The Dan Bongino Show - The Bongino Brief - Feb 12, 2022

Episode Date: February 12, 2022

Dan discusses modern monetary theory and what it really is. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Metro Links and Cross Links are reminding everyone to be careful as Eglinton Crosstown LRT train testing is in progress. Please be alert as trains can pass at any time on the tracks. Remember to follow all traffic signals, be careful along our tracks, and only make left turns where it's safe to do so. Be alert, be aware, and stay safe. Dan Bongino. Welcome to the Bongino Brief. I'm Dan Bongino. I had warned you a long time ago

about the perils of modern monetary theory. What is it? Modern monetary theory is a fancy buzz term on the left for pseudo-intellectuals who want to sound smart. Here's what modern monetary theory really is if we need something the government should just print the money to get it that's it that's what it is you could go through again the euphemisms games and all the fancy word dances and the verbal judo the hard reality is this woman uh kelton uh miss kelton here who they

cover in this new york times has been pumping this modern monetary theory for a long time essentially again it's just printing money to buy stuff okay i had warned you i'd said listen this thing is a disaster it's going to lead to inflation joe you heard it gee you heard it we said it on the show a million times you're not wasting your time here well now the new york times realizing that this lady uh kelton stephanieton or something, that this lady is a disaster and that her modern monetary theory is leading to massive inflation, of course, feels the need. The New York Times to do what the New York Times always does and try to run cover for. So they put out this article. It's getting a lot of attention.

Is this what winning looks like? It's just so just hold on a second i want you to follow this don't get lost in the terms like in the wanker modern monetary theory i don't want to hear about that this is all about printing money and what happens when it happens okay me a thousand other people on both sides of the aisle but more prominent than me in the economic space, warned this woman, you can't just print money. That doesn't make sense. No, no, no, we can do it.

It's A-OK. The thing falls on its face in tragic fashion as inflation explodes, and the New York Times runs a cover piece trying to make this woman feel good with a headline called, Is This What Winning Looks Like? You mean a headline called, is this what winning looks like? You mean like losing? Because that's what it looks like to me.

Here, listen, this is from the piece. When Ms. Kelton appeared in a Bloomberg podcast episode entitled, How Modern Monetary Theory Won the Fiscal Policy Debate in early 2021, inflation had bounced back to around 2%. But by a chilly january afternoon as ducks flew over the frosty estuary outside miss kelton's house near stony brook university where she teaches inflation had rocketed up to seven percent the government's debt piles exploded to 30 trillion up from 10 trillion at the start of the 2008 downturn and five trillion in the mid 90s

the 2008 downturn and five trillion in the mid nineties. Is that what winning looks like? It looks like losing to me. If you're a leftist who says racism is bad, let's segregate our schools. You know, everything's upside down. We're winning by, uh, by pushing modern monetary theory, inflation and the debt are out of control. Yeah. We call that winning.

You do. How exactly do you do that? Folks, I warned you about this stuff, that the printing of money, and I'm going to give you the best explanation I've seen in the Wall Street Journal coming up next, was going to lead to massive inflation. Now, it was not just me. It was tens of thousands, if not hundreds of thousands of other people, and at a minimum, hundreds, if not thousands of prominent economists on both sides of the aisle who said if you print a lot of money and you don't have a lot of goods more money is going to chase fewer goods liberals are like really they're like really i didn't know that of course you didn't know that because you don't pay attention and you're regressive

here's larry summers cue up that clip for me from cnn larry summers why am i playing this clip of larry summers because larry summers is a democrat larry summers is so much a democrat that larry summers was bill clinton's treasury secretary how do i know that because i actually protected larry summers in my last line of work a couple of times when larry summers as the treasury Treasury Secretary, visited Long Island, New York, and I was an agent out there. I wasn't on his detail. I was a field office agent who did the advance. He went to this, what do you call it, this golf course out there.

I forget the name of it, near Eisenhower Park, I think, in Long Island. park i think in long island and uh i remember because the uh the woman and i the woman who was showing me around that day we had uh we went out that night and had a long conversation that's the only reason i remember this whole freaking story about larry summers larry summers was clinton's treasury secretary he's warning people by the way that lady miss miss step what is it stephanie kelton goes to stony brook stony brook i went to Stony Brook for a year. I'm embarrassed this woman works there. Really, you should be too, Stony Brook. You need to fix that. Here's Larry Summers warning the left, a Democrat.

