First, we must abandon fiscal rules
Well, OK.
In practice, tax yields may need to follow government spending quite closely (but not perfectly) to manage inflation
That is a fiscal rule you blithering idiot.
Longer expanation here.
First, we must abandon fiscal rules
Well, OK.
In practice, tax yields may need to follow government spending quite closely (but not perfectly) to manage inflation
That is a fiscal rule you blithering idiot.
Longer expanation here.
What a tangled web we weave
When we give those fiscal rules the heave.
What if you just changed them to “fiscal suggestions?”
Fiscal guidance. #1: don’t piss it all away on useless, malignant cunts.
Candid fiscal suggestions. FIFY.
I’ve never seen any MMTer explain how precisely a MMT based government would actually operate, in practical terms.
Lets take a country that spends £1tn, but raises £950bn in taxes. It decides there’s still extra unutilised capacity in the economy so prints £50bn and spends it. But on what? If on one off capital items thats not so bad, such expenditure can at least be cancelled relatively politically painlessly for the next year. But most government expenditure, especially of the type politicians love, is recurring – wage increases, welfare payments, healthcare costs etc etc. So you can’t just print and spend £50bn, you have to do that every year, because once you’ve starting paying your employees more, or giving more away in welfare etc, you can’t just stop. So that one off printed £50bn immediately becomes £50bn every year. So very quickly that kicks off inflation, lets say after 3 years, or £150bn of printed money. How much do you tax? You need to reduce overall demand, above the £100bn you’re adding each year, and to reduce the previous years printing as well. So taxes have to rise by £100bn at very least, plus maybe another £50bn/yr over 3 years to extract the £150bn. This all begins to look very like the ‘Tax people then spend it’ model we have now doesn’t it? At some point in an MMT world it will always be necessary to have ‘austerity’ ie taxes taking more out of the economy than the government is spending, in order to reduce the money supply, to cut inflation. You can’t reduce rising inflation with fiscal policy alone while the State is still spending more than it raises in taxes. I’ve never heard an MMTer admit this important fact.
Didn’t Wilkins Micawber have a line about this?
I agree with Jim. Once the MMT gang admit that they need to tax (and destroy the money) to prevent inflation, there’s not much difference between that and taxing to pay for government spending.
Except that most of them clearly have no intention of actually doing the anti-inflation side of it.
They’re more like . . . guidelines;)
Gamecock is confused. Is this before or after we kill all the lawyers?