Why Can't We Just Print More Money?

Is printing money reckless—or revolutionary? In this episode, we break down Modern Monetary Theory (MMT) for everyday people. Learn how banks really create money, why the U.S. government doesn’t need to tax before it spends, and how elites use outdated myths to justify austerity. Featuring insights from economist Stephanie Kelton, we explore how public money could fund universal care, jobs, and justice—without raising taxes on working people.

Keywords: modern monetary theory, MMT explained, printing money, how banks create money, Stephanie Kelton, U.S. debt myth, progressive economics, austerity vs stimulus, tax myths

Transcript

Let's start with the obvious objection to the question: Why can't we just print more money? Why can't the government, if it could control the money supply, just create enough to make sure everyone has housing, healthcare, clean water, a decent job, and so on. Now, if you've ever said something like that out loud, you probably got hit with the same answer in 100 different ways. You can't just print more money. That's going to cause inflation. That's how you get Weimar, Germany. That's socialism. That's how Venezuela collapsed. If you do that, the dollar becomes worthless. The economy crashes. We all starve. I know you've heard that. Hell, I've even said that kind of stuff a long time ago, and I believed it. It makes sense. It sounds really true. It feels like rationality. And that's the genius of the problem here. We tend to treat that one idea, that you can't just print money as a kind of economic law. It's unbreakable and without exception, like gravity or thermodynamics. And laws that are just accepted become unquestionable, something sacred, something untouchable. Welcome back to American Socrates. I'm your host, Charles M. Rupert. So this episode, I want to explore the possibility that it's not a law of nature, but a story we merely tell ourselves. And the final measure we will take of this idea is that we actually can just print money, and we do, all the time. And we have for at least the last 400 years. Banks do it. Governments do it. We just don't see it because the people who benefit from it actually don't want us to see it. Imagine you could privately control printing money. That is not a power you would like to share with anybody else, right? So once you understand how money actually works, not the myth, but the real mechanics of how money is created and destroyed, you start to see the world differently and the rules begin to change. And what's possible and impossible shifts around a bit. You start to understand why the government can't afford public housing, but always seems to be able to afford war projects. Or why inflation is a crisis when workers need higher wages, but not when billionaires hoard assets and deflate the value of the dollar. Why does scarcity always seem to fall on you, but never on the people at the top? So today, we're going to dig into that. We're going to look into money as a political technology, not a fixed substance. And we'll walk through how banks create money from loans, when what modern monetary theory actually says, and how that knowledge could change everything about how we think about taxes, debt, inflation, and justice. And we'll ask the question, well, if we can just print more money, who's been stopping us this whole time? Let's start with the basics. What is money? You might picture coins, or bills, or a pile of gold bars sitting in a vault somewhere, or maybe you think of your paycheck being deposited into your bank account, you know, numbers going up on a screen somewhere, but most of us walk around with a kind of cartoon version of money in our heads. We imagine that once upon a time, people bartered, like, I'll trade you two chickens for that bag of grain. And that money was invented to simply make bartering easier. That's the story that every grade school textbook from Adam Smith to today has been telling us. But it's also wrong. According to anthropologists like David Graber, the real history of money doesn't start with barter; it starts with debt, the relationship of trust, obligation, and record keeping. In ancient Mesopotamia, for example, thousands of years ago, long before coins, people used clay tablets to simply keep track of who owed what to whom. The temple, or palace, served as the record keeper. You could bring in wheat or livestock, and you'd get a receipt for it, and that receipt itself could end up circulating as a form of money. It wasn't gold, it wasn't shiny. It was just a promise, an IOU, a form of trust on a clay tablet. So from the very beginning, money wasn't a thing that was out there in the world. It was a social agreement, a claim, a type of relationship between people. Later, governments started minting coins, not to make money more of efficient, but actually to pay soldiers. You can't trust a soldier to repay his debt for the obvious reason that soldiers have this nasty tendency to not return from battle. Soldiers needed a type of currency that repaid the debt instantly upon exchange. It was not an IOU of any kind. And to create a demand for that currency, the government would issue coins stamped with a king's face and then demand that taxes be paid only in those coins. That would force people to accept those coins, because if you didn't pay taxes, you'd face punishment, and so the money circulated. Not