is a scientific method to all of this. It’s called Marxism-Leninism, and actually allows us to analyze the future. Essentially the path forward.
Virginia Cotts:
00:30:39
Exactly.
Jeremy:
00:30:40
Yeah. And I think that you’re absolutely right. Like, hope is great, but if we have hope in something that is a fiction, then we’re wasting time.
And I think that a big part of the reason that we are so susceptible to that is because our education process is so shitty that by the time we get out of high school/college, and actually start to learn things, we’re already aging. Right? And so this youthful movement is non-existent because people aren’t getting the right education at the right age.
Virginia Cotts:
00:31:09
And it’s more than education. I don’t know if you guys are into [Antonio] Gramsci, but the whole [idea of] cultural hegemony. The messaging is everywhere.
The training to be unscientific, to not think dialectically, to not think historically. I’m old enough that I think historically by [default.] I grew into it.
Justin:
00:31:32
Yeah, the older I get, the more I can understand that.
Virginia Cotts:
00:31:34
Exactly. But we really are trained. I don’t know if you guys do a lot of communicating with non-socialists, but our organization is activist. And so our whole thing is communicating either with MMTers who don’t have a class analysis or with socialists who don’t understand money. And so we’re constantly struggling with this because people always go back to Washington. They always go back to taxes. “We can’t afford it.
How can we afford it? Tax the billionaires.”
Justin:
00:32:09
The French Revolution had an answer for that. That would work great.
Virginia Cotts:
00:32:12
Yeah, exactly.
Steve Grumbine:
00:32:14
Whatever you tax, you immortalize. Whatever you tax, if you believe it’s funding, you need forever. Right?
So if your idea of funding healthcare and education and great housing for all, and whatever you come up with, your favorite thing. Right?
If your answer to that is “We’ve got to tax the rich to fund these things,” you have created a scenario where the only way to have free health care is to tax the rich.
Jeremy:
00:32:38
Is to have billionaires.
Steve Grumbine:
00:32:39
Yeah, yeah, we got to have them. Because what else will we do? Right?
Jeremy:
00:32:42
Right.
Steve Grumbine:
00:32:43
And you think back to Margaret Thatcher and Ronald Reagan. I think this is so important.
Justin:
00:32:47
I try not to.
Steve Grumbine:
00:32:48
I know, but to be fair, this is an opportunity to piss on their grave for a minute.
They came up with this statement and I’m sure they weren’t the first ones to do it, but they popularized it that “There is no such thing as public money. There is only taxpayer dollars.” So if you want anything, it. There’s no way it’s coming for free.
It’s either coming from tax dollars or it’s coming from your savings. There is no such thing as public money. Well, in reality, MMT shows us that there is literally only public money. There is no taxpayer dollars.
And if you think about this, I want you to… I know that your audience probably doesn’t think in terms of taxpayer dollars, so to speak, but most people do, right?
Most people think that their “hard-earned tax dollars” went to pay for some poor trans kid to get a surgery or something icky, you know, “Oh, it’s paying for gay weddings,” or it’s paying for. Pick your poison. Oh, it’s paying for…
Jeremy:
00:33:43
Yeah, People have literally been killed over this kind of stuff.
Virginia Cotts:
00:33:45
Or for war. Or for war.
Steve Grumbine:
00:33:46
Yeah, “My tax dollars are going to Israel,” blah, blah, blah. But in reality, it’s these micro slices that they carve us into interest groups and use the taxpayer dollar myth as a means of pitting working-class A against working-class B.
And until we unearth and destroy the taxpayer dollar myth, and I mean, stay focused on it, right, you’re never going to see a unification of the working class. You will never find that kind of solidarity because they’re always going to have their own material interest to concern themselves with.
And think about this. If you believe that immigrants are taking your jobs – in the absence of a Federal Job Guarantee program, maybe they are. And maybe they’re more desperate for the low wage than you are. So maybe they take a job that you would have wanted and now all of a sudden Joe in Appalachia or Bill in whatever Rust Belt state or whatever flyover state or whatever, suddenly looking like, “Who the heck’s taking my job? Who’s eating my lunch? Who’s taking from my family?” And it’s a perfectly legitimate concern. If you’re a very… If you’re working your tail end off and you’re trying to make ends meet and the world ain’t giving it to you, you’re just not making ends meet. I get really angry when people punch down at “deplorables” in this way, because what would you do?
It’s perfectly logical, even though it’s not real.
Jeremy:
00:35:04
Right.
