ML-Implode News - The Rock-Star Appeal of Modern Monetary Theory

ï»¿ onventional wisdom holds that the government taxes individuals and companies in order to fund its own spending. But the government--which is ultimately the source of all dollars, taxed or untaxed--pays or spends first and taxes later. When it funds programs, it literally spends money into existence, injecting cash into the economy. Taxes exist in order to control inflation by reducing the money supply, and to ensure that dollars, as the only currency accepted for tax payments, remain in demand.
It follows that currency-issuing governments could (and, depending on how you lean politically, should) spend as much as they need to in order to guarantee full employment and other social goods
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ï»¿ "If you eliminate the tax on people working for a living and [let them] keep more money, the average family would have $625 of payroll pay. Why won't politicians do that? Because they believe the tax money is used to make Social Security payments. But that's a mistake." Even so, Mosler [one of the progenitors, and wealthy financiers of MMT] notes, "if anyone would propose that, it's not a big-spending liberal--it's something the Tea Party might propose."

This all makes a lot of sense as long as you abandon the notion that money actually might be something that has to do with wealth -- not that it is an arbitrary government construct. This is, of course, the system we had until the 1970s, when there was still a hard-money backing to the dollar. Assuming that that never comes back (which would be a tragedy, frankly), sure, it makes sense to re-focus priorities, so that there is a UBI, guaranteed jobs, no more QE or ZIRP to line billionaries' pockets, etc. But we worry about the long-term stability of the currency and financial system if any hard link is abandoned in favor of a pure "political" definition of money...

Relevant:

The Rock-Star Appeal of Modern Monetary Theory