I suggest he and everyone else in finance read Eric Tymoigne's draft for a textbook on money and banking, The Financial System and the Economy (free download). He is on the right track but needs to up his game with deeper understanding. The key to MMT lies in the nuance.
Seeking Alpha
Upside Down CAPM: Part 8 - Deficit Spending Isn't Stimulative Or Inflationary
Kevin A. Erdmann
Seeking Alpha
Upside Down CAPM: Part 8 - Deficit Spending Isn't Stimulative Or Inflationary
Kevin A. Erdmann
The objective of taxation is not to raise revenue, but rather to correct imbalances. Sadly, the proposed 50% will not do the trick - it will not trigger the "potlatch effect" - Even 70% will not trigger it (too much residual income remains) - A 90%+ bracket definitely triggers it. It is possible that somewhere between 80-90% range may also do the trick.
ReplyDeleteIMO, the aim of the top bracket is to trigger the potlatch effect.
“Whether it is a Keynesian or an MMT framework, the idea that funding spending with bonds versus taxes can be stimulative or inflationary seems questionable to me.”
ReplyDeleteThe US government does not fund its spending with bonds, nor with tax revenue. The US government creates its spending money out of thin air. US government money created out of thin air and pumped into the economy is indeed stimulative.
So, in this framework, all spending is funded by taxes.
Not at the federal level.
Bye.
"So, in this framework, all spending is funded by taxes"
ReplyDeleteActually, all government spending is funded by tax credits (not "taxes"). Government securities are tax credits not yet collected.