Ben Wray — The magic money tree is real: Treasury confirms taxes are not needed to fund government spending

A LETTER from the Economic Secretary of the Treasury has confirmed that the government does not need to raise money from taxation to fund government spending, leading to advocates of increased public investment to declare “the magic money tree exists, as a matter of fact”....

The argument goes that the government can only spend what it has raised in taxation, with any additional financing having to be raised through debt from financial markets which subsequently has to be repaid. Former Prime Minister Margaret Thatcher famously said “The government has no money of its own. It’s all your money.”

But Treasury secretary John Glen’s 18 July reply to Peter May, a Modern Monetary Theory (MMT) advocate who had written to his MP Ben Bradshaw last year to inquire of the Chancellor as to where money came from, was in contrast to Thatcher’s position.

Glen answered: “While it is theoretically possible for monetary authorities to finance fiscal deficits through the creation of money, allowing governments to increase spending or reduce taxation, without raising corresponding financing from the private sector, there is a risk that money financing could rapidly undermine the stability of inflation expectations.”...

Common Space
The magic money tree is real: Treasury confirms taxes are not needed to fund government spending

Ben Wray

U.S. decides to rent rather than own

Fifty years after John Glenn became the first American to orbit Earth, NASA no longer has the ability to fly astronauts in space, a decision Glenn lays squarely on the shoulders of the Bush administration.

Read it at Reuters
Fifty years after Glenn flight, U.S. buying rides to space
by Irene Klotz

Problem? You guessed it. "Lack of affordability." Which anyone who understands MMT knows this reasoning is just silly when a government funds itself through currency sovereignty.

Moreover, it fails to recognized the pay off of wise public investment in the nation's future, such as technological innovation and basic research.

"If there's one thing we have learned through the history of our country, it's that money spent on basic research has a way of paying back in the future beyond anything we ever see at the outset," [Glen] said.