Hey, we're printing a lot of money and not building a lot of goods. That might cause us an inflation problem. You should have listened to Larry S. Check this out. Given that you were worried about this before almost anybody else, and given that now you've got all these CEOs saying it's going to go a year, maybe even past that, right? At that point, it wouldn't be transitory. How long do you think inflation is going to go up? 30 years until either the Fed takes some significant move with respect to monetary policy or until

there's some kind of accident. So just to be clear, that hit was from months ago. He warned everyone pushing this ridiculousity of a theory. This modern monetary theory that the printing of money in a in a supply constrained economy was going to cause inflation. Larry Summers has now been proven right. Miss Kelton from Stony Brook has been proven wrong. Why do I bring this up? Because this story is so indicative not only of the regression on the left

into repeating mistakes. History has already shown us our mistakes, segregation, inflation, whatever it may be. But when the left is called out on their mistakes, rather than admitting they made a mistake and moving on, they go to their identity politics playbook. You guessed it, Larry Summers, for criticizing these people, for criticizing Kelton and others, who is a woman, obviously,

is being accused of what? You guessed it, misogyny. Yes, misogyny. For the New York Times article and critiquing the New York Times article, ladies and gentlemen, you cannot make it up. This is why you never apologize to these idiots, ever. More in a minute, but first. If you're looking for a minute, but first. catalog to check out their line at home. Plus, you'll get two free decals, a list of dealers in your area, and a great newsletter. Just go to henryusa.com and click on the free catalog button

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at all but in there he offers the best explanation of how we got to where we are in this inflationary environment now. It is very simple math, folks. It's not hard. And how these modern monetary theorists miss this thing really should make you question their intelligence. I want you to listen every word of this. They say, quote, this inflation has been driven by an explosion of federal spending which was set to average 20 of gdp in 2020 and 2021 instead it doubled to 40 of gdp in a 12-month period as pandemic spending exploded the stimulus bills did more than fill the gap in aggregate demand spending surending surged as the pandemic shut down, reduced employment and production during that period by an average of 7%.

Here it is. Listen to this textbook case, folks. In this textbook case of inflation, a dollar 20 of an income began chasing 93 cents of goods and services, a process greased by expansive monetary policy. And that mismatch sent inflation to a 40-year high. Print more money, have less goods. More money, chasing fewer goods, meaning fewer goods fetches more money. Is this hard? I'm really sorry to the

sane people listening to this today on my show. I'm really not, I'm desperately trying to never waste your time, but I warned you months ago about the cancer of modern monetary theory. And even when they are proven absolutely categorically wrong, what do they do? Hey, we're wrong. We're going to move on. Nope, nope, nope, nope, nope. They say the verdict is in.

You're a misogynist for questioning Professor Kelton or whatever. Can't make this crap up, man. You can't. There's a great explanation, by the way, of what history has taught us about inflation. The 1970s in Japan, Milton Friedman has a great segment on that, where he shows an example of exactly what happened and why Japan is such a devastating example. And you'd think these serious policy people now would pay attention to stuff they won't.

Here's Friedman, Milton Friedman, who always explains things so eloquently, explaining how inflation is a delayed response. Ladies and gentlemen, when you print a lot of money like the United States government did last year and the year before, and candidly the year before that too, it takes a little while before the money makes it into the economy to cause inflation. The inflationary response is delayed. What's the problem with that? The problem with that, ladies and gentlemen, is it also takes a while to suck the money back out of the economy. Meaning no matter what you do for inflation right

now it's going to get a lot worse before it gets better you doubt me listen to friedman explain again what happened in japan check this out in 1973 japanese housewives going to market were faced with an unpleasant fact the cash in their purses seemed to be losing its value. Prices were starting to soar as the awful story of inflation began to unfold once again. The Japanese government knew what to do. What's more, they were prepared to do it. When it was all over, economists were able to record precisely what had happened. In 1971, the quantity of money started to grow more rapidly. As always happens, inflation wasn't affected for a time.

But by late 1972, it started to respond. In early 73, the government reacted. It started to cut monetary growth. But inflation continued to soar for a time. The delayed reaction made 1973 a very tough year of recession. Inflation tumbled only when the government demonstrated its determination to keep monetary growth in check. It took five years to squeeze inflation out of the system.

Japan had attained relative stability. Unfortunately, there's no way to avoid the difficult road the Japanese had to follow before they could have both low inflation and a healthy economy. First, they had to live through a recession until slow monetary growth had its delayed effect on inflation. Took the Japanese five years to squeeze all that money out of the economy and get some semblance of value back to their currency. Ladies and gentlemen, this is just the beginning. Nobody in human history has printed as much money as we do. What can we do? Start hedging your bets now, folks.

I'm not a financial advisor you have to talk to your financial advisor about what to do i can tell you what i do i invest in assets land gold comic books into what i'm telling you whatever i can so those assets are tied to the inflation so the inflation the inflation every number up, those assets go up too. The only way your paper money is a value of it's going down every day. And it's going to take us years to fix this. The Dan Bongino show. If you'd like to hear more, subscribe to the Dan Bongino show,

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