[RADIOLAB INTRO]

JAD ABUMRAD: Hey. I'm Jad Abumrad. This is Radiolab. And today ...

BECCA BRESSLER: All right, we're back in business.

JAD: All right. Producer Becca Bressler brings us a story about money.

BECCA: Yeah. So—and it actually kind of started like I feel like a lot more things are starting at the show—with a tweet. And ...

JAD: Man, that's depressing. That's a depressing development.

BECCA: [laughs] It is depressing. But basically, I saw this tweet that said, "Mint the [bleep] coin."

JAD: Mint the coin?

BECCA: The [bleep] coin.

JAD: So the coin?

BECCA: Yeah. So I saw this tweet back in March, when the economy was falling into a tailspin.

BECCA: Dad?

MARK BRESSLER: Yeah, I'm here. Hello?

BECCA: Goddammit!

BECCA: And the government was talking about the first relief bill for people who were in danger of losing their business.

BECCA: Dad, hold on. I dropped my phone.

MARK BRESSLER: Okay.

BECCA: Like my parents, who happen to run a small business in California.

MARK BRESSLER: People knew that the amount of money they allocated wasn't nearly enough, and the government was gonna run out of money. You know, I felt tremendous pressure to get on it.

BECCA: My dad told me it was really confusing. It wasn't exactly clear who you could get money from. He tried one bank, then another, then another.

MARK BRESSLER: They were so backed up that I could not get through online. It was a cluster [bleep].

BECCA: And so while all this was going on, I saw that "Mint the coin" tweet, and it took me to a proposal that would basically solve this whole thing: dump trillions of dollars into the economy to bail all these people out just by making a [bleep] coin.

JAD: [laughs] Okay.

BECCA: So I first just started by calling up one of the guys who got this idea out there.

BECCA: Rohahn?

ROHAN GREY: It's Rohan, just by the way.

BECCA: Rohan! Oh my God. I'm so sorry!

ROHAN GREY: No, no, no. It's not a problem. I don't really care.

BECCA: This is Rohan Grey. He's a law professor at Willamette University.

ROHAN GREY: I worked with Congresswoman Rashida Tlaib on developing the ABC Act to #MintTheCoin.

BECCA: And he told me the proposal was to inject $2-trillion worth of cash into the economy. And the way that they planned to finance this ...

ROHAN GREY: This would be funded through the minting and issuing of a series of trillion-dollar platinum coins.

JAD: Wow! Literally coins worth a trillion dollars?

BECCA: Yes, platinum coins worth a trillion dollars each.

JAD: Why would that fund anything?

BECCA: Well, so the argument goes that under federal law, the Treasury Secretary has the authority to direct the mint to issue platinum coins at whatever denomination they choose.

ROHAN GREY: And so the way that the mint would do this today is whether it's a dollar coin or a trillion-dollar coin, the mint sells coins to the Federal Reserve. The Fed puts that amount in the mint's account, and then the Treasury has that available to spend as part of regular budget operations.

JAD: And what would that do? Would that just, like, suddenly make $2 trillion appear?

BECCA: Well, according to Rohan ...

ROHAN GREY: I mean, that's exactly right.

JAD: You're telling me that money just Harry Potters itself into existence the moment they print a coin? How the hell does that work? And wouldn't that just make our money worth less?

BECCA: So these were the exact questions that I was left with. And it turns out ...

STEPHANIE KELTON: You know, once you see it, you know, you don't want to go back to the old way of thinking and talking about these things.

BECCA: As I set out to get some of these answers, talking to folks like economist Stephanie Kelton here ...

STEPHANIE KELTON: Because you realize so much more is possible.

BECCA: ... it became pretty clear that the only thing I thought I knew about money was wrong.

JAD: [laughs] The one thing.

BECCA: The one thing. [laughs]

JAD: Okay, so where do we start?

JACOB GOLDSTEIN: Hold on. I'm tangled in my headphones.

BECCA: We're gonna start with this guy.

JACOB GOLDSTEIN: I really—I really am discouraged by the fact that I feel like I'm getting worse at recording from home. Like, I ...

BECCA: This is Jacob Goldstein.

