Asset Protection, Rent Growth & MMT

Jason starts the show with investment counselor Adam as they discuss the growth of rent and home prices across the US. Different markets have been going and different speeds and they discuss how this impacts you as an investor. Later on the show, Jason plays a clip of Garrett Sutton talking about what asset protection is and isn’t. In the last segment, he chats with in-house economist Thomas about MMT, Modern Monetary Theory.

Investor 0:00
Do your research. There are some providers out there. I mean, this is true not just in real estate, but in general and sales that just wants you to get information from them. Do your research, and you’ll come to see, I think, at least for me that Jason, you, you look out for your clients, you I mean, I with my investment advisor, there were things that I was looking at initially, and there was absolutely no pressure there was okay, yeah, keep asking questions, do that research it. And not only is it better sales, because you have a competent client, but also you become more knowledgeable. So I do the due diligence, constantly investigate, ask questions, and also just look at the big picture. I think about that all the time. You know that they’re going to be hiccups. I’ve already experienced some hiccups, and I haven’t been investing that long. But overall, even with those hiccups, it’s still profitable.

Announcer 0:45
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:36
Welcome to Episode 1268 1268. Thank you for joining me today. And I’ve got Adam here with me. We’ve got a big show for you with a few things going on. Adam, welcome back. Good to be back. Thanks for having me. I also want to welcome our listeners from our top countries. We we went from a bottom up with our smallest number of listeners. While back What do we have listed In 186 countries now I think right so it was a whole lot it’s a lot It was more than we thought we only thought we had 165 so we were very excited and want to welcome everybody from around the world but the us is our biggest listener market. Canada number two, the UK number three Australia for Germany five South Africa six the UAE we took a venture Alliance mastermind trip to the UAE that is number seven, Sweden number eight, Japan number nine and Mexico 10. So that’s our top 10 markets right there. I think I got them all. We should do it backwards like David Letterman go top 10 and go up right.

Adam 2:39
I guess we pretty big jumps between number two and number one though.

Jason Hartman 2:42
That is true. Fair enough. Fair enough. It is Yeah, mostly us. But our lowest ratings are in Madagascar. Folks, listeners in Madagascar. Please tell your friends about the show. So they will come and listen. Okay, we need more listeners in Madagascar. Okay. This is so cool. I just love it. You know, it’s truly an amazing time to be alive, that you can talk to the whole world. It’s really cool. You know, speaking of an amazing time to be alive, drew our client who has been on the show many, many times talking about self management. He watches a lot of YouTube. And so he kind of inspired me I’ve never been much of a YouTube consumer. And we’ve been trying to sort of develop an audience on YouTube and you know, it’s going moderately well, I guess. So anywhere in the world. Please subscribe to my YouTube channel. That’s what we really need some help with. We’re not able to retire off the income from the YouTube ads yet. So keep watching. We don’t have any ads on our YouTube channel. No ads. But yeah, if we did, I would be starving. Anyway, the point is, Drew is a big consumer of YouTube content. And so I thought, you know, there must be something to it. And I really started Benjamin watching YouTube in the last two weeks, it amazes me how much great content there is out there. And I’ll share some of my favorite YouTube channels. I like that bright side channel pretty well and business casual. Those are good. And it amazes me how talented some of these people are. They just post this content and they put a lot of effort into it. So I’m just really impressed. So hats off to the it’s a wonderful world of ideas that circulate around the world, we really get to learn from each other. It’s an amazing time to be alive. And it’s also an amazing time to see some rent growth with income properties, isn’t it? Adam?

Adam 4:41
Well, depending upon what part of the country you live in, but if you live in the southwest, or if you own property in the southwest, at least you’re looking a whole lot better now than you did last year.

Jason Hartman 4:51
That is true. That is true. And how much better is it?

Adam 4:54
Well, if you’re in Phoenix, which some of our clients aren’t bleep

Jason Hartman 5:00
Many of them I mean, we were recommending Phoenix, we’ve been in and out of that market as prices have gone up and then up too much. And then down, that is a hybrid market. You know, there’s three types linear cyclical hybrid, Phoenix is a hybrid market. And right now, it’s just too expensive. Nothing makes sense in terms of rent to value ratios. And you know, that RV ratio is something we really, really look for as a prime metric. But I think we stopped recommending Phoenix in around 2014, I want to say, because the RV ratio started getting too out of whack, but a lot of our clients are there and they’ve got stabilized properties and they’ve made a lot of money. So let’s pat ourselves on the back end. Right.

