Ellis Winningham — MMT and Modern Macroeconomics
Federal Taxpayers Do Not Fund the Federal Government; The Federal Government Funds Federal Taxpayers
Ellis Winningham
Monday, September 4, 2017
Ellis Winningham — Federal Taxpayers Do Not Fund the Federal Government; The Federal Government Funds Federal Taxpayers
Ellis Winningham — MMT and Modern Macroeconomics
Federal Taxpayers Do Not Fund the Federal Government; The Federal Government Funds Federal Taxpayers
Ellis Winningham
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6 comments:
I hate to be a negative Nancy, but the people who need to read this article won't. Too much cruft in the first few paragraphs. Second, the libertarians will immediately stop when he mentions taxation as civilized, because they view taxation precisely as expropriating their property at gunpoint.
Imo, the to-the-point logic argument suffices: no dollars with which to pay taxes even existed until the govt created them, so ipso facto, taxes can't fund the govt, the population doesn't have any dollars until the govt created them. Therefore his conclusion stands, taxpayers don't fund the govt, the govt funds the taxpayers.
The founders of the various countries with their own currencies must have understood this explicitly, or did the links to gold screw up their thinking?... well at least one British governor must have explicitly understood this in instituting their hut taxes.
Joe you're not making the connection between your first sentence and the second....
The people who won't read it won't because they are libertarians....
Touché Matt, touché.
(Although I do know of one case of a person I know who was a fan of Schiff, and I told him about mmt. He actually read about it and was persuaded by the logic of it all... clearly not a true randian)
The primary problem with Winningham's presentation is that it does not incorporate the nuance that, other than a relatively small percentage of money issued as paper dollars and coins, money creation has been outsourced to the banks. Even Federal expenditures are accounted for by the Treasury issuing T-bill that "primary dealers," i.e., very big banks, are forced to buy by creating bank money and depositing it in the federal governments accounts held at their banks. Federal oversight of the banks keep the federal government in ultimate control of the money creation, whether for public or private purposes, but the banks are the actually ones that "create" (or "print" if you prefer) the vast amount of new money.
This oversight by Winningham doesn't take away from his main point, but it provides a wage to undermine it.
"are forced to buy by creating bank money and depositing it in the federal governments accounts held at their banks"
I'm not completely sure on this, but isn't it the case that regular banks purchase treasuries with reserves, which are govt created money? I'm sure Matt can fill me in on this. (And if they don't have the reserves, the Fed supplies them)
While it's true the vast amount of money in the system is bank credit, when you go to pay your taxes, it still ends up as a transfer of reserves from your commercial bank's reserve acct at the fed to the Treasury's acct at the Fed. And since reserves are created by the govt, it's still the govt that has to create the money first before you can pay the tax.
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