By Cullen Roche

There’s a viral video going around by Tony Robbins on the national debt.  Unfortunately, he makes the dreaded error of confusing a currency issuer with a currency user.  Of course, the two can never be compared since a currency issuer has no solvency constraint meaning that they can never “run out of” currency like currency users can.  So the national debt and having to “pay it back” is never a concern.  Rather, the concern is always inflation which is a very very different phenomenon than being unable to make payments.   See the following video for more and if you’d like to review inflation and the true constraint for a currency issuer then please see the other video attached below. And if your interest is really piqued or you’re really confused you might want to spend a few hours on my paper about the monetary system which can be found here and contains much more detail.

Oh, and if you know Tony Robbins get this to him….

Video on inflation and explaining the true constraint:



Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • anon

    Some of Robbins first words in the video – “…economic problems…so dangerous”.

    What’s so dangerous is when influential people who know almost nothing about a topic stir up alarm and fear by spreading mis-information.

    Its sickening – Tony, I know you’re trying to help but please don’t lecture people on a topic you know nothing about – you’re making things much worse… In return, I promise to stick to being a finance pro and not move into motivational speaking!

  • LVG

    Now how do we get your video to be the viral one Cullen?

  • esb

    Well, since the American people are a people in search of an endless series of free lunches (and breakfasts and dinners and snacks), they should readily embrace a concept of never having to “pay it back.”

    The “currency issuing” government just does all of our borrowing for us and the obligation part of the matter just goes away since we never have to “pay it back.”

    What was that tune that my mother was fond of humming?

    Oh yes, “Life is Just a Bowl of Cherries.”

    Ain’t it a shame that its not just a bowl of (free) cherries.

  • Cullen Roche

    We are in search of an endless free lunch? We represent 25% of the entire world’s output. That’s no free lunch.

    And what would it mean to “pay back” the national debt? Who do we “pay it back” to? Almost entirely ourselves. So what would we do? Have the Fed QE all the bonds back, let them retire and have tsy stop issuing bonds and instead just spend. What would that accomplish? It would “pay off” the national debt and then you’d have millions of grandma’s, grandpa’s, pensioners, military and retired folks all complaining that they have no risk free saving accounts. What then?

  • LRM

    Your video responds to Robbins was well presented and continuously improving.
    Thanks for your effort to educate in the video medium. A nice change from the written word, for variety.

  • Sai

    i have been following MMT for a while and find their explanation to be most persuasive. However, while i can accept their take on national debt and deficit, one thing bothering me in a fundamental sense is how all this squares with the finite resources of the planet. Frederick Soddy called it the divergence between wealth and debt. here is an article on his work. whats your take on the money economy not being representative of the ecological basis responsible for production and wealth production ?

  • Anonymous

    This is the worst drivel I think I’ve every been exposed to. Don’t walk, run away from this hack.

  • rhp

    is the “hack” you are referring to Tony Robbins or CR?? If Tony Robbins, he’s not necessarily a hack, but doesn’t really understand econ, so cut him some slack except for venturing into an area he shouldn’t have. If it is CR, then I suggest you put this site on your watchlist and come back every now and then for an education over the following few weeks. Posters here are diverse, well read, intelligent, and usually thoughtful. If not interested, continue trolling to other sites more conducive to a closed mind. This site is not appropriate for kneejerk responders….



  • jjames

    weren’t those adolf hitlers words?

    the currency can still devalue.

  • Jo

    You MM(x) gibberish merchants hate the fact that you’re (rightly) ignored.

    ‘It burns us’.

  • Cullen Roche

    Quality post Jo. Thanks.

  • Cullen Roche

    Hitler? Really? If you have a rebuttal then let’s hear it. Otherwise, don’t just say totally ridiculous things….

  • GMD


    You’re wasting your time trying to educate TR. He’s jumped on the ‘national debt’ bandwagon, and he won’t be getting off until he finds the next hot topic he can pike his DVD’s and seminars about.
    Give it a few months, and he’ll be off peddling his wares elsewhere. As with all great marketers, he simply enters into the conversation that’s already happening. Robbins is a GREAT marketer, above all else.

  • Dunce Cap Aficionado

    It was just a matter of time….'s_law

  • Obsvr-1

    yes, stop issuing US Trys.

    These savors are getting screwed today with the artificially constrained interest (ZIRP) policy. Perhaps you or somebody can shed light on the Primary Dealers (PDs) and how much money they are extracting from the QE programs. PDs loan funds from the FED at .25%, buy USTrys, then sell to the FED at a higher price (aka Front Running the FED).