Steve Grumbine:
00:35:05
The government itself could fix absolutely every single one of these. And if it was in its class interest to do so, it would. But in reality, we are not run as a democracy, and we are not run by “We the people,” the working class do not have hegemonic status and control of the government. It is literally the guy that is kindling for the rich people’s fire. And so at the end of the day, when we understand we don’t live in a democracy, we live in a bourgeois democracy at best, it’s important to understand that we don’t really have any say so in any of this. And so all these great ideas, all the potential, it’s just a fairy tale in reality. Right? Because we don’t have the power to make that change within the system as it stands. We lack electoral power. We lack…
There was a study done by a Princeton group that showed that there is less than, like, like less than 1% of any negligible impact that public opinion has on any policy the government spends on. So it’s really easy to see why the fuck. Why the fuck people doubt MMT. Why they look at MMT and say, “What is this? This is just an extension of capitalism. What are you talking about? You’re just enabling capitalists to do whatever.” And it’s like, no, think about this.
Jeremy:
00:36:19
And there, there was a critique lobbied against that study, which suggested that people were quite often convinced to support the thing after the fact. So if the wealthy wanted something to be passed, and it was passed, quite often in the lead up to that thing being passed, the opinions of the general public would change in favor of that thing.
And that just tells me that the hegemonic, that sort of getting back to Gramsci, the cultural hegemon there, is dictating to the working class what they want, whether or not that is intrinsically what they want.
Justin:
00:36:58
Yeah, I mean, we can… Jeremy and I can give a personal anecdote here, because in the lead up to the first Trump presidency, when they were still waiting on the nominations for the party, our parents were like, hardcore anti-Trump. They were like, “This fucker is like an idiot and he’s malicious and he’s trying to burn everything down.”
And then a year later, two years later, you wouldn’t know it because they are like fucking flying Trump flags and shit.
Jeremy:
00:37:25
Yeah.
Virginia Cotts:
00:37:26
I watched my Democrat friends go overnight – it’s just what you’re saying, overnight, from being about a strong social safety net – not concerning themselves with the federal budget deficits – to being fiscal conservatives and thinking, “That was the good Democratic way to be. If we’re smart, if we cut deficits, if we cut the so-called national debt, then we’re good Democrats. That’s the progressive thing to do.”
Jeremy:
00:37:56
Yeah.
Virginia Cotts:
00:37:57
So it’s what you say. They convince you that what they want is what the people want.
Jeremy:
00:38:00
Is in your interest. Even though you just were saying that it wasn’t.
Virginia Cotts:
00:38:05
Yesterday it wasn’t. Today it is.
Steve Grumbine:
00:38:07
Yeah.
Intermission:
00:38:08
You are listening to Macro N Cheese, a podcast by Real Progressives. We are a 501c3 nonprofit organization. All donations are tax deductible. Please consider becoming a monthly donor on Patreon, Substack, or our website, realprogressives.org. Now back to the podcast.
Jeremy:
00:38:31
If we are looking at the fact that currency manipulation, the value of the dollar can be used to make commodities cheaper in order for the rich to buy them up or to make them more expensive for the purpose of creating value in the stock market or whatever they’re doing here, how do they manipulate the value of the dollar?
And this happens internationally as well because a lot of currencies are tied to the dollar and so the value of the dollar is manipulated up or down in order to destroy the economies of other nations. But what is the process by which that happens?
Steve Grumbine:
00:39:10
Think about this, right?
Like so China manipulates its currency, it puts an artificial peg against the US dollar and kind of keeps a permanent distance to always keep it below, to keep it so it can… Think about this. If your currency is low, that helps the people that already have the money. If your currency value is high, then it’s helping people who are already in debt to get out of debt, right? So there’s a tradeoff there because one man’s spending is another man’s income, right?
But in the US one of the things that the US does to maintain whatever position they want, you can either raise or lower taxes to create austerity conditions or a looser dollar conditions to allow people to have more access to pent up aggregate demand, whatever. But one of the things that like – and this is really interesting and we just got to experience this through the pandemic inflationary period, right?
There were signals sent to industry saying hey, we’re quote, I hate this term so I’m never going to use it except for the purpose of illustration here where they’re “printing money,” right? “And so since they’re printing money, that means it’s inflation,” because that’s the libertarian stronghold – quantity of money. Right?
But the reality is that’s not true. And I can get into that. But the signal sent to industry allowed them to price gouge like crazy.
Like there was like sometimes up to a thousand percent profit on crisis sellers inflation that wasn’t like inflation, like the big inflation which is a rise in all prices. That was specific inflation based on we expect this to happen. And whether we expect it or not, you expect it.
So when we raise prices it won’t come as a shock to you and we’re going to pocket all that money costs. Yeah, that’s exactly it.
So there’s a lot of back and forth signaling with industry and Wall Street between the Fed, the government, the Treasury and they do play a game.
But what the Federal Reserve’s tools are is they can either raise interest rates to delay purchasing power for you and I to limit our ability to make purchases on credit or whatever. But the unspoken part of that is that interest rates hikes are government-spent dollars into existence, not tax dollars.
Government has pre-budgeted that.
