The biggest myth of all is that public expenditure is funded from the (private) taxpayer’s pocket. There is a growing alternative economics which shows that it is the state’s capacity to create money that underpins the market, through the authorised banking system and government spending.
OK, MMT. But the end of the letter?
The time has come to recognise the autonomy of public money and the role of the public economy in sustaining the market system. Proposals for public spending for the public good need not fear the neoliberal question: “Where is the money to come from?” We know where it comes from. It doesn’t come from magic money trees – it comes from us, as citizens.
So we, the citizenry, do pay for it then?
Prof Mary Mellor
Author of Money: Myths, Truths and Alternatives
Almost Spud-like, eh?
Mary Mellor is Emeritus Professor at Northumbria University, where she was founding Chair of the University’s Sustainable Cities Research Institute. She has published extensively on alternative economics integrating socialist, feminist and green perspectives
I can see now why there was no obstacle to Spud becoming a professor….
The world is increasingly become a mash-up of the fictions of George Orwell and Lewis Carroll. Six impossible things before breakfast and we’ve always been at war with Eastasia.
Chicken and the egg arguments.
I thought that was spud until I got to the end
“The world is increasingly become a mash-up of the fictions of George Orwell and Lewis Carroll. Six impossible things before breakfast and we’ve always been at war with Eastasia.”
Yup, word soup as I call it. Or to paraphrase the late great Eric Morecambe, I’m writing all the right words, not necessarily in the right order……..
I’m increasingly wishing for a catastrophe to strike this nation, because its the only way such crap will be swept away.
Time for the ‘B’ Ark
@Lurker: maybe he’s transitioned?
Since money is only a token of exchange for goods or services, I’d like to ask her where she thinks the goods & services it can be exchanged for come from?
100% Julia.
@bloke in spain
Precisely.
Give everyone in the public sector one million pounds and see what that does to inflation when they try to exchange it for goods and services provided by the private sector.
Since money is only a token of exchange for goods or services . . .
Yes, these idiot theories only come about because that gets forgotten in all the layers of financial complexity. If the government removes itself from creating and controlling a useful token of exchange then the people will invent something else and use that. If the people stop trading goods and services, the government will have nothing.
Mutual masturbation theory.
Can’t see what this has to do with anything other than sating the ignorant degenerates involved?
@ starfish
This is the ‘B’ ark.
People support MMT as a way of signalling to their friends that they’ve never done anything so crass as working at the sharp end of a business or even in the private sector.
So we, the citizenry, do pay for it then?
No, I don’t think that’s quite it. The state embodies it’s citizens and the citizens have no autonomy outside the state. There’s a bit of Italian that would fit the bill, if you like.
What BiS and PJF argue holds, of course, but only to the extent that their assumption of free exchange is allowed to stand. In practical terms, rationing and other forms of state intervention would interpose themselves.
You are all being unfair. Look at the title: “Myths, Truths and Alternatives”. She’s actually admitting that she’s talking about alternatives to truths.
The “neoliberal” red flag has been used. When I read anything that has “neoliberal” in it I assume it’s written with heavy political bias using ‘facts’ to prove a point.
I wonder if there were pundits back during the late Roman Empire earnestly discussing how shaving the edges off the coinage and adulterating it with tin was what really drives the economy.
@BiND – I’m not sure what Prof. Mellor does counts as working.
I like to see Mentalist Monetary Theory as more of a symptom than a theory as such…
@PJF – indeed. Someone was quoting Marlowe the other day: “Why, this is hell, nor am I out of it.”
Since the political reformation, the state *is* the people, so what the state does is by definition what the people want. L’État, c’est nous.
“The biggest myth of all is that public expenditure is funded from the (private) taxpayer’s pocket.”
Really??? When I mess up my finances, I have to pay the cost. When the Government messes up the public finances, I have to pay my share the cost.
Surely a practical way to test this theory would be to abolish all taxes.
I’m in favour of giving it a go.
With all due respect to Tim, he missed the biggest fallacy in the article, which is this:
“Public spending is not inflationary if it is balanced by taxation.”
Absolute nonsense, that is. MMT, and I am an MMTer, follows Abba Lerner’s Functional Finance as opposed to mainstream Sound Finance. The purpose of taxation is to release resources, not obtain money. After all, the government as the issuer of fiat currency has no need of money.
Say Biden wants to fund that $100-billion to Ukraine by taxing the rich instead of borrowing from them. Say the rich have a marginal propensity to consume of 10%. That means on net, you just added $90-billion to aggregate demand, which is of course inflationary and the Fed will take back in the form of higher interest rates, which are a stealth tax on the poor, and those higher interest payments will end up again in the pockets of the rich. In that sense, most of the burden of that increase in spending will end up on the poor.
So no, spending balanced by taxation will always be inflationary because we have a progressive tax system. You should tax the rich anyway to reduce their political power, but you have to tax the middle class to release resources.
Just skip the middlemen and have government print out meat and potatoes and apartments and fuel, then.
Once you understand that government is the fount of all of value, it gets much simpler.
“Since money is only a token of exchange for goods or services, I’d like to ask her where she thinks the goods & services it can be exchanged for come from?”
Are you aware that the money in the world financial system is at least ten times the value of actual goods or services?
In other words, as ppl get more money, do they simply consume more virtual financial goods which are not limited by physical resources?
Did none of you see the Margarine Revelation article on income inequality vastly eclipsing consumption inequality, because ppl get satiated on real things and just want to consume virtual financial things after a while?
“Surely a practical way to test this theory would be to abolish all taxes.”
Isn’t that precisely what MMMT (Modern Motherfucking Monetary Theory) calls for?
MMTers are like those wankers at school who argued endlessly that gravity is not a force which attracts but which is actually a massive hairdryer in the sky pushing us downwards. They also would not shut up until you punched them in the face.
@aaa
Gravity not being a force (ish) is one of those be things you get from Einstein’s theory of General Relativity. Fortunately he discounted the hairdryer and instead put the effect down to the curvature of time and space.