JACOB GOLDSTEIN: Co-host of Planet Money, and I'm also the author of a book called Money: The True Story of a Made-Up Thing.

BECCA: And he says to understand where money comes from today, we've got to understand what it used to be.

JACOB GOLDSTEIN: Let's just do the gold standard. You want to do the gold standard? We can do the gold standard.

BECCA: Let's do it! Let's do the gold standard. [laughs]

JACOB GOLDSTEIN: Okay. So, you know, for a long time, gold and silver, in varying ways, were money. But in the 19th century, the world sort of locked in on the gold standard.

BECCA: Which was basically a way of saying that the dollar was really just a paper representation of a little bit of gold.

JACOB GOLDSTEIN: Exactly. Gold would quite literally turn into money. So, like, you would pull gold out of the ground, take your gold to the US Mint, and they would give you money. In the US, it was, I believe, $27.67 for one ounce of gold.

BECCA: And this was the way it was all over the Western world. Gold was really this stabilizing and standardizing common currency.

JACOB GOLDSTEIN: But what happens when you make that rule is the value of money changes according to how much gold is coming out of the ground.

BECCA: Can we just break that down for a second? Because ...

JACOB GOLDSTEIN: Yeah, that's a lot.

BECCA: No, no, it's just like one thing falls, and then the other thing rises. And I'm just like, oh my God.

JACOB GOLDSTEIN: I mean ...

BECCA: So ...

JACOB GOLDSTEIN: The simple—here's the simple version. Like, with any thing ...

BECCA: Yeah.

JACOB GOLDSTEIN: ... with any thing in the world, all else equal—and there's a lot riding on that all else equal—all else equal, the more of it there is, the less each one is worth. And that's, like, basic supply and demand, right?

BECCA: Okay. Yes.

JACOB GOLDSTEIN: The supply goes up, the price comes down, which is another way of saying in the gold standard world, the more gold there is, the more expensive things are gonna get.

BECCA: To help visualize this, Jacob says, imagine it's the 1840s, and you've just arrived out in California.

JACOB GOLDSTEIN: And $20, an ounce of gold ...

BECCA: Yeah.

JACOB GOLDSTEIN: ... buys—I don't know. What do you want to have?

BECCA: Oh God. What do I want to have? I don't know. A car. [laughs]

JACOB GOLDSTEIN: Well, there were no cars.

BECCA: That's right. [laughs]

JACOB GOLDSTEIN: A horse. How about a horse?

BECCA: A horse. That sounds great. That sounds great.

JACOB GOLDSTEIN: Okay.

BECCA: So one horse costs $20 or an ounce of gold.

JACOB GOLDSTEIN: But now let's say there's a gold rush.

BECCA: Okay.

JACOB GOLDSTEIN: Suddenly, gold is flooding in. The availability of horses is still the same, but gold is everywhere.

BECCA: What happens in that moment is inflation. Prices go up.

JACOB GOLDSTEIN: Because the more money you put into the world, the less valuable each piece of money is gonna be, the less stuff it's gonna buy. So when there's a rush, my $20 doesn't buy me a horse anymore because gold isn't that hard to come by. So now maybe I need to spend $30. Maybe I need an ounce-and-a-half of gold to buy a horse.

BECCA: And this phenomenon throughout the 19th century just had prices whipsawing.

[ARCHIVE CLIP: Yahoo!]

BECCA: More gold would be discovered.

JACOB GOLDSTEIN: And the price of everything would go up. There would be inflation.

BECCA: But then, fast forward a couple of years ...

JACOB GOLDSTEIN: Gold became scarce, and so prices fall.

BECCA: Lower prices, deflation.

JACOB GOLDSTEIN: But then ...

BECCA: Just a couple years later...

[ARCHIVE CLIP: Yahoo!]

JACOB GOLDSTEIN: There's a gold rush in the Klondike, and there's a gold rush in South Africa.

[ARCHIVE CLIP: Yahoo!]

JACOB GOLDSTEIN: And because suddenly more gold is coming out of the ground, prices start going up.

BECCA: And this up and down and up and down ...

JACOB GOLDSTEIN: That is what happened in America for decades.

BECCA: Where gold, something supposed to keep money stable, was actually doing the exact opposite.

