No matey, it ain’t

In fact, all that they have not noted is that the role of tax is to cancel the money the government has created, meaning that the tax yield and not the interest rate is now the primary tool for the control of inflation in the UK.

This is important. What we actually have here is, as Peter has noted, an admission that the government can create money at will. So the ‘magic money tree’ exists, as a matter of fact. But what we have not got is an admission on the role of tax in this equation.

What that suggests is that the role of tax in controlling inflation has to be the next argument brought to the Treasury’s attention.

Interestingly, the Tuberator thinks the economy is not running at full whack, therefore we require further fiscal stimulus. Thus taxes should fall so as to provide both that and a little moe inflation. The Tuberator does not recommend lowering tax levels. Thus the Tuberator does not believe his on theory.

6 thoughts on “No matey, it ain’t”

  1. Personally, I would have used “understand”. I’m sure he believes it, but belief does not require understanding.

    In fact, in many cases, belief withers in the light of comprehension.

    Any road oop, Spud’s lack of brain makes understanding a rare event indeed.

  2. Isn’t it delicious that the abbreviation for modern monetary theory MMT is the same as magic money tree. It must make the potato furious.

  3. Printing money and spending it first, and then collecting taxes to cover it, is an odd way to look at things. But not wrong. Just odd.

    The obvious is that it doesn’t really matter which comes first, the spending has to be covered by taxes or you get inflation. So there IS NO MONEY TREE. Just an accounting trick.

  4. Are there any clever chaps with the time and energy to plot the MMT+“tax-does-not-fund-spending” and the “we must raise taxes to fund spending” posts against the days of the week? My vague impression is that the MMT nonsense tends to be on early weekdays, whereas the second opinion tends to be a weekend concern.

  5. Rob, you make it sound like menstruation.

    Wonder what happens when you put them all in the proggie version of a convent. Murder will out, is my guess.

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