Adam 5:46
So that went up. Just a little over 7%. Tucson went up just a little under 7% and your old stomping ground Vegas, went up just under 6%, which all sounds really good in some words. Until I went on the National Association of Realtors site and looked up home prices. Yes, and that is where the kicker comes in. So the single family rents over the past time have fluctuated about right around 3% growth rate, it looks like nationally. Here’s the problem. If you look around the country, home prices, the Midwest went up 8.1%. The South went up 5.2%, the West went up 3.7% and the Northeast declined 2.3%. So if you compare those numbers to rent growth, we’re not there.

Jason Hartman 6:38
Right. So the fallacy of something like this is that the typical low information investor looking to borrow a political phrase, the low information voters that just doesn’t really understand how things work. They read an article like this and they think, oh, wow, if I want to make the most money with my rentals, I’m going to invest in Phoenix. But that would be a mistake. And by the way, Phoenix is also my old stomping ground. I lived there for six years, only lived in Las Vegas, Nevada for a year and a half, which I really miss Phoenix, I tell you that was that was one of my favorite places to live. But you can’t invest there and make any sense of it. Just too expensive. Now, it’s certainly much better than the cyclical markets, like the expensive Northeastern markets, Miami, which by the way, we’re going to talk about Miami in a moment, and that one’s really have the double whammy of bad news, in a sense. And then, you know, the West Coast of the US, these markets are totally out of reach. But an investor might think, well, Phoenix ain’t too bad. But really, it just doesn’t work. From an investment perspective, from an rent to value ratio perspective. You become more of a speculator in a market like that.

Adam 7:52
If your AR and your V are going up, but your fees going up higher. You got a problem with your ratios there. And that’s what’s happening lately. I mean, The rents just aren’t able to

Jason Hartman 8:01
keep up. Oh, I like the way you said that. So the RS rent, and the V is value to value usually outpaces the rents. And that’s why these markets become a bad deal over time. And so you don’t want to be too late to the game when that ratio is really out of whack. Because that will make your investments unsustainable. So very important. Good. I’m glad you brought this up. Anything else you want to say about this?

Adam 8:27
I don’t think so. At the moment, I think it’s just the good news is it’s continuing to go up. I mean, you that’s the good news is we get farther and farther away from the Great Recession, and we start expecting pullbacks, at least we’re still in a phase where prices and rents are still going up. We’ve got that going for us.

Jason Hartman 8:46
Now. I was going to say something about Miami. So when I think Miami was mentioned in this study, wasn’t it?

Adam 8:53
Not in a good way? Yeah, it’s uh, I believe the term is dead last.

Jason Hartman 8:58
Yeah. It had the lowest grant. growth, the lowest, okay. And San Diego and Houston had the largest deceleration. Okay, so that’s low growth, okay? It doesn’t mean rents are going down. It just means deceleration and rents. So really out of whack markets and you know, we’ve never recommended places like San Diego and Miami, but Houston. That was great for a long time. We did lots of business in Houston over the years, but don’t have any anything great there now, so we haven’t been talking about it too much. But we do have, as you heard our special announcement on Sunday, we do have some great new construction properties in Atlanta from one of our favorite teams. We’ve talked to you many times about how the team really arguably is more important than the market. I’ve always said I’d rather have an A team of providers of local market specialist and the B market over In a market and a B team, because that team is going to make or break it, you know, Adam with all the properties you’ve purchased through our network, and of course, I’ve purchased her network. I have definitely found that to be true personally, as well as with our clients.

Adam 10:15
And I’ll also say that’s very true and this provider and the team will be at profits in paradise. Yes, you want to come and meet them yourselves before you purchase a new construction in Georgia or in they still have some in Florida as well new construction, they will be at prophets in paradise come and meet them and learn for yourself how great