JACOB GOLDSTEIN: Like, the whole world's price level was sort of arbitrarily determined by how much gold is coming out of the ground.

JAD: All right. Maybe this is a stupid question but, like, why not just do it a different way? Like, untie the dollar from gold and go a different direction?

BECCA: There were people advocating for that.

JACOB GOLDSTEIN: There's a whole presidential election in 1896 that's about money and what should be money.

BECCA: But it never really got anywhere, in part because, like, I don't know, it was hard to imagine an alternative. As long as the dollar was tied to gold, the thinking went, it meant something. Like, it meant a piece of metal that you could go and trade it for. And if that was no longer the case, I mean, I don't know, what does money mean at that point? I mean, to go off gold would require people to fundamentally rethink what money was. And so this up and down and up and down and up and down continued.

JACOB GOLDSTEIN: And what finally breaks this cycle is not some change in the way people think about money, but rather the Depression.

[NEWS CLIP: Stock markets buckled and crashed.]

BECCA: October, 1929 ...

JACOB GOLDSTEIN: The stock market crashes. The economy starts to collapse. People start to lose their jobs.

[NEWS CLIP: Nearly one man out of four unemployed.]

JACOB GOLDSTEIN: And there's just a massive wave of bank failures.

BECCA: And the federal government just can't seem to right the ship.

JACOB GOLDSTEIN: But there is this sort of fringe group of economists who have been arguing that the problem is the gold standard, that being on the gold standard has not given America the sort of latitude to put more money out into the world to get people spending.

BECCA: Basically, they're saying we need to get more money in people's pockets to kickstart the economy, but on the gold standard, the only way to get more money is to find more gold somewhere.

JACOB GOLDSTEIN: And Roosevelt supported the idea that the gold standard was the problem. And so after Roosevelt is elected, in this just, like, insane few months in 1933, he just completely—I don't even know what the words—he—like, the amount he does with money in, like, basically March and April of 1933, he, like, completely throws out, you know, hundreds of years of the way money works.

[ARCHIVE CLIP, Franklin Roosevelt: The United States must take firmly in its own hands the control of the gold value of our dollar.]

BECCA: Including the gold standard itself.

[ARCHIVE CLIP, Franklin Roosevelt: I am authorizing the Reconstruction Finance Corporation to buy or sell gold at prices to be determined from time to time after consultation with the Secretary of the Treasury and the President.]

JACOB GOLDSTEIN: He breaks that, you know, sacrosanct rule that $20.67 gets you an ounce of gold. And, like, that moment in the spring of 1933, like, that is the great sort of break between traditional money and money as we know it now.

BECCA: I guess then it's like, what does money mean? If it no longer means that you can redeem it for gold, is there like a crisp way of describing what it means in this, like, new world order?

JACOB GOLDSTEIN: I mean, maybe the question is, like, what is it backed by? What does it rest on, right? And clearly, it used to be the foundation of money was gold.

BECCA: Right.

JACOB GOLDSTEIN: I think now the foundation of money is the government, right? Like, whatever money you're using, the thing you are trusting in is the government that issues that money.

BECCA: And Jacob says that means that the government can kind of just print as much money as it wants—including this trillion-dollar coin. It can mint it and—poof!—all of a sudden, there's a trillion more dollars in the world.

JAD: I understand those words, but they don't—they somehow bounce right off of my head. I guess I think I'm really confused.

BECCA: [laughs] I will do my best to unconfuse you after we take a quick break.

[LISTENER: Hey, my name's Laurel. I'm calling from London. Radiolab is supported in part by the Alfred P. Sloan Foundation, enhancing public understanding of science and technology in the modern world. More information about Sloan at www.sloan.org.]

[JAD: Science reporting on Radiolab is supported in part by Science Sandbox, a Simons Foundation initiative dedicated to engaging everyone with the process of science.]

JAD: Three, two, one. No more break. Hey, I'm Jad Abumrad. This is Radiolab, here with producer Becca Bressler, who before the break told me that money isn't based on anything real, and the government can just apparently make as much as it wants. That's what you said.

BECCA: Yes. Kind of that.

JAD: So you are on the record saying that.