because it was necessarily valuable in and of itself, but because it was legally required. In other words, there's nothing natural about money. It's a legal thing. It's a political thing. It exists because some military power declared that it has to exist. Fast forward to today. And this basic idea still holds up. You might think that the U.S. dollar is backed by gold or something real, but the dollar hasn't been backed by gold since the 1970s. It's backed by nothing except law. And still, everyone accepts it, not because it's shiny, or rare, or magical, but because you have to pay your taxes in dollars. And because we all agreed to treat it as money. And that agreement is what gives it power. But there's a trick here. Once people forget that money is just made up, the people in power get to kind of control the story. They get to act like money is actually scarce, this rare commodity we're all trying to get our hands on. Like, there's not enough of it to go around. Like, if we want to fund a hospital, we're going to have to cut food stamps or something like that. If we want to have clean water, we have to raise taxes on working-class people and not the job creators. But money's not like that. It's not water, it's not oil. It's not some limited physical thing that we could run out of. That's a design choice. Money is a tool. It's a bit of coding. And the question isn't whether there's enough money. The real question has always been, who gets to control what the money is being used for? So make this idea more concrete. If we were attacked by an alliance of foreign powers, we would spend whatever money we needed to save ourselves. We would not let ourselves die or become enslaved, because it would just raise inflation too high. So when we don't do that for, say, poor people, or certain races, or whatever, it's only because we don't think that they're worth saving. So, before we talk about printing money, or spending money, or even taxing money, we need to unlearn the myth that money is a substance, like gold, that needs to be dug up and then passed around. Our economy runs on power. Here's a fun fact: Did you know that banks literally create money? They don't just store it and move it around; they create it out of thin air. Let's say you go to a bank and take out a mortgage for your house. Let's say you're approved for a $300,000 loan. What do you think happens? You probably imagine that the bank scrapes together $300,000 from the savings of other people that they've been keeping in their vault, you know, other people's deposits. But that's not what happens at all. What really happens is the bank simply records that you owe them $300,000. That money just didn't exist until a moment before. It was conjured into being when the loan was approved. The first bankers, in fact, back in medieval Europe, were jewelers, because those were the guys who had the best safes. So if you wanted to keep your money safe, you would leave it with a jeweler who would likely charge you a small fee just to keep it in their safe. After a while, people started to realize that they could borrow money from these jewelers, since the jewelers had all this money just sitting around, not doing anything. The jewelers then began to lend out other people's money, and they would collect interest on the return. That interest became sufficient to waive the fee for deposits, and even eventually paid a small dividend to the depositors. So the depositors were happy that their money was being lent out. But banks really arrived when they realized that the people who had deposited the money never really needed it all at once, which meant that the bank could lend more than they actually took in. And so, barring a run on the bank, they would be fine. They could just make a lot of money by lending money that they didn't actually have and then keeping the interest for themselves. In other words, the bank started making money out of thin air. Let that sink in for a second. When a bank makes a loan, they're not lending out existing money. They're creating new money. This isn't conspiracy stock. This is straight from the central banks themselves, the Bank of England, the U.S. Federal Reserve, and the International Monetary Fund. They have all publicly explained this. But it almost never gets taught to people. In fact, the majority of the money supply, over 90% of it, exists only as digital entries in private bank databases. And it all originates when banks issue their loans. That's how powerful banks are. They don't just hold on to our money for us. They manufacture it in real time. And they don't do it for the public good; they do it to make themselves rich. Think about all of the debt in the world, the credit cards, the credit lines, the student loans, the business loans, the car loans, the mortgages, all of that. All of that is new money that has been injected into the economy. So why don't they fail? Why doesn't it cause inflation? Well, because over time, as people begin to repay those loans, the money that was effectively created by issuing the loan is also effectively destroyed. It's erased from the record. But in its place, there is something of actual value that was created. There's a new house, a new car, a new business, right? Something was made because of these loans. People were able to live. They were able to work. Somebody is out there living in a house, repaying a loan, and because of