Jason Hartman 10:34
their I just want to say something about that though, you said before you purchase these properties may well be gone by that time unless he is trying to buy another plot of land there. And I even offered to finance the deal for him. I said, Look, if you need money so you can build more houses there. I’ll loan it to you and I loaned money to a lot of our local market specialist that said nothing new. I’ve been doing that for many, many years, just so our clients Have more inventory. I have another company and I use my own money in that company to finance deals so that we can provide more and better inventory for our clients. So yeah, I’ve heard finance that deal just so he can buy it, but he doesn’t know if he can get the land. So, you know, I want to say this is fairly limited opportunity. And we’ll see where it goes. So, talk with your investment counselor, if you don’t have one, go to Jason Hartman, calm and reach out there. And we have a contest. Well, for we get to the contest. We’ll talk about that in a moment. Let’s talk about today’s show. What do we have coming up? I believe our first one is going to be a little person people know named Garrett Sutton. And he has, he has allowed us to use some of his clips that He has for people to learn about asset protection. And you want to talk about which one we’re gonna play. Yeah, absolutely. So Garrett was gracious to give us permission to play a lot of his paid content. He sells this stuff. But here you get a year for free. Okay, so beautiful thing friendship is it’s a beautiful thing. Thanks for being friends with us. We’re very generous to our friends and listeners and clients. So here you get it for free. You don’t have to pay $200. And we’re going to play a little clip about what asset protection is not a lot of you hear about what it is. It’s just a short clip part of Garrett’s series that he he sells, you know, to lots of people and they pay for it. We’ll be playing some more clips from his series as things go along. And of course, you’ve heard him on the show before. Look for more of those. So we’re going to play that little clip. And then we’re going to talk with our in house economist Thomas, about one of Adam’s favorite topics. Adam, what could your favorite topic

Adam 12:45
be? Well, what a topic that makes you believe that I’m a raging socialists, and that is modern monetary theory.

Jason Hartman 12:50
Yeah. mmt. You are a raging socialist, but

Adam 12:55
I still think it’s because you’re confused about what mmt is. But hey, we’ll talk about that. Another day.

Jason Hartman 12:59
Thank mmt thing when we had Mike Norman on a while back, he hung up on me. First of all. He hung up on me. I’ve only one other time had a guest hang up on me.

Adam 13:12
I worked with him at a radio station years before I met you. And him hanging up on people was not an uncommon occurrence.

Jason Hartman 13:18
Yeah, well, okay. I don’t feel that special

Adam 13:22
on me. Oh, well, but it had probably been several years since he’d hung up on somebody. So you got that going for you?

Jason Hartman 13:27
Oh, okay. Okay. Well, I’m in I’m in the more recent hang ups. Yeah, he just he just slammed the phone down on me when I started asking him questions. And he said, I’m not doing this interview. And I called him back and I kind of begged him and he did the interview. And all of you said, you really enjoyed that interview. So if you want to see you know, anything from our back catalogue, we’ve got well over 1200 episodes for you just on this show, not including all of our other shows about 5000 episodes in total. You can go to Jason hartman.com. And you can search the website and you can Look up Mike Norman, modern monetary theory or mmt is it’s called and get that there. But Thomas and I are going to talk about it today, after we hear from Garrett Sutton and let’s talk about the contest. Okay, so this is the biggest, best and most generous contest we’ve ever done. We’ve done a few over the years, and we haven’t done one in about a year or maybe it’s been a while. Oh, no, it’s been two years since meet the masters of 2018, I think was the last one we did. Well, that was the video contest. But I think we had some little giveaways and things since then. I don’t know Maybe, maybe not. Maybe Yeah, maybe they were before but I want to do more of these. Time is what it is time it is time and this one is going to be particularly generous. So why don’t we talk about the prizes first. We talked about the prizes and you have come up with some absolutely fantastic prizes. I would say some of the most expensive prizes you’ve ever given out. These are the biggest prizes. We ever done. So here they are, there are three prizes and there is potential for a big huge bonus. Okay, so that’s the way this works. It’s it. I’m really excited about this contest the empowered investor contest. The third prize is one ticket to our upcoming profits and paradise event. That’s a two day conference in Orlando. And then the second prize is two tickets to profits in paradise. And first prize. drumroll that’s gonna say drum Ah, but you know, I thought we should save the drumroll for the bonus Sir,

Adam 15:37
we got a super get a super drumroll for the bonus. There you go. Okay.