BECCA: [laughs] I stand behind that. But just to recap real quickly: so there's this idea that in order to save the economy from this free fall that it's been in for the past many months, the government should just print trillions of dollars of new money, like, print a couple of platinum coins, slap a trillion dollars on the face of it, and put that money into the economy. And according to a bunch of economists I've been talking to, they can just do that.

JAD: They could just—I mean, why have a coin? Why don't they just print the money? I mean, just ...

BECCA: Well, so if you want to get into it, we can get into it. But ... [laughs]

JAD: I mean, I don't know. I mean, is there a good answer for that?

BECCA: Well, it's like a legal quirk that allows them to do that with platinum. Like, you can't do it with other metals.

JAD: With platinum only?

BECCA: With platinum only. Yeah.

JAD: Really?

BECCA: Yeah. It's just this sort of weird quirk of the law basically to just, like, help the Treasury make money through collectible coins. One of the ways that the government actually makes money is selling collectible coins. So they started selling platinum collectible coins, but in order to sort of give them the flexibility to just kind of, like, make money, they can put any number on the face of the coin, and that's how much it is worth.

JAD: Wow. There's a whole, like, procedural wonkery happening.

BECCA: Oh, for sure. And it's because of this procedural wonkery that the government can just print these coins, say they're worth a trillion dollars, and throw them into the economy to keep everybody afloat.

JAD: But—but then I know—it's so interesting. On some level, I understand what you just said. But on another level, I'm like no. If the government's gonna give people money, somebody's gotta pay for that. [laughs] I don't know who. I don't know who it is, but somebody's gotta pay that money back.

BECCA: Well ...

[ARCHIVE CLIP, Rand Paul: If you're looking for more COVID bailout money, we don't have any. Congress has spent all the money.]

BECCA: That's exactly the argument some people in Congress make against these stimulus bills.

[ARCHIVE CLIP, Rand Paul: The coffers are bare.]

BECCA: They say we're out of money, and the only way to get more is to go borrow it from somewhere.

JAD: Right.

BECCA: Which adds to the national debt and freaks everybody out. And that's where these bills tend to get stuck.

JAD: Yeah.

BECCA: But ...

STEPHANIE KELTON: No, no, no, no.

BECCA: ... turns out, it doesn't have to work that way.

STEPHANIE KELTON: The federal government of the United States of America has the sole legal authority to issue our currency. It can literally never run out of money.

BECCA: This is Stephanie Kelton, an economics professor at Stony Brook University. And she says the government's not like you or me who need to earn or borrow money in order to spend it.

STEPHANIE KELTON: Congress has the power of the purse.

BECCA: Which means Uncle Sam's pen that signs the government's checks and funds any spending ...

STEPHANIE KELTON: As long as there's ink in it, can fund any damn thing they choose.

BECCA: And that's the idea behind this trillion-dollar coin. Congress can use it to just add a couple trillion dollars to the economy without adding to the national debt.

STEPHANIE KELTON: Exactly.

BECCA: And, you know, this idea sounds kind of out there, but we've sort of done something like it before—and pretty recently.

[NEWS CLIP: This is gonna be one of the watershed days.]

JACOB GOLDSTEIN: So okay.

BECCA: Jacob Goldstein again.

JACOB GOLDSTEIN: So start with the financial crisis.

[NEWS CLIP: Let's talk about the speed with which we are watching this market deteriorate.]

BECCA: So if you go back to the crash of 2008 ...

JACOB GOLDSTEIN: The economy is collapsing.

[NEWS CLIP: The losses staggering, the fear climbing.]

JACOB GOLDSTEIN: And the financial crisis is so bad, the government is like ...

BECCA: We've gotta do something.

JACOB GOLDSTEIN: Yes.

BECCA: We've gotta get money into people's hands, and we've gotta get them spending to save the economy.

JACOB GOLDSTEIN: So then, the Fed ...

BECCA: The Federal Reserve.

JACOB GOLDSTEIN: And —I'm not gonna explain any of these things. And you can explain them somewhere else. We can talk about it later.

BECCA: The Fed does a lot, but think about it like our government's bank.

JACOB GOLDSTEIN: So the Fed says, "Okay, we're gonna do this thing we've never done before." It's amazing what the Fed does. What the Fed does is ...

