White House economic adviser struggles with question on monetary policy

A viral video of President Joe Biden’s chief economic adviser, Jared Bernstein, showing to battle to elucidate how monetary policy works has raised new questions concerning the administration’s dealing with of the economic system.

Bernstein, who chairs the White House Council of Economic Advisers, was interviewed for a brand new movie referred to as, “Finding the Money,” a documentary made by advocates of Modern Monetary Theory (MMT) – a controversial line of economic thought. One of MMT’s central tenets is that government budget deficits do not matter for international locations just like the U.S. that borrow cash in their very own currencies. Proponents argue this implies the federal government ought to use tax and spending insurance policies to handle the economic system and tackle inflation as an alternative of the central financial institution’s monetary insurance policies.

“The U.S. government can’t go bankrupt, because we can print our own money,” Bernstein says within the video. He was then requested by the interviewer, “Like you said, they print the dollar, so why does the government even borrow?”

Bernstein’s reply appears to point uncertainty – at finest – about monetary policy.

“Again, some of this stuff gets – some of the language and concepts are just confusing. The government definitely prints money, and it definitely lends that money by selling bonds. Is that what they do? They sell bonds, yeah, they sell bonds. Right? Since they sell bonds, and people buy the bonds, and lend them the money,” Bernstein replied.

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White House Council of Economic Advisers Chair Jared Bernstein struggled with a monetary policy question in a clip posted by the staff behind a documentary touting the controversial Modern Monetary Theory. (Photo by BRENDAN SMIALOWSKI/AFP by way of Getty Images / Getty Images)

“A lot of times, at least to my ear with MMT, the language and the concepts can be kind of unnecessarily confusing but there is no question that the government prints money and then it uses that money to um, uh … I guess I’m just, I can’t really, I don’t get it, I don’t know what they’re talking about. . . . It’s like, the government clearly prints money, it does it all the time, and it clearly borrows, otherwise you wouldn’t be having this debt and deficit conversation. So I don’t think there’s anything confusing there.”

Bernstein’s jumbled response about monetary policy sparked criticism of the Biden administration’s economic insurance policies on social media. FOX Business spoke to federal funds and economic specialists who weighed in on the change.

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Bernstein was requested about why the U.S. borrows when it prints cash. (Photo by Mark Wilson/Getty Images / Getty Images)

Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), instructed FOX Business, “What you have there is a serious, credible, economist – Jared Bernstein – trying to be polite about a nonsensical economic fairytale that can’t even be called a theory. MMT is forever being reinvented by its defenders who use made-up excuses for why you don’t have to pay for anything.”

“First, both Jared and the MMT crowd are great reminders of why limited government is so important,” Norbert Michel, VP and director of the Cato Institute’s Center for Monetary and Financial Alternatives, instructed FOX Business. “Fortunately, the people in the administration (and Congress) do not actually ‘run the economy,’ they only enact policies that affect people, and the people have a chance to elect new politicians every couple of years.”

“Second, the MMT crowd, no matter what they say, pretends that the government can just print and distribute money without consequence, but history has already proven that kind of policy leads to inflation, and, depending on how the money is distributed, massive cronyism,” Michel added. “In the real world, there are always rent seekers and resource constraints.”

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Modern Monetary Theory (MMT) lies outdoors the mainstream of economic thought. Federal Reserve Chairman Jerome Powell has stated that MMT is “just wrong.” (Photo by Mandel Ngan/ AFP by way of Getty Images / Getty Images)

The White House Council of Economic Advisers didn’t instantly reply to a request for remark.

Bernstein is a longtime economic aide to President Biden, though he lacks a tutorial background in economics. He earned a bachelor’s diploma in music from the Manhattan School of Music, in addition to a grasp of social work from Hunter College and a doctorate of social work from Columbia University. 

He has taught at a number of schools, together with Columbia and New York University, and labored as an economist for the Department of Labor in the course of the Clinton administration. Bernstein has additionally labored at liberal assume tanks, together with the Economic Policy Institute and the Center on Budget and Policy Priorities.

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Bernstein labored because the chief economist and economic adviser to then-Vice President Biden from 2009 to 2011 in the course of the Obama administration. He was an advisor to the Biden-Harris Transition Team, and after President Biden’s inauguration, Bernstein was appointed to the CEA.

He was confirmed because the chair of the CEA on a 50-49 vote by the Senate in June 2023. The affirmation vote was largely alongside get together strains, with all Democrats voting in favor aside from Sen. Joe Manchin, D-W.V., who joined Republican senators in opposing Bernstein’s affirmation to the function.