Jason Hartman 15:42
So the first prize is two tickets to profits in Paradise, upcoming event in Orlando or two day conference, and then a one year free membership to the empowered investor community. And I’m very excited about the empowered investor community. So putting it mildly Yes, yes, I know. I’m like jumping out of my shirt. I’m so excited about that. So can’t wait to talk more about it. We’re just working on the tech and the Tech has been a hassle as as technology can be. But Adam, there is a super bonus super bonus. He’s a super germinal. Hey, I didn’t know you were a talented drummer. That’s pretty cool. Okay, so the super bonus prize is if you win first prize Now remember, this is based on a blend of how awesome your video is. and awesome does not mean professionally produced although it could be. It could be we won’t cry

Adam 16:39
if you do.

Jason Hartman 16:40
Yeah, yeah, you can. You can professionally produce it if you want, but you don’t have to. It can be a homespun video, as long as the content is good. So awesomeness could mean great production value, great content blend of the two plus views. Remember, we want you to share your video and help us get the word out and the better The video the more traffic it will naturally get. So the super bonus foreign way, the biggest prize we’ve ever given out is a $3,000 allowance for our upcoming cruise a $3,000 allowance. Go to Jason Hartman calm check out the details on the cruise. You know if your videos just been awesome. And it gets over 1000 views on our YouTube channel because we’re going to post these on our channel selected videos and over 200 views on your channel. So you post it to YouTube, you get over 200 views, which should be easy. And then it gets over 1000 on our channel, and then you get a $3,000 cruise allowance. In addition to the prizes mentioned before, I do have to mention, there is no cash value to this. These are all prizes that we’re giving out for our events. It is going to be super exciting, biggest ever and you know what even if you don’t win a prize You can learn a lot by doing this. There’s huge power in committing to your goals in sharing your knowledge, talking about how you’re becoming an empowered investor and declaring it to other people. So it’s very powerful anyway. So do this for yourself. And look at the prize as the estate or the prize is, I should say, as the icing on the cake. Adam, what else should we tell them about that?

Adam 18:28
Give them a little guidance, I would tell them that first off, keep it under 10 minutes, as we said in the thing, because it’s important not to go off on too big of tangents like Jason would know about tangents. But to keep it short, and kind of to the core of it, because you don’t want to try to plan out all of the little details that are going to happen. You want your big, broad ideas here, kind of what is going to make me an empowered investor, kind of what is it that’s standing in my way that I need to learn in order to be a better investor and talk about then you look at how you’re going to Are you going to find mentors in your area? Are you going to make it a mission to read more books? Make it a mission to listen to all 1200 podcast episodes,

Jason Hartman 19:09
you know what a mission to come to all of our events

Adam 19:12
to come to all the events. So just what are the big things that are going to help you because if you start going too nitpicky, you can get lost in the weeds, but look at the big building down the road, that is your investment goal, and make that road to it.

Jason Hartman 19:27
Good point. So keep it like the big plan the big broad strokes of the plan. And remember, you could just make a five year plan video, or a 10 year plan video, like before, it could be that the five year plan, that last contest we did is really part of being an empowered investor. But this allows you to be more broad, okay, where you could talk about technology or using in your real estate investing. You could talk about another component of your business. Or how you’re dealing with your property managers, or how hopefully, you’re not dealing with property managers and you are self managing your plans to refinance your property or maybe you’ve already done refinances with such low interest rates, or how you’re going to benefit from at the last meet the Masters what we call the big boring idea, ROI, a return on amortization. So that’s the plan, make it posted to YouTube with the hashtags Jason Hartman and the hashtag empowered investor two things. We will select certain videos and upload them to our YouTube channel. And here’s the reason that’s important is because the winners will be judged on a blend of two things, the quality and content of the video and by quality I don’t mean it has to be professional and slick. You don’t have to be a great video producer for this. I just mean the quality of of your plan. Okay. Are your ideas, okay? And the content, right the quality and the content and then the number of views. But if we choose your video and post it on our channel, those views will count. And we will add the views you got and the views we got up. And we will count the two together for number of us category. Okay, so basically two things quality and content number of views. So you’ll want to share it and show off to your friends of how awesome your plan is, and they will all be very envious, and they will seek you out as a guru and come to you for advice. So that’ll be good too. And then, you know, hey, maybe you can become a guru too, right? So look forward to this. We’ll have more details as the contest unfolds, but get busy making your videos. And Adam We better get to Garrett Sutton

Adam 21:48
ready? Let’s learn what asset protection isn’t.