BECCA: The chairman of the Fed, Ben Bernanke ...

[NEWS CLIP: Aside from the President, he's the most powerful man working to save the economy.]

BECCA: ... or, like, one of his people, sends a signal to this room.

JACOB GOLDSTEIN: In downtown New York City at the New York Fed, there is a room, and it's just a normal room.

BECCA: And in this room, someone's gonna receive that message, head to the computer, open up a spreadsheet ...

JACOB GOLDSTEIN: Uh, ish.

BECCA: Maybe a little more complicated, but with just a few keystrokes ...

JACOB GOLDSTEIN: They just create trillions of dollars on their computer out of nowhere.

JAD: So in the financial crisis bailout situation, they just made up a whole bunch of new money and dumped it into the economy?

BECCA: Well, yeah. I mean, in the end, that money went to the banks and just kind of sat around. There wasn't like a coin that would give the money straight to the people. But yes, they just waved trillions of dollars into existence that hadn't been there before.

JAD: Wow, that's some—you just kind of blew my mind. I just assumed that the money lived somewhere, I don't know, in a basement or a bunker.

BECCA: [laughs] No.

JAD: Okay, okay. I get that money is no longer backed by gold. And so now it just lives on a computer, and you can create it by pressing a few buttons. But even if you can do that, even if you can just add some zeros to a spreadsheet or whatever, it still seems like that would be a major big deal. Like, it would have blowback. Like, wouldn't you arrive at the very same scenario as the gold rushes, where the more money that is out there, the less valuable that money becomes?

BETSEY STEVENSON: Okay. And the Zoom is officially recording.

BECCA: Okay, great. Okay, we did it! Thank you so much for ...

BECCA: Okay, so yes, there is a danger in doing something like this.

BETSEY STEVENSON: We don't solve our problems by printing money, because if we do that, it threatens to make our money worthless.

BECCA: This is Betsey Stevenson, an economics professor at the University of Michigan. And she told me that printing money can have a similar effect to those gold rushes.

BETSEY STEVENSON: There's more dollars, there's more money, but there's not more real stuff. And that's when we start to run the risk that it starts to push up prices.

BECCA: Okay. And this is actually something you can see play out right now in Venezuela.

BETSEY STEVENSON: Venezuela has for years now been wrestling with hyperinflation.

[NEWS CLIP: Venezuela already has the world's highest inflation, and it looks like the economic crisis there is about to get even worse.]

BECCA: What happened in Venezuela is sort of complicated, but around 2014, the price of oil collapsed, and the cost to import goods to Venezuela rose. So to keep up with that, the government started printing money.

[NEWS CLIP: Effectively, what we're doing is putting more money on the street. More notes on the street means depreciation in the currency and nothing else.]

BECCA: And as the money became worth less, they just kept printing more.

[NEWS CLIP: The Central Bank hasn't been able to even print currency fast enough to keep up with inflation. And Venezuela's government can't afford the paper for the bills.]

[ARCHIVE CLIP, Gustavo Ocando Alex: [speaking Spanish]

BECCA: This is Gustavo Ocando Alex. He's a journalist in Venezuela.

[ARCHIVE CLIP, Arcelia Romero: [speaking Spanish]

BECCA: And he spoke with this woman.

[ARCHIVE CLIP, Arcelia Romero: [speaking Spanish]

BECCA: Her name is Arcelia del Carmen Vilchez Romero. She's 70 years old, used to work as a secretary and is now retired, living off her pension.

[ARCHIVE CLIP, Arcelia Romero: [speaking Spanish]

BECCA: And back before the crisis, Arcelia lived comfortably off that pension.

[ARCHIVE CLIP, Arcelia Romero: [speaking Spanish]

BECCA: She could buy food, clothes, groceries.

[ARCHIVE CLIP, Arcelia Romero: [speaking Spanish]

BECCA: Even extra stuff, like a new bicycle for her nephew. But as Venezuela's economy spiraled out of control ...

[NEWS CLIP: Officially, Venezuela had 180 percent annual inflation last year.]

BECCA: ... Arcelia's pension money ...

[NEWS CLIP: 475 percent...]

BECCA: ... became worth less and less.