And so they know if they’re selling a three-year treasury bond for whatever amount and for whatever interest rate, that they know what that interest will be over the maturity of that thing. It’s already there. They already know it. That money is just there to delay a purchasing power or to create a safe investment. Now think about this.
Remember one person or one entity, in this case the government spending is another person’s income. It doesn’t just, it doesn’t just happen. Right?
So interest rate hikes are like a giveaway to the rich or because they’ve purposely muddled this, you got all of our retirement accounts that our corporations do, the 401ks, all the other investments that your grandmother and your mom and maybe even you and I have those go into that pool of interest rates and that you look at your 401k, they raised interest rates all of a sudden, “Wow, my portfolio is growing hand over fist because of the interest rate hikes.” That is new net money being infused into the economy.
But they raise and lower interest rates as another tool to go along with the signaling that they do to industry, signaling they do to Wall Street, the signaling they do to consumers. “Hey, interest rates are going up.”
What do you immediately think of as a person? “Oh man, I better start saving, I better pinch pennies, I better maybe delay getting my cavity filled or delay getting my septic tank pumped or delay getting the oil changed on my car.” So they create austerity conditions under certain circumstances and they create spending spree conditions on other. And it’s completely at the whim of these pieces, these technical pieces of the economy: the President’s words, the Treasury’s response, all the news people repeating the shit over and over again. Right?
In fact, I don’t know if you all remember when Roseanne came back on the air a few years back and it didn’t last long, became the Conners or something like that after she shot her load on that one. But she went out there and one of the things that was the pitched battle of episode one of the return was Roseanne and her sister fighting about the fact that her sister voted for Jill Stein and, “Oh, you went on that Medicare for All, blah, blah, blah.” And then Roseanne drops the one liner that I will never forget and you talk about Gramsci on steroids. She says, “The only problem with socialism is eventually you run out of other people’s money. Ha.”
Jeremy:
00:43:42
Isn’t that a Thatcher quote? I think that’s directly a Thatcher quote.
Virginia Cotts:
00:43:45
A Thatcher quote, yeah, it very well could be, but that was literally in everybody’s living room.
Jeremy:
00:43:51
Yeah.
Steve Grumbine:
00:43:52
15 million people watching this episode. They’re all excited about the return of Roseanne. And damn it if capitalism didn’t slip in the one-liner. Right?
Jeremy:
00:43:59
Yeah.
Steve Grumbine:
00:44:00
And it slipped it in a way that everybody goes, “Well, of course. Yeah, that’s right. Yeah. That’s what’s wrong with socialism. Eventually you run out of other people’s money.” Except you don’t, because MMT proves that the money comes from the fucking state.
Jeremy:
00:44:13
So, so what? Why is this important for socialists, communists to understand and to know?
Virginia Cotts:
00:44:21
Well, again, I think it’s important for all of us to understand capitalism, to understand the system we live in and that we’re ultimately going to have to dismantle and hopefully create a better one. Isn’t that what we’re all about? And MMT, it’s just a tool. It’s not going to make it happen. It’s not. But understanding it allows us to get to the heart of certain matters.
Like I said before, explaining that austerity is manufactured, understanding imperialism, which for those of us who live in the belly of the beast is crucial. We have an enormous responsibility to the rest of the world and understanding that even things like unemployment are a choice, that the federal government could do all that. We believe in central planning. And another thing, imagine a socialist nation with a strong state determining…
I’m sorry, I’m going to go off on a tangent here, but there’s talk about a job guarantee and the way they describe a Federal Job Guarantee. Most of them are fantasizing that it could happen in the US.
But the idea is that it is centrally funded and locally administered so the community decides which jobs we need. Do we need people reading to old ladies like me and holding our hands at night?
Do we need people turning empty lots into parks and playgrounds in New York City? We can do all of those things. To me, that sounds like socialism.
Federally funded, federally managed distribution of resources with local administration and feedback. Little Soviets, little Soviet councils all over the place, at least.
Jeremy:
00:46:20
Yeah, that’s fair. For the most part. Yeah.
Virginia Cotts:
00:46:23
So what do you mean for the most part?
Jeremy:
00:46:24
So socialism has to be like a representative where the workers have a dictatorship over everyone else. A dictatorship of the proletariat, as they say.
Virginia Cotts:
00:46:32
But as a mass? Or is there a vanguard? How does that work?
Jeremy:
00:46:36
Well, it depends on the nation, but typically you would have representatives of the working class. You would alienate the bourgeoisie.
You would marginalize the bureaucrats and the intelligentsia in order to like have the government shifting in the favor.
Virginia Cotts:
00:46:51
Oh, I had jumped a few steps when I was describing. I’m not arguing with you on that. I had assumed certain things. Sorry.
Jeremy:
00:47:00
No, you’re good. That’s a great point.
And on that note, so I understand why the power players are interested in maintaining the status quo as far as taxes and inflation and interest rates and all that kind of stuff. But all of the smaller countries that are beholden to these larger countries, are they not able to just be like, “No, like fuck you.”
