Nope, not even understanding MMT

What this also means is that the capacity to tax, and indeed to borrow, cannot constrain government spending. Tautologically this has to be true: since neither payment of tax or lending to the government would be possible unless government created money was put into circulation as a result of government spending that spending cannot be constrained by either of them.

But what this means is that there is no requirement per se to balance the government’s books. Indeed it is not just illogical but completely economically perverse to seek to do. A government with a balanced budget necessarily denies an economy the funds it needs to function.

Nope, not at all.

Assume the steps leading up to this are correct. Govt can just print money, they spend then tax, there aren’t those constraints. This does not then mean that a balanced budget is denying society the money it needs to function. MMT doesn’t say that at all. Taking it all again as true, imagine a society at full employment. True, entirely full, employment and capacity utilisation. Any further money emission will turn up as inflation, only inflation. Which MMT types say must be taxed back to prevent the inflation.

That is, even MMT says that at full capacity therefore there should be a balanced budget. To prevent inflation.

5 comments on “Nope, not even understanding MMT

  1. Maybe I’m just overly simplistic, but isn’t this all just wanky semantics?

    Aren’t Pound notes are just the way we keep score? If Government wants to do something it must requisition the resources it needs from real people, for ultimately there is no other source. There is a finite pot of labour, after all. The more of that Government does then the fewer resources there are available for real people to exploit.

    Fundamentally, all else is bollocks.

  2. “A government with a balanced budget necessarily denies an economy the funds it needs to function.”

    He’s barking. There’s no more polite way to say it.

  3. Tautologically this has to be true

    And what that means is that he would be clearer if he blogged using only emoji rather than words.

  4. Under MMT wouldn’t there be times when the tax take was greater than the government budget spend, in order to take money out of the economy and reduce inflation? Isn’t that the whole point of MMT, you manage inflation via how much money you put into the economy by printing or take out by taxing?

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