    Let savors/investors, mom, pop, grandma and grandpa find investments in the private sector. They can invest in less risky Corp bonds from well established healthy business, muni revenue bonds and any hypothetical future US Gov’t bonds for special issuance (Like statutory directed/targeted investment programs).

  • Brito

    Can I get a final word on whether MMists are QTMists or not? Because I’m getting conflicting answers. Your videos seem very QTMist in that inflation is ‘too much money chasing too few goods’.

  • Brito


  • Brito

    This doesn’t make sense, this economist seems to be virtually identical to modern economists apart from his advocacy of ‘full reserve’ banking, which is a complete red herring. It wont make a difference because people will just move their money into the loanable accounts, why would they want to put all their money in a glorified safety deposit box?

    Also, the banks can’t create infinite money, it’s the federal reserve that can credit the banks with infinite money, should it want to, but it doesn’t have to.

  • AWK


    You get better every time presentation-wise. Keep it up!

  • Cullen Roche

    We’re quantity theorists in that we worry about inflation when we print in excess of our productive capacity. So yes, while we’re not quantity theorists in the traditional sense, we are quantity theorists in an unconventional sense….

  • Cullen Roche

    Baby steps. Thanks AWK.

  • Brito

    I’m not sure if you’re unconventional, the more nuanced version of QTM is basically increasing the money supply in excess of productive capacity, that’s the version that is normally econometrically tested.

  • Don Levit

    In synagogue today, I enjoy reading through Pirke Avot, The Ethics of Our Fathers.
    In more beautiful words, it says, in essence, that borrowing money from another is like borrowing from God.
    Not paying back the money would be like stiffing God.

    That is how we need to look at debt.
    Our viewpoint has gotten so out of kilter, we don’t seem to even want to pay back the interest, except thorough increased debt.
    I don’t know if Jesus rose from the grave, but he must be turning over in it now.
    Don Levit

  • Cullen Roche

    Don, who do we pay the debt back to? Ourselves? Confiscate grandma’s saving? There’s no such thing as the govt paying back its debt….

  • Don Levit

    If you are speaking of debt held by the public, there are specific entities outside the U.S. government to pay back.
    If you are speaking of intragovernmental debt, the debt due back is the amount of the trust funds that were borrowed to pay other expenses.
    If the latter debt is considered debt we owe to ourselves, repaying the trust funds will do just fine.
    Both of these debts need to be paid back via budget surpluses, not additional debt.
    Don Levit

  • Gerald P

    Don, why to these budget debts “need” to be paid back when they are not causing financial harm? The USA has almost always had national debt, and did poorly in most of those years when the budget balanced.

  • Cullen Roche

    What does it mesn to pay back China. We give them dollars in exchange for bonds? Why would they prefer that? Same for the pvt sector here in the USA. Why would all these people who willingly bought US tsys now want to exchange interest bearing notes for non-interest bearing notes?

  • Don Levit

    Are you suggesting that Treasuries are better than cash, because they pay interest and cash does not?
    If so, then is the surplus in the trust funds, such as Social Security, a similar type of surplus we find in retirement plan trust funds in the private sector?
    If so, do you think there is such an entity as unfunded liabilities for Social Security and Medicare?
    What is debt? It is the flip side of a surplus.
    If we can run deficits, we can run surpluses.
    What does it take to do so: discipline.
    Don Levit

  • Pierce Inverarity

    Don, it really seems as though you have not taken the time to understand MMT/MMR.

  • Cullen Roche

    How can something be unfunded? The US govt has limitless funds….

  • Witt

    I agree to a large extent with the MMR framework. More so now than ever. But, even if we accept that the US gov can spend how ever much it wants I still think you run into the problem of the nature of government contracts and spending. Obviously, I’ll take government spending over no spending, but I’m inclined to believe that the current government spending is far from optimal in terms of societal production and is becoming more so the more the government is forced to “spend.” So, Cullen and crew, how do you fix this conundrum – because I think MMR only works if the governments deficit spending produces additional economic output, and I worry that it may be doing the opposite in certain instances (eg regulation, or distorting capital allocation through certain subsidies, etc). If that money is simply being recycled into the private sector savings, without increasing private sector output (as if we produce any tangible value these days), then isn’t the system cannibalizing itself no matter how much the government spends? I assume the belief is that the new savings are translated into the capital markets, stimulating production, but to paraphrase Keynes, if capital allocation, and thereby production, becomes a by-product of a casino the job is likely to be ill done. So, to the extent that the “casino” is being encouraged by this spending, doesn’t the theory fall into an infinite regress whereby it slowly cannibalizes itself?