that, they're working as a server at your favorite restaurant, bringing you food. That's what's getting created. That's service. So our economy expands and contracts, not based on how much the government prints, but based on what banks are willing to lend it out for. And that means the health of our economy, that is, your access to money, is determined by what private banks think is profitable. Not what's good for society, not what people actually need, but what banks think will give them the biggest return on their made-up money. money. Now, if you or I tried to go out and create a bunch of money out of thin air by, say, printing $20 bills, we'd be arrested. But banks do it every day. And then they charge you interest for the privilege. We imagine the government is the one printing our money and that private enterprise is just out there doing its own business. But in reality, private banks are printing far more money than the U.S. Treasury ever does. And yet, when things go wrong, when the financial system crashes, when banks overextend themselves, and the bubble the economy, the government is there to bail them out with actual public money. It's one of those heads they win, tails we lose, kind of deals. But this deeper understanding enables us to ask, if banks have the power to create money and they're doing it based on profit, shouldn't we, the public, have the same power at least, through our governments, for the public good? Why is it normal for banks to create trillions to fuel speculation, but irresponsible for the government to create money to build schools or fix bridges, or feed children? What we're seeing here is not just bad policy, but a deliberate hiding of the truth. This is a sleight of hand. And when you pull the curtain back just a little bit and realize that we already do create money from nothing, then the only question is, who really gets to do it, and why is it just them? So if private banks can do it for profit, what can the government do? The U.S government isn't just a big household. It's the issuer of money, of the dollar. And that's where modern monetary theory comes in. Now, I want to be clear here, MT is not some French idea. It's not a Reddit conspiracy or some sort of magic utopian loophole here. It's a serious framework used by economists to explain how money actually works in countries that are allowed to issue their own currency. And once you see what they're saying, you really can't unsee it. I want to start with Stephanie Kelton. She's an economist, professor, former chief economist of the U.S. Senate Budget Committee, and the author of the book, The Deficit Myth. Kelton argues that the biggest misunderstanding in American economic life is that we believe the federal government needs to collect money through taxes before it can spend it on government services and projects. That's backwards, she argues. The government doesn't need your money to spend. The U.S. government issues dollars. It doesn't earn dollars. It simply creates them. Just like the scoreboard in a basketball game doesn't run out of points. The U.S. Treasury doesn't run out of dollars. It simply adds or subtracts, as needed. That's its job. Now, does that mean the government can spend endlessly with no consequences? Of course not. The real limit isn't money; it's actually inflation. It's what happens when too much money chases too few goods that are actually being produced. It's fine, as long as the money that is going out there, that is being created, ultimately creates new goods, new services, puts people to work so that they can labor, so on and so forth. If it does all of those things, and it returns then in the form of taxes, everything's fine. The limit on government spending isn't, How are we going to pay for it? It's do we have the resources to turn this into equipment, into materials, into people? Can we do that without causing inflation? So let's say the government wants to build public houses. Under the MMT lens, we don't ask "Where will the money come from?" We ask, "Do we have a labor force sufficient to create these new houses that we can then just pay and buy the new houses?" Do we have brick manufacturers? Do we have construction know-how? Do we have workers ready to swing a hammer? Because if we have that capacity to build, then we should just create the money. We should pay for the work. We can tax later if inflation becomes a risk. And if not, then we don't add it to the taxes at all. There's really nothing more to it than that. Here's another thing that comes out of MMT. Taxes don't fund spending. The government spends first and then taxes the money and to take it out of circulation after it's done its job. This is crucial. We've been told this lie for generations, that the government is like a household. It's like its own private company. That if it wants to spend, it needs to take in money first from taxpayers, that if we want universal healthcare or green energy or free colleges or a border wall or VA services, somebody, usually you, has got to foot the bill for all that. But MMT is going to come in and say, no, that's not actually right. Taxes serve other purposes. They create demand for national currency because you have to pay your taxes in dollars. They control inflation by removing money from the economy whenever that's necessary, and they shape behavior, like if you tax cigarettes or give deductions for certain kinds of