| That's where the wasteful bit comes in. If the taxed dollars ended up with say hurricane victims or other struggling Americans, those dollars would chase goods and services domestically driving up the price of those goods. Now consider if instead you helped fund Israels socialized medicine program or paid off some of Ukraines debt or paid interest to Chinese creditors. Those dollars wouldn't have much effect when it comes to increasing the price of eggs in the US as they are being spent far away in another economy. A similar effect could occur if the money ended with the wealthy folks, say wealthy owners of private defence contracting firms, as those dollars might chase building a super yacht (inadvertently employing some people but also consuming foreign made materials and labor) instead of trying to rent an apartment in Iowa. Less dollars chasing Iowa apartments, considering supply and demand, lower prices, lower CPI. Take dollars from the middle class who will drive up the cost of the American dream and instead give them to people who will drive up the price of luxury goods. It's never explained this clearly beacuse people would riot, but with this framework the choices of government in the last few decades or so suddenly makes more sense. (I don't endorse MMT) |