    Cullen, thanks so much for leading these discussions! I really think you’re making huge contributions to society in mediating and encouraging this dialogue. is my homepage these days and I feel like I’m seeing a sort of revolution in monetary theory before my eyes. Keep it up!

  • Curvo

    You ask hOW Cullens video can get viral

    Based on what goes viral in a population 1/5th strung u on ADD drugs, there are a few tried and true paths

    1) Cullen appears in video explaining MMR while “Tebowing” – next step, have Faux News show clip while clapping.

    2) Cullen appears in video explaining MMR while “Planking” – next step, have NYT Entertainment section publish video

    3) Cullen and MMR team enlist talking (doh/parrot/cat) to explain MMR – next step, have HuffPo publish video

    4) Cullen and MMR team hire Snooki to explain MMR perhaps in tanning booth or at a club, have publish video

    All but the last are low cost solutions and parallel to the average video the enthralls the American population. Short of these solutions MMR is stuck being of interest to a tiny population who enjoy wonky discussions. Snooki can change the fortunes of MMR forever. Just do it.

  • Michael


    I would not equate SS or Medicare trust funds in monetary terms. Instead think of it as the SS and Medicare taxes are merely productivity funds. By paying those taxes, the government acknowledge that you have been a productive member of society and so in your twilight years, we (the government) will ensure that there is a safety net to help you. That was always the case so there no funds are needed. The Treasury just continue to send out checks unless no one trust the productivity of the USA anymore.

  • Don Levit

    I assumed you took the position that there is no such entity as unfunded federal government liabilities.
    There are actuallly enough people who believe this in relation to Medicare Part D, that they have a name – adherents of the Trust Fund Perspective. They believe that Medicare Part D is fully funded, on a current and future basis.
    This is where you and I part ways, and we simply have to agree to disagree.
    Don Levit

  • David

    I just read this post over on Business Insider and read the comments as well. My one question is, Dude – why do you bother to post over there? The comments are so juvenile and ridiculous. I feel for you man.

  • Cullen Roche

    They syndicate my comment. So it’s not really my choice. Best not to read the comments there. Nothing productive comes of that comment section.

  • Cullen Roche

    I just don’t see how an entity with a bottomless money pit can have anything that’s “unfunded”. If they want to fund it they’ll change numbers in a computer system just like they always do. There’s no such thing as “unfunded”.

  • Mr. Market

    The federal budget deficit is about $ 1.8 (including the “”off budget”” items, like the wars in Aghanistan & Iraq a.k.a “”investments””). In 2011 the Trade deficit was about $ 500 to $ 600 billion. So, that meant that foreigners reduced the deficit by the same amount. So, about $ 1.2 to $ 1.3 trillion has to financed by domestic “”savers””. In that regard the US gov’t/citizens should wish for commoditiy (e.g. oil) prices to go MUCH, MUCH higher. It increases the Trade deficit and as a result it will increase foreign demand for T-bonds, right ? Problem solved.

    But even with a rising Trade Deficit foreigners seem to be unwilling to buy more US T-bonds.

    Well, if all stock investors would swap their stocks for T-bonds then I guess there’s enough demand for T-bonds to drive rates down even more. But what would happen after all US investors have bought all the T/bonds they can buy ? More monetisation of US T-bonds ? Rising US interest rates ?

  • esb
  • Tom

    Its funny….people who dont undestand these things just come in and use random meme’s and sayings and quips to try and trip those up.

    You have to present an argument and facts if you want to be taken seriously, not just clever statements.

  • esb

    Sheila Bair not serious?????

    What a laugh.

    Thake a moment to review her Wikipedia entry.

  • SS

    Sheila Bair is an idiot. In order to borrow from the central bank you have to post collateral. But she conveniently left that detail out.

  • Jussi

    Thanks Cullen for the vids. Keep it going. The ship is turning slowly, at first it is hard to see but it will come.

    Your quote “Why would all these people who willingly bought US tsys now want to exchange interest bearing notes for non-interest bearing notes” is invaluable. Govt’s liabilities are govt’s liabilities; some will just yield better than the others which of course might have some other preferable attributes. It is simple and powerful.

    Also I like the idea of MMR and splitting explicitely theory, description how it works, and politics, policy prescription.

  • Mr. Market

    CR, did you update the (Adobe) Flash software ? Because the videos fail to play.