Garrett Sutton 21:51
Welcome to start your corporation or LLC get protected now. My name is Garrett Sutton. I’m an attorney and an author and employee you’re considering taking this important course. I’m sure you have several questions. So let’s answer the main four questions I’m sure you have. Is this the right course for me? Am I going to learn the right stuff? Am I the right instructor for you? And am I rightfully going to be bored to tears? No, but we’ll get to that. So let’s answer the first question. Is this the right course for you? I built this course for entrepreneurs, business owners, real estate investors, and those with assets to protect, as well as for those with the drive to acquire assets that will need to be protected in the future. Hopefully, you’re part of this group. Now, they don’t teach corporations or LLCs in school. Heck, they don’t even teach asset protection in law school. This is important information that you’ve got to get on your own. So I hope that this is the right course for you because it’s important information. that most people need to be able to understand. Am I going to learn the right stuff? I really hope so. I’ve based this class on a course I taught across the country over a four year period. in teaching that class, I came to understand what people did and did not understand about our legal system, and about asset protection. So this course evolved according to the needs of the students. And that’s what you’re going to get a course that will teach you what you need to know about asset protection. Am I the right instructor for you? Yes. Let me give you a little background. I tend to Colorado College for two years and then graduated from Berkeley with a degree in business administration. I went across the bay to Hastings College of the law, the University of California law school in San Francisco. I then practice law in San Francisco and Washington, DC See, but I spent all my summers as a kid up at Lake Tahoe and really liked the idea of living in the mountains. So in 1989 and moved to Reno, Nevada, and it’s just been the perfect town for me. Along the way, I became associated with Robert Kiyosaki and the rich dad advisor group. And in that series, I’ve written a number of books, including start your own Corporation, run your own Corporation, loopholes of real estate. These books are also on audio, you have to listen to my voice, but we have mall on audio, and we’ve printed a couple of them in Spanish. This one start your own corporation is available in Spanish. So I’ve written books on the topic. As I mentioned, I’ve taught the course over a period of years. So I sincerely hope that I am the right instructor for you. Now, will you rightfully be bored to tears? Well, I’ve got to be candid here. There are no entertaining cat videos in this course. I tried to be true to the material. So, as part of the material, what we’re dealing with is protecting your assets, or losing them all at once out of the blue, a concern that keeps people awake at night. So the course won’t bore you. It may motivate you are in lecture 50 we have a right now service and with your certificate of completion of this course, you’re entitled to a discount on forming a corporation or an LLC. But more importantly, this course will enlighten you as to how our legal system works, how others have protected themselves, and how you can easily do it too.

Jason Hartman 25:43
And now let’s talk with Thomas our in house economist about modern monetary theory. I want to welcome art in the house economist Thomas young back to debate something

Jason Hartman 25:58
that is well maybe not debate That might be the wrong word. But to talk about something to enlighten us on something that you’re hearing a lot of nowadays, you’re hearing a lot of this from those folks on the left side of the political aisle. Those folks who believe in socialism, those folks who I say, want something for nothing. Am I wrong? Or am I right about that? I don’t know. Let’s explore it. We’re talking about em. MT. A lot of you really, really gave me some great feedback on my show. The first show I did about that. I don’t know what was that about a year ago with Mike Norman, talking about modern monetary theory mmt Thomas, this kind of seems like you know, you can get something for nothing to me, what is mmt and, and can you get something for nothing? Or is that even what the whole theory is, in essence promoting

Garrett Sutton 26:59
so nmt supporters, they’ll say, Well, people that don’t like mmt, they kind of think we don’t know what we’re talking about or we don’t. You know, we think we can just print money and nothing will happen. It’s okay to print money. You know, I think the theory has some ground in actual practice in the, you know, the developer of mmt Warren Mosler. He’s a financial theorist. And back in the 90s, he thought, well, is Italy going to default on its debt? Would it actually default? And he bet that Italy wouldn’t default. Well, how could that work? So he bet against what other bond traders were betting on and he made 100 million in the process. And obviously the way Italy did not default is it came up with a bunch of money that was not tax revenue. It was basically money that came out of the air right. I think the main disagreement between mmt the supporters and empty and those That are more mainstream is that mmt supporters think that debt doesn’t matter. They kind of think that demand is what governments and central banks should be concerned about demand for their currency. The first answer is, well, where do we have lack of demand? And the answer is, well take the case in Japan. They’ve been printing a ton of money. And for a long time, and it hasn’t led to strong inflation.

