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by marcosdumay 1186 days ago
Hum... I only disagree that people keeping calling it "modern".

The actually modern theory has a much more complex lifecycle for money. Yep, government spending creates it, and taxing destroys it, but between all the kinds of money and the entities that can create them, it's not automatic that the government numbers are the important ones.
1 comments
acjohnson55 1186 days ago
As far as I know, MMT accepts all of the theory of money supply. The main break with mainstream economics is in asserting that government spending beyond taxes collected need not be financed with borrowing. The borrowing is an option, which may be desirable, but a government could also choose to print the money instead, and doing so wouldn't automatically be inflationary. In many ways, this is a recognition of the fact that it's not just an unbalanced budget that creates money.
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bubbleRefuge 1185 days ago
Well yeah and I think the main difference is that MMT ( and it has been called chartalism as well) recognizes that money derives it value from the state via the imposition of taxes at the barrel of a gun ( you goto jail if you don't pay). So money, at the federal level, ( and there is broad money which is money at the bank level) is essentially a tax liability. Therefore in order to provision itself, the state (feds), must first spend money into existence before collecting taxes as a point of logic. Therefore federal deficits are a necessity . The only question is how big ? And , given the imposition of taxes, the private sector is unemployed in the currency in which the tax is levied, so it must make itself available for employment in order to pay taxes. Thats how the government provisions itself. And you can say the government causes unemployment when it taxes and should therefore as a social goal, guarantee work to anyone at a living wake. So called Job guarantee, which MMT thinks is better than an income guarantee. There rest of the economy you build up from there. Its gets more complicated when you factor in banking and bank money which is the form of money that makes up 90% + of the money supply.
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