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- Seems like the net effect of saying we have to pay taxes for the government to pay its bills and we tax ourselves to provide some fiscal space to then pay our bills is equivalent--in effect, if not in semantics. If the result is the same why the need for an explanation for something most people don't understand. Unless MMT allows us to spend infinitely and indefinitely (meaning we don't have to repay the "debt" we incur) more than we tax ourselves, what is the value of it? Unless we sever the relationship between taxes and spending, the why the need for the mental gymnastics. Isn't the net result the same in both cases?May 27, 2012
- I'm no expert in MMT so I don't even try to answer, but maybe you can find these helpful:
Even if not, it's a quite interesting read nonetheless. :)May 27, 2012
- Well. That's exactly it(with caveats). BTW, they've splintered. There is another school of though out there, MMR . They're similar, but MMR seems less political. My readings on MMT and MMR both start out with a thorough explanation of fiat money. But MMT takes a few plunges that are a bit far, like their Jobs Guarantee. MMR also has a somewhat more balanced stance on trade deficits. I think you'd be more on board with MMR
The difference between "pay taxes for the government to pay its bills and we tax ourselves to provide some fiscal space to then pay our bills" is that one is a corporation mindset. The difference between a sovereign government with it's own currency and a huge corporation is the government doesn't need to tax to spend. It taxes to control the amount of net financial assets. Too much taxes, and it will suck out all financial assets from the system. Too little, and you get inflation. If it spent like crazy while the private sector was fully engaged/employed, it would cause massive inflationary problems.
That is very different from a large corporation, where a net surplus is basically it's only reason for existence, while the government has no business to have a positive balance. So while it sounds the same, underneath, the reasons for income vs expenditure are greatly different.
"Unless we sever the relationship between taxes and spending"
-- Exactly. There isn't one. Of course, in any complex system, there are ripples between. But one doesn't necessarily require the other.May 28, 2012