He does keep raising the stakes, doesn’t he?

There is no obligation to balance the books, after all. There is only an obligation to use the power of office for the public good, and that means that the power to create money must be used to deliver full employment for all who want it, at which point it may well be that tax revenues will cover all spending the government desires because for it to do otherwise would be inflationary. So, to create money (and not, I stress, borrow it) would in that case be the sacred duty. And there would be no need to reverse that money creation so long as the public, or at least the private sector, wished to save and so keep those funds with the government, which is what the actual consequence would be as the sectoral balances would show.

So tax revenues will, at full employment, more than cover the extra money printed to get there. Further, peeps will invest in government bonds because they want to.

Perhaps not so much really, For Snippa also claims that peeps want to invest lots in govt bonds now because uncertainty. Uncertainty that will disappear once we’ve got full employment and less uncertainty. Or, more technically, he#s missing that peeps will invest abroad.

But OK. Now think of his other assertion. We’ve a risk there of inflation given that full employment and money manufacture. So, this is when people are going to want to invest more in fixed income bonds from government?

11 thoughts on “He does keep raising the stakes, doesn’t he?”

  1. I’m no professor but surely if what he claims is possible the euro should be abandoned for the original currencies and everyone can print their way to Utopia.
    There would be no poor in the world and Murphy would have statues everywhere, we could probably spare him a palace or two.

  2. Bloke in North Dorset

    the power to create money must be used to deliver full employment for all who want it,

    And those that don’t will be made to work anyway.

    Time to invest in spoon factories.

  3. How can anyone be so dim as to write this and believe it?

    How come this did not work for Germany and Zimbabwe?

  4. He keeps going on about how you control the inflation that would arise from increasing the money supply by taxing it back out.

    I don’t see how this is supposed to work.

    So, what? We have full employment but everyone’s paying a 95% income tax rate? ‘Great news, we got a government contract. The only catch is that they’re taxing us at a 100% rate – in order to not inflate’.

  5. Agammamon… exactly that..

    Murphy wants to tax any whiff of Profit.. Because the Great Cause.. ( where have we heard that before..)

    Of course he forgets that by removing any possibility of profit regardless of effort, he’s removing the incentive to even try.. As anyone who lived east of the Wall could tell him…

  6. Sounds supiciously like “Extra govt spending will be covered by the extra tax raised from the resulting extra economic activity”. Despite the innumerable times this has been declared Govt debt keeps on rising rather than contracting.

  7. I’ve heard that the Zimbos, as soon as they get their hands on some money, immediately spend it before it goes down in value. But perhaps he thinks we’re stupider than they are.

  8. It’s very simple: he just keeps using secundum quid fallacies.

    Start with two propositions:

    – The Government printing of money causes inflation
    – Inflation can be controlled by taxing it away

    You can then get two obvious conclusions:

    – The Government can print as much money as it likes without causing inflation (so long as it taxes it away).
    – The Government can print as much money as it likes without needing to tax it away (so long as it accepts the resulting inflation).

    If you omit the bits in brackets, you then get two very clear implications of MMT:

    1) The Government can print as much money as it likes without causing inflation
    2) The Government can print as much money as it likes without needing to tax it away

    Both statements are true (if you accept MMT).

    The fact that they’re incomplete and mutually exclusive is neither here nor there: you can hand on heart say that they’re both conclusions that can be derived from MMT.

  9. @moqifen, yeah, when they start talking about spending = full employment = more tax and the circle is squared my physics/engineering background starts shouting ‘perpetual motion machine’.

    the power to create money must be used to deliver full employment for all who want it,

    As BiND says, spoon factory time. This is the spiritual goal for MMT and yet it’s the most hand wavy part of the entire theory. Forget about the downstream inflation/tax stuff, I’m yet to see any explanation of how this bit happens other than ‘turn on money taps, employment results’. The code in political arenas is to talk about infrastructure because that’s a great way to hand out billions before lunch. But how this linkage is supposed to work in the wider economy I don’t know.

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