[NEWS CLIP: The annual inflation rate is now running at around 80,000 percent. They say it could reach 300,000, 400,000 percent this year.]

[ARCHIVE CLIP, Arcelia Romero: [speaking Spanish]

BECCA: And today, one month of Arcelia's pension can only buy her a single pack of toilet paper.

[ARCHIVE CLIP, Arcelia Romero: [speaking Spanish]

BECCA: And she's very afraid of getting sick. The last time she tried to purchase medicine, it cost more than one month's pension.

[ARCHIVE CLIP, Arcelia Romero: [speaking Spanish]

JAD: Wow. I don't know that I fully appreciated how bad inflation can get. And what you just described does feel like the classic answer to that question of why can't we just print more money?

BECCA: Yes. And what happened in Venezuela is different than what might happen in the United States, but this is the fear that people have when you just print more money.

JAD: Right.

BECCA: But according to Jacob Goldstein, here's the very weird thing: in the years after our government just printed all those trillions of dollars ...

JACOB GOLDSTEIN: We did not get inflation. Inflation was mysteriously, persistently low.

BECCA: And it has been ever since.

JAD: Huh, that's weird!

BECCA: It's crazy! This is what everyone thinks, right? You add more money, you know, whether there's a gold rush or the Fed puts it into a spreadsheet, the value of that money should go down, prices up, inflation.

JACOB GOLDSTEIN: Yeah.

BECCA: Well, so it's not working that way. Do you just throw the rulebook out then? Like, what do you—where do you go from there?

JACOB GOLDSTEIN: So I mean—so there are explanations, right? There are explanations. Here are some of them.

BECCA: Jacob talked me through a bunch of these reasons—it gets pretty complicated—inflation is still kind of mysterious, even to the experts. But let me just tell you about this one reason.

JAD: Okay.

BECCA: And it's actually about our expectations.

JACOB GOLDSTEIN: Yes. What people expect about inflation actually affects whether there is inflation and how much.

JAD: Wait. I'm sorry, you're saying if I think there's going to be inflation, that somehow manifests inflation into existence?

BECCA: Yes.

JACOB GOLDSTEIN: Exactly right. Exactly right.

JAD: Well, how the hell does that work?

BECCA: Okay, so let's take an example. You are saving to buy a new car.

JAD: Okay.

BECCA: And you're thinking that you're gonna buy that car, like, next year, maybe the year after. But then you start realizing that over the last couple of years, prices have been consistently going up.

JACOB GOLDSTEIN: It was six percent, and then it was seven percent.

BECCA: So then this year you're thinking ...

JACOB GOLDSTEIN: I know what it's gonna be, and you know what it's gonna be. It's gonna be eight percent because that's just the world we live in.

BECCA: And so if you think that prices are gonna go up by eight percent next year, like, you're not gonna wait to buy that car, right? You're gonna go out and you're gonna buy it now. And everyone's thinking about this, right? Like, for you, it's a car. For someone else, it's a laptop. I am going to get a few extra bottles of my beauty supplies because ...

JAD: [laughs]

BECCA: ... they are already very overpriced. And so when everyone goes out and starts buying more stuff, it puts this pressure on demand for that stuff.

JACOB GOLDSTEIN: If demand for stuff, for everything, goes up and supply stays the same, prices will go up.

BECCA: Right.

JACOB GOLDSTEIN: Right?

BECCA: Okay.

JACOB GOLDSTEIN: And it's like ...

BECCA: So expecting inflation can literally cause it. But because inflation has been absent for so long ...

JACOB GOLDSTEIN: We just live in a world where we expect that prices aren't gonna go up very much.

BECCA: And so that expectation ...

JACOB GOLDSTEIN: It effectively keeps inflation low.

BECCA: Oh my God! So it's a self-fulfilling prophecy.

JACOB GOLDSTEIN: It's—it is absolutely a self-fulfilling prophecy.

BECCA: But so what's so interesting is, like, what's happening here is trust, right? We are—we just trust that our economy is going to work.

JAD: Yeah.

BECCA: And with inflation nowhere in sight right now, I think about this trillion-dollar coin idea and I feel really conflicted. And I'm not alone. It's a really controversial idea because there are risks here.