Jason Hartman 28:30
Okay, so so let’s kind of set this up for just a minute, maybe let’s just back up a step. So I believe that most economists will tell you, in fact, Milton Friedman said it Well, I think he said something to the effect of inflation is everywhere and always a monetary phenomenon. Okay, I think that was Milton Friedman. I hope I’m attributing that right. And I agree with that. I think that you know, when you create more money More currency, I should say more dollars in this example, you have more dollars chasing a limited supply of goods and services. So of course the price goes up because the sellers raise the price, the suppliers raise the price. Now mmt says, Hey, you can just create more dollars without causing inflation.

Garrett Sutton 29:22
Right? Yeah. And they say that because, you know, it depends on which mmt supporter you talk to. But in general, I think mmt thinks that there’s a lack of demand,

Jason Hartman 29:32
right. And the demand is for currency,

Garrett Sutton 29:35
right? demand for government services. So, you know, AOC will go out there and say, well, we don’t have to tax for the spending priorities. We can just go out and spend the money. Okay, and then we’ll never have to pay it back. We’ll just issue more money and it will create demand where there is demand for government services. And, yeah, basically have your cake and eat it too, right? You get something for nothing.

Jason Hartman 30:04
Okay, so the government says, Okay, we’ve got to provide more services. How are we going to pay for them? Well, instead of raising taxes, we’ll just create more of our currency and do what I mean. So they create more currency. Well, usually the counter thing to that is someone has to buy a government bond, a treasury, right or no, that’s the traditional thing.

Garrett Sutton 30:27
Yeah, that’s the traditional thing. Okay. The way it is now is the Treasury Department is separate from the central bank. Yeah.

Jason Hartman 30:33
But they’re, they’re working together. They’re colluding.

Garrett Sutton 30:38
I think that’s kind of empties insight is that mmt supporters say, well, they’re not really independent. They they work closely together, they know what each other is up to, so that they they can collude. I shouldn’t say glue. I don’t know what you call it, but to me, it’s collusion where they’re working together to issue more debt to finance government expenditures.

Jason Hartman 31:01
So look at the folks on the left would love to have more government goodies or handouts, politicians would love to have more goodies to hand out because that’s how they either get elected or stay in power. So they’re all going to be happy with this idea. But it seems like any rational economist or business person is going to say, Well, hey, if you create all this money to pay for these government services, then the value of the money is going to go down. Because the way something is valued is by its rarity and its utility. Look at diamonds are rare. Sand is abundant, sand is cheap, diamonds are expensive. Okay? I mean, that’s pretty simple to me. If you create more currency, the currency becomes less valuable because it’s less rare. Is that not true? any of that?

Garrett Sutton 31:48
Obviously, that is true. It’s going to be true, or else markets would respond, I think. I think an mmt supporter would say, Well, why isn’t there inflation? Now then

Jason Hartman 32:00
well, because it’s a matter of degree. I mean, he used the example of Japan when we started. So Japan has been creating a lot of currency. and Japan has a massive debt obligation. And it’ll likely default somehow or another. So that’s a mess. But Japan has a whole host of other issues. It’s not just about the money. If they created more and more and more, eventually, the value of their currency would be meaningless. I mean, if mmt were true, why not just give everybody everything? Why not have the government do everything for us? Why not? Have the government provide free health care, free food, free transportation, free housing, free everything? You could just print money and they could just provide everything we don’t need to pay for anything at all. How about if the government just gave us all free, you know, amazon.com accounts and said we could spend a million dollars a year on Amazon They’ll just print currency to pay for it all. It’s a silly idea. I mean, just Am I missing something? Am I oversimplifying?

Garrett Sutton 33:08
No, I think the only way mmt could work in practice is if foreign governments or if any government was never honest about what they’re doing, right? If they say, oh, we’re just going to print money forever and never pay our debt back the currency markets and anyone buying the government debt would wouldn’t ever buy it. That’s the end this thing’s worthless. But they don’t ever say that. Right. Japan is always out there saying, no, we’re not printing money. were right. They mentioned raising the value added tax to pay for their additional spending. So they I think that’s part of the public relations strategy of central bankers is maybe they write the issue money, that probably a bad idea. But then with the other side of their mouth, they’ll Talk it back and saying, well, we got to fix our fiscal discipline. You know, so one hand is doing one thing the other hand is doing another. governments can do that until markets say, Hey, what’s going on here? Eventually currency markets will say, Japan, they’ve got a giant problem. We’re not we don’t we have no interest in their debt. That’s not the case yet.