Steve Grumbine:
00:47:24
It’s good that you asked that. Because the problem is value added production, right? Like in the US for example, if we shared intellectual property with other nations, right? Because we have spent centuries oppressing other countries. Now, each empire has done its worst at exploiting, killing off entire generations of productive capacity in each of these nations and then plundering it. Right? So a lot of these countries are intentionally behind. Not because they’re stupid, not because they have different genetic makeup, but because of freaking empire.
Jeremy:
00:47:58
Not because they are underdeveloped, but because they are overexploited. Yeah. Michael Parenti.
Steve Grumbine:
00:48:04
Bingo.
Virginia Cotts:
00:48:05
They’re not poor. We wouldn’t be interested in them if they were poor.
Steve Grumbine:
00:48:10
Well, think about Africa for example. Africa has the most able-bodied, capable worker force of age within a productive age group that can really do wonders.
But they can’t produce for themselves right now because they’re trapped in colonial arrangements, the CFA Franc, we’re talking about a lot of real hardcore issues that have been brought on by destabilizing nations around the world, really, not just Africa, but like in South America, Central America, you name it.
Even in the East. The reality is that as of right now, there’s no need for a Wall Street per se. There’s no need for the bonds to be sold the way they are today. We could limit bonds if we wanted to have them at all. We could choose not to do that. We could choose to not sell bonds.
So some of these smaller countries. One of my favorite academics is Fadhel Kaboub, and he works most exclusively on Power Shift Africa and African issues and African sovereignty. And he’s Tunisian, so he focuses a lot on his own country, where he came from. And for example, Germany has these incredibly robust plans for greening their society.
And so they import green hydrogen from Tunisia, who then in turn has to buy dirty oil to maintain their power structure because they don’t have the capability to create that for themselves. But they export it to Germany. It’s the same with a lot of Africa right now.
You figure we have vaccines that could have saved lives, with AIDS, with all kinds of things, medicines, you name it. Production, like factory knowledge and stuff. But what do we do when we’re done with those factories, those technologies?
They don’t just die. They get sent to Africa where they can be 20, 30, 50 years behind. And then people wag, “Why isn’t Africa smarter? Why isn’t Africa up to speed?” Well, we’ve done plundered everything out of there. The good news is they’ve got massive amounts of real resources, raw materials. The bad news is they don’t have productive capacity to refine them.
So they’re at the mercy of the Global North to refine those things and then sell them back, sell their own raw materials back to them with a huge markup now that it’s in its final form, right? And that’s the same thing that happened with Venezuela. Venezuela was a single-export kind of country. They have more than that, but one primary and that was crude oil. Well, if everybody else is looking for refined oil and crude is no big deal, then OPEC can drop the price of that and bankrupt Venezuela. [Yeah] Add in a few coup attempts by the US CIA and you’ve got great predatory environment for the jackals that come in there.
Jeremy:
00:50:53
It’s not new either. Like that is more or less the same thing that the British Empire did to India.
They had a bustling textile industry there, like end-user sort of product textile industry.
And the UK, Great Britain, whatever the fucking entity you want to call it took like destroyed that began to send wool and flax and other things from other parts of their empire into India where they would then create the raw materials, ship those back to the UK where they would then turn them into a finished product and then sell them at inflated prices back to India. Just again, this sort of cycle of the destruction of the domestic economy to feed the imperial need, it’s not new. It is as old as empire.
Virginia Cotts:
00:51:43
India’s a great case study for colonialism, neocolonialism, imperialism. It’s the perfect example. The Brits taught us well.
Jeremy:
00:51:52
Yeah.
Just as a quick aside, would you say then that was the main impetus behind trying to destroy Nasser in the 60s, was it? And Gaddafi, of course, in the 90s and early 2000s.
Virginia Cotts:
00:52:09
Even a country that only wants to socialize its resources, anytime something can be privatized and isn’t anytime the US corporations are denied, “It has to be stopped. That’s an enemy, that’s a threat.”
Jeremy:
00:52:28
So the last question, at least official question would be, how do you guys feel like our listeners can use this information or analysis to move beyond the kind of cage of capitalist paradigm that we exist in at the moment?
Virginia Cotts:
00:52:45
I think it can capture people’s imaginations to understand that if money isn’t the issue, if you don’t have to find money because all the services, everything we need, takes money. If you don’t have to find the money, if somebody says that should be the most boring part of the conversation, then we can design the society we want. Then we can plan for the world that we want.
So to me it’s a natural. And I think that your listeners come in contact with people all the time who do believe that we are constrained by the need to borrow from China, the need to raise taxes. I would hope… Steve used the quote from Margaret Thatcher that “There’s no such thing as public money, only taxpayer money.”