charities. But they are not the source of government money. Let me put it another way. If you're the only person with a printing press, you really don't need to collect money from other people before you print. Like, you could just create and then manage what you've created. Now, some people hear this and they start to get nervous, right? Won't this turn us into Zimbabwe? Did Venezuela try something like this? But those situations involve other problems, collapsed productive capacity mainly. Foreign currency debt, they relied on the dollar, which they don't print. And they had a series of political crises. The U.S. controls its own currency. It has has massive productive capacity. It borrows money from other countries only in its own currency, only in dollars. We're not Venezuela. We're not the banana Republic. We're the banana printer. So the question is not, can we afford to fund public needs? The question is, do we have the political will to use the tools at our disposal to do something other than make the rich, even richer? Stephanie Kelton calls the deficit, or our national debt, a kind of scoreboard of what the government has added to the economy. A government deficit is a private sector surplus. When the government spends more than it taxes, that money goes somewhere. It goes into the pockets of private citizens. It goes into our roads. It goes into our schools or into the investment profits of a corporation, even. Think of it like this. Every cent of your income was actually somebody else's spending. So when the government spends, it adds money to the economy by making it a payday for the companies that it spends that money on. But by pretending the deficit is some kind of evil, we stop doing things that help people, just to make the books look tidy. And I bet you can guess who benefits the most from that. Yeah, the same people who own everything else. So to recap, a government that issues its own currency can never run out of money. The real limit is inflation, not how many taxes we want to pay. Government spending actually comes before taxes. And deficits are not inherently bad. They're often necessary and useful. The real question isn't then, how will we pay for things? It's, do we have real-world resources to turn made-up money into valuable products and services? So the next time you hear someone saying something like this, the government has to live within its means, you know, just like you and I do. Or we can't spend what we don't have. The national debt is out of control. Remember that such rhetoric is just based on that false assumption about how money works. It sounds responsible, and it feels like common sense, but it's not. It's a lie. And not just a mistake. They're repeating this lie designed to control you and the resources that you have available. Your family does not print dollars. You can run out of money. You have to earn it before you spend it. But none of that is true for the U.S. government. It issues the dollar. It doesn't need to collect money before it spends. It creates money by law, on command. To illustrate the difference, think about something like Major League Baseball. There are all these franchises, and they all compete. But there's also the league, which operates on a different structure, a different set of rules. Trying to win games doesn't make any sense if you're the league. Just like like maintaining a balanced budget doesn't necessarily make sense if you're the government. It definitely makes sense if you are a household or a private company, but not if you're the government. So when politicians say, We can't afford that, they're not telling you the truth. They're using a fake comparison to scare you into accepting some form of austerity. We've got to have cuts to the schools. We've got to cut housing. We've got to cut health care. Well, the rich keep getting billions and billions and billions. We don't even have to taxes the billionaires. We could just print more damned money if we needed to. Ask yourself, if the government can find money for war, for bank bailouts, for tax breaks to the rich, why is it only broke when it comes to the things that help us? The household budget myth isn't harmless. It's the story that makes poverty feel inevitable, and as inevitable, acceptable. You resign yourself to this sort of fate because you think it's fate and not a choice that somebody else made on your behalf to keep you poor. In short, then, the government is not like a household or a private business. It issues its own money, and scarcity then is a political choice. Austerity punishes the poor to protect the rich. If we can fund war, we can fund care. We just don't. So let's say you're following me so far, and you agree with all of this. Then the real question is, "If monetary theory is true, if governments that issue their own currencies can create money just to serve public needs, then why don't they really?" Why do we still hear that there's no money for housing, schools, healthcare, and all that stuff? Why does the media treat deficits like some kind of moral crisis? And why do politicians panic about spending? Only when it benefits regular people? Well, the answer is simple, because someone else benefits from that myth, and MMT threatens the people who hold that power. Let me try to explain it like this. If you're a billionaire, like, let's say you own a bank, you know, you're a corporate CEO. You like the idea