Uploaded November 2016 | Updated September 2026, 3 weeks ago
Professor Stephanie Kelton (UMKC and economic adviser to Bernie Sanders and the Senate Budget Committee) explains the difference between the United States monetary system and the EU monetary system. The US government issues its own currency, has a floating exchange rate, and has no debt in foreign currencies. This makes it "monetarily sovereign," which basically means that the US cannot go bankrupt, and there is no financial constraint on its spending (only real resource constraints).
But the EU nations are not. They have all essentially adopted a foreign currency, that they do not issue. This means they can run out of Euros, forcing them into bankruptcy. For this reason and several others, the EU has a recessionary-bias built right into the currency. Proposals to fix this include either forming some sort of fiscal union that can spend the currency into existence (rather than just buying bonds like the European Central Bank can do), or dissolving the Euro and letting the nations go back to their own currencies.
Watch the whole interview here: youtube.com/watch?v=z1F4RuX2SUc
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Professor Stephanie Kelton (UMKC and economic adviser to Bernie Sanders and the Senate Budget Committee) explains the difference between the United States monetary system and the EU monetary system. The US government issues its own currency, has a floating exchange rate, and has no debt in foreign currencies. This makes it "monetarily sovereign," which basically means that the US cannot go bankrupt, and there is no financial constraint on its spending (only real resource constraints).
But the EU nations are not. They have all essentially adopted a foreign currency, that they do not issue. This means they can run out of Euros, forcing them into bankruptcy. For this reason and several others, the EU has a recessionary-bias built right into the currency. Proposals to fix this include either forming some sort of fiscal union that can spend the currency into existence (rather than just buying bonds like the European Central Bank can do), or dissolving the Euro and letting the nations go back to their own currencies.
Watch the whole interview here: youtube.com/watch?v=z1F4RuX2SUc
Follow Deficit Owls on Facebook and Twitter:
facebook.com/DeficitOwls
twitter.com/DeficitOwls