STEPHANIE KELTON: Absolutely.

BECCA: Stephanie Kelton told me, you know, if the government just keeps pumping money into the economy, there will come a point where there's too much money floating around.

STEPHANIE KELTON: And on that point, we can have real disagreements. We can have debates. We can talk about where, you know, the limits are.

BECCA: But when printing money, like, one of the big things you have to consider is where that money's going, right? Like, if everyone has more spending money, for example then, like, yeah, the competition for your car or my, you know, shampoo is going to rise. There is gonna be more money out there, more money chasing the same amount of stuff, right?

JAD: Mm-hmm.

BECCA: But in the situation that we're in right now, you know, we're in this pandemic and businesses are shutting down. For a lot of people, this money is just filling a hole that this pandemic has created. Like, my dad, for example, he's not using it to go buy a bunch of stuff that's gonna just drive up the price of milk and eggs. Like, he's just keeping the lights on. He's using that money to pay his employees.

MARK BRESSLER: We also used it for rent.

BECCA: And like so many other businesses right now ...

MARK BRESSLER: Had we not gotten the money, I'm almost certain that we would have closed our business.

BECCA: I mean, like, my dad got so lucky. Like, he was very close to closing his business, and I just don't understand why—why you have to be lucky.

JAD: Yeah.

BECCA: Like, the government could mint these trillion-dollar coins. They could pour a lot more money into the economy than they are right now, but there's this feeling that adding so much money into the economy is against the rules or something.

JAD: Yeah.

BECCA: Like it's a machine.

JAD: Huh.

BECCA: But then, you know, just talking to Rohan, he gave me this other analogy. He said, think about it like a game, and the government is the referee.

ROHAN GREY: The goal of the referee there is to manage the points in such a way as a good game gets made.

BECCA: You know, the referee doesn't need to, like, take points from some people in order to give those points to someone else. They're just there to manage the flow of the game. And game rules can change, right? Just last season, college basketball moved the 3-point line back because it was too easy to hit that shot. And just like FDR had to get off the gold standard to save the economy after the Great Depression, like, maybe we're at another inflection point where it's time to change the game.

ROHAN GREY: It's unnerving to think of the big infinity sign in the sky because it's like bowling without bumper lanes, you know? If you have the power to create money in an infinite amount, obviously that doesn't mean you should spend an infinite amount. But if you have that power, if you functionally have an infinity sign next to your bank account, there's no external discipline. It's sort of like when you become an adult and you realize you could just eat pizza every night.

BECCA: [laughs]

ROHAN GREY: The only thing stopping you is that you have to grow up and not do that. Now that doesn't mean you can't ever eat pizza. So you have to make that decision on your own terms about what those limits are. The only discipline comes from us.

JAD: This episode was reported by Becca Bressler and produced by her and Simon Adler. Special thanks to Justine Hill Edwards and Gustavo Ocando Alex. There's so much more to this stuff than we could get into. If you want to learn more, we have links on our website. You can check out Stephanie Kelton's book The Deficit Myth, Betsey Stevenson's podcast called Think Like An Economist and, of course, Jacob Goldstein's book Money: The True Story of a Made-Up Thing. Not to mention, of course, the podcast he works on, Planet Money. They are amazing.

JAD: And before I go, I just want to say a very special thank you and goodbye to Michelle Harris, who has been our fact-checker for the past several years and is moving on. Thank you for keeping us honest, Michelle. We will really miss you. And that is it. I'm Jad Abumrad. This is Radiolab. We'll see you next week—maybe sooner.

[LISTENER: Hello. This is Hope Kamer calling from Portland, Oregon. Radiolab was created by Jad Abumrad and is edited by Soren Wheeler. Lulu Miller and Latif Nasser are our co-hosts. Dylan Keefe is our director of sound design. Suzie Lechtenberg is our executive producer. Our staff includes: Simon Adler, Jeremy Bloom, Becca Bressler, Rachael Cusick, David Gebel, Matt Kielty, Annie McEwen, Sarah Qari, Arianne Wack, Pat Walters and Molly Webster, with help from Shima Oliaee, Sarah Sandbach and Jonny Moens. Our fact-checker is Michelle Harris.]

 

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