One thing that I try to do when I talk to people is even if you’re not ready to wrap your mind around MMT, stop using the term ‘taxpayer money.’ Just start calling it public money. You might not believe where it comes from, but just stop. It’s public money.
To me, that’s already a huge shift in the way of thinking.
Steve Grumbine:
00:53:59
I want to say this. I think that there are peer-reviewed papers out there that break down the way money works, right? We always are told taxes fund spending. And so people think, “Well, we need to raise taxes to pay for this thing.” Right? And it’s important to understand, like I said in the beginning, that the federal government is the currency issuer and the states are currency users. But when you talk to individuals that are really buying into the Bernie, “We’re going to bring down the oligarchy Bernie style.” Right? Which just can’t even fit fathom how that still holds water at this point. But, “He’s going to tackle the oligarchy with AOC and they’re just going to do really socialist things.” Right? It fundamentally lacks any kind of critical awareness of the system. And the average person still believes it’s their hard-earned tax dollars going to these things and thinks that “If we just get money out of politics everything will be okay and we just regulate it better, it’ll be okay.” And I always ask, “Well, how do you think that’s going to happen?” Right?
So from a socialist perspective, you know me, now that I’m growing into that space versus I was the MMT guy growing into this, as opposed to Virginia, who was the lifelong socialist communist who’s now coming into the MMT space, it’s like peanut butter and chocolate. We become Reese’s Peanut Butter Cups. And I think it’s important for people to have an awakening.
Virginia will frequently talk about we just got to educate everybody. Right? And education is part of that.
But if you think about an alcoholic that fundamentally knows that if I drink there’s a good chance I’m going to get drunk and if I get drunk there’s a good chance I’m going to get in the car and drive. So don’t drink. Right? They know it, but they still do it. They have a compulsion to continue doing that. And I think that the compulsion to believe we live in a democracy is akin to that drunken lack of sober thinking. Right? Sober thinking says there’s absolutely no proof we live in a democracy. That’s sober thinking. This bizarre kind of magical thinking is it would just get a few more progressives. So to me, MMT is the great radicalizing tool for normies. Okay?
I think socialists need to understand it because even in Star Trek land they have credits, right? So you understand a credit and debit system even in Star Trek. There’s always going to be some form of rationing. And you consider money, if you will, as a tally stick or a coupon or anything else. It doesn’t have to be the way it is today. Right? It’s still the same thing though. We’re going to use this thing to provision ourselves, to provision society and our image the way we the working class, would like society to be. But when you flip around and you think about what the value is. It used to be, to me: “This is how we’re going to get a Green New Deal. This is how we’re going to get Medicare for All. This is how we’re going to do all these fancy things.”
Now my focus has shifted from this is what we’re going to do with this great understanding to hey, listen, if all your dreams came true in your head, why aren’t they happening now? Why can’t that happen now? And then I begin to use my understanding that I’ve developed now about understanding the nature of capitalism and understanding the nature of the cultural hegemony that is going on in this country and understanding the dominated and the dominant and understanding that kind of role play and just asking yourself, “Do you really believe the oligarchy is going to let you vote them out of existence?” Ask yourself that. If you don’t believe that, then there’s nothing to Bernie and AOC. Everything they’re saying is hogwash.
And so to me, the epiphany, that awakening, that, “Hey, I’m. My name’s Steve Grumbine, I’m an alcoholic.” “Hey Steve, welcome. Keep coming back.” That’s what I think needs to happen. And I think socialists… Our Venn diagram is tiny. We don’t have the masses right now. In order to grow that mass, you gotta show people what’s in it for me, the WIFIM. Right?
And you’ve gotta show them what’s happening in today. And part of that is understanding the real material conditions of today which stem from the sovereign issuing currency and lying to you, creating austerity conditions that create a feeling of desperation and hopelessness and debt peonage that creates the worst kind of lifestyle conditions, shortening everything about your life, ruining it and ruining your ability to be with your family or to enjoy yourself or to have any kind of free time, downtime, anything. And it’s all stems from this lack of understanding of the currency and the lack of understanding of capital.
So if you take the socialist critique of capitalism and you take an MMT understanding of the way the currency works, marry them together and I think you’ve got a perfect radicalizing tool that can grow the base. And we need the base to grow. We need more and more people that are willing to do something different than cast a vote and put an “I voted” sticker on their forehead.
We need people that are willing to risk and willing to organize and willing to work together and build parallel systems and to grow and create power that can counter that, to create any potential and ultimately, if the conditions allow, there’s always the potential for revolution. We’re not anywhere near that.
My God, every time I look at the big structures of this capitalist society that we’re in, and you go to Northern Virginia and you see all the military contractors and these huge massive buildings built strictly to kill people, and then you go up to New York and you see all the massive Wall Street folks and you go to Chicago and see all the titans of finance capitalism and banking and all. And at the end of the day, you realize we are up against really strong forces. It’s like the strongest forces in the history of the world.