Jason Hartman 34:25
Okay, well, interesting. What else do you want people to know about mmt.

Garrett Sutton 34:29
So there are really five assumptions, six, maybe that that would make mmt valid or invalid. And the third one, that unemployment as a result of government spending, you know, an empty supporter of US government spending as a way to reduce unemployment, but I don’t, you know, government spending from 2009 to 2015. It was declining. And, you know, unemployment rate kept ticking down after the recession even though government spending was declining, I didn’t really see that unemployment is a direct result of government spending. Yeah, the another one, inflation is not related to government spending and poor tax decisions generally. So obviously, that can’t be true over the long term. supporters will say, well, in the short term, it’s fine. I think the big one that you mentioned that solvency is irrelevant.

Jason Hartman 35:26
minor detail. Definitely deficits don’t really matter. Okay. You know, it is a fair question, though. I will throw this back in their court. It is a fair question to say how much is okay? Because we’re obviously testing the waters, we really don’t know. We really don’t know how much you can have in the way of deficits and debt. You know, how much national debt is okay and how much annual deficit is okay? And nobody really knows the answer to that question. Because we’re in uncharted territory, at least with a country with a, you know, reserve currency, at least right,

Garrett Sutton 36:06
I’m sure hope I don’t die before this gets resolved, but advanced and so called developed, I don’t like to call them advanced and not advanced, you know, just countries will eventually have to figure out how they’re going to deal with the giant amount of debt. And you know, I haven’t heard a good solution.

Jason Hartman 36:25
Well, that’s funny what you just said about death. Not to be morbid here. But it’s an interesting thing. I mean, one of the great reasons to live a long time and to listen to my longevity show podcast is so you can just stick around long enough to see how it all plays out.

Garrett Sutton 36:43
I really, I do want to be alive when this gets played out, you know?

Jason Hartman 36:46
Yeah, yeah. It’s any economist, they want to know what’s going to happen with all this. Yeah, very interesting. Alright, so deficits don’t matter, according to the mmt folks, and I guess that doesn’t matter either. It’s kind of you know, one leads to the other Tax and bond sales come after government spending. What does that mean?

Garrett Sutton 37:05
Yes, this is that yeah, this is the mmt I guess this is the main mmt. Inside is the government spend the money and then taxes and bond sales come after the appropriations, you know, and traditional models, the two are decided simultaneously, right, revenue is decided and then government spending comes but, you know, I think they have a point, right? government spending happens, and then they figure out what they’re going to do in terms of paying for it. Well, that’s true, but so what?

Jason Hartman 37:35
That doesn’t mean it’s okay. That’s like saying, Oh, I’m gonna go run up my credit card debts, get myself into a massive hole, and then I’ll figure it out. mean, that doesn’t mean it’s okay.

Garrett Sutton 37:47
All right. No, I agree with you.

Jason Hartman 37:49
Yeah, it a treasury auction. That just means that foreign governments won’t buy our debt. And then, you know, eventually that’ll be a mess.

Garrett Sutton 37:58
Oh, that would be a great Yeah, I can’t I can’t wait. No, I won’t be afraid

Jason Hartman 38:03
it won’t be a great day. You just want to see it happen and

Garrett Sutton 38:05
see how it plays out. Right? Yeah, there’s this famous physics professor that I forgot his name, but he was dying. And he said it was a shame that he had to die in the day of relativity. He was living at the time of Einstein. Yeah. You don’t want to die when something bigs happening?

Garrett Sutton 38:21
Yeah, well, Weinstein

Jason Hartman 38:22
and Stephen Hawking are gonna miss out on some new things that come down the pike. So, Higgs boson, right, you know, the God Particle. Yeah, there’s just a lot of stuff. Well, Thomas, thanks for coming on and talking about this and mmt folks, what do you say go to Jason Hartman comm slash ask Jason Hartman comm slash ask and tell us what you think or ask us a question. Thanks, Thomas. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and terms of service. Remember that guest opinions are their own. And if you require specific legal or tax advice or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • del.icio.us
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks