An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Your tax dollars, hard at work in the Washington beltway.
Taxes don't fund US government spending. MMT 101 :-)
Six you said "Taxes don't fund US government spending. MMT 101"In the beltway they do! Remember the people inside the beltway who make the decisions choose to ignore MMT.
Ironic if you think about, the biggest bang for our taxpayer buck is to have the largest possible deficit with acceptable levels of moderate inflation.IOW, the taxpayers in an economy thats generating 2% inflation with a 3% of GDP deficit are getting way less value back for each tax dollar collected then an economy generating 2% inflation with a 10% of GDP deficit. Another way to put it.....if the private sector spends $3 trillion on tax payments, is it better to get $3.5 trillion back from the Govt or $5 trillion as long as you can maintain moderate inflation levels?
Basically, a currency sovereign is best advised to run as large a deficit as possible consistent with price stability and the desire of the private sector to use available resources. This insures that available resources are being put to use.The size of the deficit is immaterial. The objective is use of available resources along with price stability. There are lots of ways to arrange that, but "money" is not an actual issue. The question is really political. What kind of a society does the electorate want.
Taxes and savings are a function of leading govt withdrawals...T + S = f(W)dt Or in rote: " before you can do a reserve drain you first have to do a reserve add...."
The two rote statements:1. All prices are necessarily a function of what govt pays for things or what they let their banks lend against things"And2. "Taxes are used to control price inflation"Are incompatible...I suggest avoid rote teaching entirely when trying to understand material systems....
Separate tools for a similar job that work somewhat differently, or in tandem.For example in emergencies government bids up prices in acquiring resources and uses taxation to control incipient inflation.
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