And so how do we defeat that? And educating is part of it, but awakening people out of that drunken stupor of electoralism I think is very important. It’s kind of a weird relationship of, “Okay, so you’re telling me we don’t live in a democracy. Well, what’s your plan? Tell me your plan. How are you going to make this happen, Steve?” And I’m like, “Well, dude, if you’re an alcoholic, the first step isn’t to fix the problem. The first step is to acknowledge you have a problem and you are an alcoholic of the democratic variety.”
You are someone that believes you can vote your way out of this capitalist hell and you cannot. And so to me, the MMT story is dependent on votes. Votes are what gets bills passed and bills legal authority from government is what pays for Social Security. Not taxpayer dollars, not FICA dollars and all this stuff. It’s literally the government’s ability to do that.
But they sit there and lie to you on camera and tell you “Our hands are tied, where’s the money going to come from? We blah, blah, blah,” and they hand ring. Everybody’s like, “yeah, very serious. It’s very serious. We just don’t have the money. What are we going to do?”
Oh my God. “The Republicans raided Social Security.” No, they didn’t. Social Security is a place where taxes go to die. There is no such thing as a second-spent tax dollar. Tax is spent once into the economy and deleted out of the economy. It comes home as a tax. There is no second time through from the government.
The government creates money when it spends and it destroys money when it taxes. And I’ll give you one final thought on that. Back in the Bill Clinton era, everybody calls it the Goldilocks economy. Well, he had a disruptive technology called the Internet jumping out through the roof, right?
And you had people that were so giddy about this, they were creating millions and millions of businesses that were literally pop up one day and gone the next. They get venture capital, they get rich and they close down. You had people willing to pay through the nose for houses buying these big monstrosities. Paper millionaires. “Cisco Stock went up 1 million percent today. Hey, I sold this at the right time. I’m rich. I’m a millionaire now.” And so there were so many people that were keeping up with the Joneses, that were living life on a real credit card. We don’t have unlimited ability to spend money into existence. We are currency users.
So during the Bill Clinton era, his surplus destroyed the economy. Because when you take out more money from the economy than you spend into it, people’s natural savings desires are wiped out. People are living on credit cards. And sure enough, as much as I hate to say anything nice about W [the 43rd POTUS], he inherited a recession from Bill Clinton.
And then the next steps as they got rid of Glass-Steagall, the little protections that were there for investment and banking separation, all of a sudden you saw the global financial crisis hit with the mortgage backed security crisis. So all these things are manufactured by capitalism. These crises are created, created by capitalism. And you and I cannot create enough money, save enough money, do enough things to avoid being caught in the grist mill of capital’s…
You ever been to like an arcade where they have that quarters game where you drop the quarter in and the thing keeps going, ‘joonk’ pushing the quarters off the thing. Right? That’s what the economy is like. You just keep waiting. The thing keeps going and then boom, knocks all the coins off.
It’s like, shit, we’re out of luck right now. So it’s going to be another.
You got to put another 50 quarters into the machine to get it to where it fills up enough to drop off the edge again, right? Or Star Wars, those AT-AT Walkers where like ‘Thunk. Thunk.’ It’s kind of like that rhythmic rise of the economy and pump and dump and then down goes the economy. The rich buy low, they sell high. We end up being the ones that bear the brunt with layoffs, extreme deleterious effects on our lives.
Virginia Cotts:
01:03:10
Death.
Steve Grumbine:
01:03:11
Yes. My handle on Twitter is called Austerity is Murder. Okay?
You think about the social murder that Engels put out there and people don’t think of that as violence. They should. Economic violence kills more people than guns and plague, you name it. But we act like that’s just you should have made better choices. So to me, being able to free people’s minds of the idea that they did this to themselves, the atomized person, the alienated person taking that belief that “You did this to yourself, you screw up, you loser, you waste.” And making it realize, “No, God damn it, it was the state. These people enabled capital to do this. It’s like, we the people stop buying that lie.
Whoever told you that is a liar.” Right? So I guess when you think about Bill Clinton doing it and you think about Obama when he had the huge, massive recession, barely spent a trillion dollars to get us out. So it created the longest non-recovery in the history of forever. That was capital driven. That wasn’t just like, “Oh well, the people voted for it.” The people wanted fucking health care and they got the ACA, right? The people didn’t want wars, but Obama was bombing them, right? What the fuck?
So after a while, when you realize that no matter whether you get a Democrat or you get a Republican, you get austerity. It comes in different forms, different part of the oligarchy wins different outcomes, etc. But it’s always we the people losing. It’s always the working class losing.
And so I think MMT shows us, gives us a blueprint for how to assess those things. And hopefully, instead of letting people think they just got to vote for a few more progressives, help them understand this is not a voting issue.
This is what capitalism does, especially as it’s purged its ability to create new things. It has to eat the public commons now for its next bite. And that’s why you see in England, they’re destroying the health service. You see all these public services being gutted and destroyed. Why? Because capital has run out of its own current pool of ideas of how it can capitalize and make money. So now we got to destroy the next level and the next level and the next level. And it’s never going to stop until we make it stop. And the only way to make it stop, sadly, isn’t going to be at the voting booth.
Jeremy:
01:05:19
I was just going to say, who needs LSD when you’ve got MMT? Right?
Virginia Cotts:
01:05:24
Thank you.
Steve Grumbine:
01:05:25
I’d say shrooms, man.
Jeremy:
01:05:26
Open that third eye. Yeah. Decalcify your pineal gland or whatever.
Steve Grumbine:
01:05:31
I’m there, brother.
Virginia Cotts:
01:05:32
The advantage to having lived so long, as I said, is I have a sense of history, whether I want to or not. But I still have people. And Steve gets into arguments all the time insisting that “The right Democrats can do the right thing.”
I saw the last good Democrats, it was 1964. That was three quarters of a century ago. The Civil Rights Act, the – I think the Environmental Protection Agency was the last progressive-ish thing that the Democrats have done. There has been no indication by their behavior since then that they have any interest in doing.
Jeremy:
01:06:12
Yeah, well, the only reason they did any of that was just to placate the working class and keep us from getting angry, right? Because we were getting angry in the 60s. People were very angry.
Virginia Cotts:
01:06:21
Exactly. But even now, we’ve had plenty of huge demonstrations since then. I think capital is like a virus that mutates. It’s very clever and learns how to resist all of those pressures. It learns how to protect itself more and more against all vaccines.
Jeremy:
01:06:40
No, that’s very true.
Justin:
01:06:42
Okay, so this actually, I think, is going to be a really cool episode. Hopefully open people’s eyes a little bit and help them understand, I guess, the conditions we’re living in and how to move forward with.
If we don’t have a materialist dialectic perspective going into our organizing, then we don’t have any hope of getting off the ground. And your statement about the fact that there aren’t enough of us working class together. I think everybody knows that intrinsically.
But I talked about it at the end of the conclusions episode of the Stalin eras, and I think that this actually ties into that really nicely.
So before we get out of here and head to the secret speech, the bonus episode for our patrons, can you guys just talk a little bit about your organization, what you do, where people can find you? If they’re interested in absorbing a lot of monetary jargon.
Virginia Cotts:
01:07:32
Our main product is this podcast, Macro N Cheese. 323 weekly episodes, every goddamn week, whether we felt like it or not. Some of them are really interesting, really important.
They cover the macroeconomics, but also all sorts of weird political niches. We just had one on the egg monopolies, the egg oligopolies. Again, to create these sort of fully well-rounded, educated people.
I am obsessed with connecting the dots, so that’s where I’m coming from.
But we have a Tuesday evening community-building gathering where we actually listen to the episode and talk about whatever the guest’s expertise is and discuss it among ourselves. What we agree with, what we disagree with, what we learn from it. Those are our main things. Sometimes we have book clubs. Sometimes we have webinars.
I would love to have you guys come and do a webinar for us. Teach. You have so much to teach our people. And we’ve been around for, I don’t know. Steve knows the history of the organization better than I do, but as he said, it started as a Bernie/MMT organization and the evidence led us to class analysis.
Jeremy:
01:08:54
That’s the dialectics in motion.
Steve Grumbine:
01:08:55
Yeah. I just off the top, because Virginia came in probably six years or so into the project. We were purely a Bernie gang at that point. Right?
Virginia dropped the red bomb into RP. Right? And so this all started with me talking about, this is my journey. Right?
Cause I have an MBA, I have a Master of Business Administration, I have a Master of Science and Technology Management, and I had to unlearn all that stuff. When I started stumbling onto MMT, it was like, “Holy shit.”
And then Stephanie Kelton, who is one of the bigger names in the space, was Bernie Sanders’ economic advisor. So RP started end of 2014, beginning of 2015, right when Bernie started running for president that time. And we were there purely as MMTers.
We weren’t there as socialists or anything like that. And so being able to say “democratic socialism” even was like really spicy on the lips, you know. It was a real transformation. Look, for real people need to understand that it doesn’t happen overnight. There is a process. And the more is revealed, the more you dig, the more you yearn for knowledge, the more you will change and the more it will become a permanent path to enlightenment, if you will. I hate to say it like that, but it is like that. And I think the purpose of Real Progressives – I would love to get rid of the name.
Jeremy:
01:10:13
It’s too late.
Steve Grumbine:
01:10:14
It is not a name that we really aspire to anymore, but it is the name of the nonprofit. It is a 501(c)3. It serves our needs to teach and educate those that are not already in the fold. Right? We are not trying to preach to the choir. So I think that there is a couple things about RP that stick out. Number one, is I had to find it out on my own. A lot of this stuff, right? I had to bump my head through and I forced my way into the conversation. I’m not elite, I’m not rich. I’m nothing special other than just a guy that found this and thought it was really important. And the academics, although they didn’t really love me, they weren’t like, “Oh, this guy is really a great representation of all our thinking.”
Virginia Cotts:
01:10:56
He’s one of us.
Steve Grumbine:
01:10:58
Yeah. So I kept going through this process, and little by little, MMT became very important.
And the org tries to create new MMTers that are socialists at heart. And so even though Virginia will tell you we’re not socialists, we are by everything I put forward when I talk is in that vein. I don’t talk as “We’re going to vote our way out.” I don’t. None of that exists in our language. But because we started as a Bernie group, we have a lot of legacy people and we love them. Thank you for staying with us. But we’re moving left and we keep moving further left.
And really, I think we’re at this point now where the idea of waking people up and bringing them into the fold is super important to us. It’s become the priming not to change. Say we don’t believe we can change it in this system, right? We can change ourselves in terms of how we relate to each other and build power outside of it, but I don’t think we can really make the change we’re looking for in here. So Real Progressives as an entity is about exploration. It’s about learning together. It’s about building ideas that are outside of the norm. Consider them heterodox. And so we don’t, like, tell somebody who’s an eco-socialist, “Hey, you can’t come on here. We’re just Marxist-Leninist. Or we’re just Trotskyists or just Maoist or whatever.” We are in none of that in process. Right? The issue is less relevant to us.
Jeremy:
01:12:21
Right.
Steve Grumbine:
01:12:22
And wake people up. And we’re hoping that the collective will help educate each other and bring that kind of discipline knowledge forward.
And I think that’s the essence of the org right now, is to really, really educate and to Virginia’s eternal chagrin, create an awakening. She does not like when I use that word. I am stuck on it, though, because I keep thinking like, the alcoholic knows they can’t drink, but they still drink. So to me, the awakening is that kind of into sober thinking, right?
Crossing from hope to reality, having a real material and historical dialectical perspective and understanding how to assess situations as they arise. And just as the final point, we’re living in a time where economics might be the most important thing to wrap your head around. You’re watching DOGE rip apart all these agencies and fire your friends, your neighbors, your brothers, your sisters. People. Working class. And you’re firing them in the name of saving money. For who? The government creates it. It doesn’t need to save money. Right?
But because you believe they need your tax dollars, or you being the proverbial you, not you, the people I’m talking to you. But ‘you’, ‘we’ end up creating
the conditions where DOGE looks credible, where all these austerity cuts look credible because we believe it. And we’re here to eradicate that. We’re here to shatter that myth. And that’s how we create more socialists.
By severing the umbilical cord to the current system and providing them with an epiphany, a wakeup call that says, “Holy shit. No matter how much we know we can’t fix this, it’s time for a new one.”
Virginia Cotts:
01:13:59
And every time there’s a cut in the government, we are driven further into the arms of the credit card companies, the bankers. Also that’s the point of austerity, is to get us into that private debt.
Justin:
01:14:14
Awesome. I’m excited for the bonus episode, but that about does it for this one. Thank you so much, Virginia and Steve.
Like I said, I think this is a great episode. And to all of our listeners and Patreon subscribers, once again, if you’d like to subscribe, you can do so @patreon.com/prolespod for free.
If you have any questions, comments or episode ideas, please email us at prolespod@outlook.com. Please follow, review, like all that algorithm stuff, may the specter haunt your streets and solidarity forever.
Jeremy:
01:14:48
And now a preview of the secret speech.
Steve Grumbine:
01:14:52
But when you add a class consciousness, a class awareness to the macro, now all of a sudden, you’ve applied a value to the lens and now you can really understand what’s happening. If you think it’s your tax dollars, you have this righteous indignation, right? It’s like, hey, you’re taking this to do something I object to.
But imagine if they’re making you feel that way while simultaneously not doing that but doing even more. Like, how many bombs do we give to Israel to kill the people of Gaza, the Palestinians, right? And all of that. Every last bit of it. If you think about how many billions of dollars we sent. We didn’t send dollars to Israel. No, you know what we did? We fattened our military contractors here in the United States.
It was a goddamn job program. It wasn’t what they sell it to be. But because people think it’s their tax dollars, they fight the wrong battle.
End Credits:
01:15:46
Production, transcripts, graphics, sound engineering, extras, and show notes for Macro N Cheese are done by our volunteer team at Real Progressives, serving in solidarity with the working class since 2015. To become a donor please go to patreon.com/realprogressives, realprogressives.substack.com, or realprogressives.org.
I enjoyed this discussion immensely! Definitely, something for everyone.
Proles vs. Capitalist Assholes. Unfortunately, the assholes have control over our govt. and monetary system. Hence why in order to wrest control from the assholes, the proles must first #LearnMMT and understand the concept of #classstruggle.