that money is scarce. You like a world where the government can't afford to challenge your services or, say, award a contract to one of your competitors. Because in a world of scarcity, people become more desperate. They work for lower wages. They don't organize. They fight each other over crumbs. Money becomes more valuable relative to, let's say, who has more of it. The less people who have it, the more it ends up being worth. And so you have a lot if no one else has any. You're richer by comparison than if everybody is doing, you know, reasonably well. And more importantly, if the public ever realized that the government could just fund jobs, housing, health care, all without taking anything in the form of taxes, then suddenly, tax cuts for billionaires aren't a patriotic reward for success anymore. It just starts to look like theft. If people understood that, if people understood that inflation isn't caused by grandma getting a bigger social security check, but by a corporation jacking up prices to protect their own profits, then we'd stop blaming poor people and start blaming the powerful. And then that's dangerous. Well, to these people, MMT doesn't just explain how money works. It sort of shifts the target of our blame. It tells the public, look, buddy, you've been lied to. They told you the country was broke so that they could just keep all the power and money for themselves. This is why elite economists dismiss MM.T as fringe, even though its predictions often hold up better than mainstream models. Elite economists get their money from the owning class. This is why politicians fear it, even as they quietly use its logic during crises. For example, in 2008, when Wall Street crashed the economy, the government created trillions overnight to save the banks from themselves. No one asked, How are we going to pay for this?" And in 2020, during COVID, Congress passed the CAREs Act over $2 trillion in spending, not by raising taxes, but by simply authorizing the Treasury and the Federal Reserve to inject new money into the economy. People got direct checks. Corporations got bailouts. Unemployment insurance was expanded, all with money the government simply created. And guess what? The economy didn't collapse. The dollar didn't die. But those moments proved something more dangerous that we can act and do so fast, we can spend big and bypass austerity whenever we want to. In fact, compare cares to student loan debt. When Wall Street needed saving, there was no talk of tightening our belts. But just two years later, when activists pushed for student debt relief, a mere fraction of the cost, suddenly, the country was broke. That wasn't economics. That was politics. The tools are right here, and the limits are mostly artificial. The difference is, who is the person who's getting helped? We could help working-class kids go to college for pennies and do so without increasing taxes on anybody. We just don't. We just don't do that for people, only corporations, only billionaires. So this is a conversation the ruling class does not want us to have, because as long as you believe the country is broke, they stay rich. So if money isn't scarce, if we can create money to serve our real needs, what could we do? Well, we could guarantee a job to anyone who wants one. We could cancel medical debt. We could fund universal health care and end the fear of getting sick. We could build millions of homes and end homelessness, not someday in the future, but like right now, today, we could fully fund public schools, clean energy, food programs, childcare, all without raising taxes on working people, if we have to raise them on anybody at all. And we could do it without asking permission from the billionaires. Because the money is not the problem. The obstacle is power, and to a lesser extent, our own imagination. What MMT shows us is that we don't have to accept our manufactured scarcity. We could build an economy that serves life, not profit. But to get there, we have to stop asking, How will we pay for this and start asking, who does this system really serve? And to answer the question, why can't we just print more money? Well, the truth is, is we already do. The question has never been, can we, but who gets to, and what does it ultimately get used for? We've been taught that money is scarce, that deficits are dangerous, and that public spending must be paid for with sacrifice, but that story only serves the powerful, and it keeps the rest of us small and poor and insecure. Modern monetary theory doesn't promise utopia, but it gives us something that we haven't had in a long time, an honest understanding of the tools at our disposal. And once we understand them, we can demand something better, not just survival, but dignity, justice, and respect. Thanks for tuning in to American Socrates. If today's episode of philosophy got you thinking in new ways, make sure to subscribe so you'll never miss an episode. New full episodes drop every Wednesday. If you enjoyed the show, leave a review. It helps others find us, and it means a lot. And if you know someone who could use a little more practical wisdom in their life, share this episode with them. Want more? Visit AmericanSocrates.buzzsprout.com for show notes, resources, and exclusive content. You can also follow me on Facebook, Blue Sky, or TikTok to keep the conversation going. Until next time, keep questioning everything.