Modern Monetary Theory

Can we afford it? Yes. Yes, we can.

SUMMARY: Few concepts get under the skin of traditional economists, Wall Street executives and academics as Modern Monetary Theory, or MMT. We’ve been building to this episode for quite a while in our examinations of the United States budget and it’s time to properly unf*ck this massively important economic concept. MMT posits the idea that any government that issues its own currency can run extraordinary deficits to finance basically anything without fear of negative monetary or fiscal consequences. In short, all of those wonderful progressive notions like universal healthcare, a federal jobs guarantee and food security are entirely possible without mortgaging our future.

LISTEN TO THE FULL EPISODE HERE


Before we get to this week’s essay…The results are in from the Stupid White Guy Olympics! 

It was a hotly contested race but in the end your Gold Medal finalist in the Stupid White Guy Olympic trials is the pride of Texas, Governor Greg Abbott! 

Thank you to everyone who participated in the survey. We had a ton of submissions and it was a real nail biter between Abbott and DeSantis, but Abbott prevailed! Perhaps a harbinger of presidential races to come. (Sigh) 

My personal horse in this race, Governor Kemp from Georgia, came in dead last and it wasn’t even close. So not even his racist voter suppression efforts or inability to get through America’s motto were enough to make him competitive against these other two assholes. With that out of the way, let’s talk economics. 


MMT, Baby!

We’re back to business today with an episode that has been in the works for several months. It’s all about a concept called Modern Monetary Theory, or MMT. It was on the board a for a while but I kept punting on it because I felt it was necessary for us all to walk an economic path together to really set it up. Again, if you’re just plugging into our little thing here, this episode should stand up on its own and give you a decent understanding of MMT without listening to prior episodes. But in so much as this is somewhat of a culmination of past topics, it will probably make even more sense with a few of those under your belts. 

In order, the episodes that serve as primers for today are:

Priorities: War, Wealth and Welfare

Capitalism

The Beatification of Ronald Reagan

America Inc. Copyright 2021

Stimulate This Beyotch

Corporate (Ir)Responsibility Part 1 + Part 2

And, of course...

Fuck Milton Friedman

It’s funny because I distinctly remember removing any reference to MMT in the Priorities episode even though it’s basically an MMT episode. The reason I stopped short of naming MMT in this and prior episodes before laying the groundwork for it is that MMT makes people uncomfortable. Some get angry. It’s basically a fuck you to established economic theories and to the budget hawks that have ruled central banks and governments for more than a century. 

Truth is, it’s not all that revolutionary but the mere mention of it can color one’s view of the subject. I liken it to the Defund the Police movement. No matter how sound the argument behind it or the intent, a significant block of the population will immediately sour at the idea because of the nature of the name and associated philosophy. In economic circles, MMT has a similar effect. While it’s not widely known outside of academia and policy circles - though it’s certainly gaining momentum due to the tireless efforts of superstar economist Stephanie Kelton - what it teaches us and what it portends to our daily lives cannot be overstated or oversold. 

So let’s go… 

Less than Stimulating

I’m going to give you our PITOTWIU segment up top as a way to set the table for this week’s episode. As of this recording the House passed a $700 billion infrastructure bill that’s headed for the Senate with a number of earmarks - interesting that these are back but that’s for another day - to complete specific projects split pretty nicely among Democrat and Republican districts. 

The bill is targeted mostly toward transportation and water infrastructure, which is certainly fine and necessary, but the really ambitious stuff will come down the road in bigger reconciliation bills designed to subvert the filibuster. This should be fairly easy to do in theory given this is all spending, a requirement for reconciliation, but it doesn’t mean that it’s going to breeze through the Senate as there are rogue Democrats who believe in a balanced budget and will likely balk at anything with a trillion dollar price tag. 

When all is said and done, even the full scope of the six trillion Biden and company are looking to appropriate this year is less than what is required to build out an infrastructure that tackles the existential climate crisis, connectivity needs for rural and impoverished areas of the country, a fully modernized and efficient grid system and bulletproof physical infrastructure upgrades that have been ignored for literally 50 years. 

The reason it has taken so long to address, the reason there will be pushback on additional spending beyond this initial PITOTWIU bill of $700 billion and the reason we live in the wealthiest nation in history and can’t muster the political will to offer universal healthcare and free public university education, have a crumbling infrastructure and live under the constant threat of social safety net insolvency is that we are living under old economic thinking

When Nixon pulled us out of the Bretton Woods agreement and allowed the dollar to float, this was the moment our thinking should have changed. To be clear, the concepts behind MMT were valid prior to this moment, but he essentially unshackled money on a wholesale basis. The immediate aftermath was pure chaos as he compounded this incredible moment by adding punitive tariffs on imports and sent the world scrambling to align with the new economic order prescribed by the United States. 

Now before we get here, let’s go back a bit and talk about what the world order actually looked like. Unf*ckers who have been closely tuned to our previous episodes might think I’m a bit schizophrenic as I have excoriated the recklessness of prior administrations for their handling of economic affairs. We’ve taken Reagan to task for tax cuts, called out Bush for liquidating the budget surplus on the eve of two multi-trillion dollar wars and most recently referred to the Trump years as the most economically irresponsible in modern history. 

I stand by every one of these accusations but with a massive caveat: These were wildly irresponsible actions given the prism of old economic thinking.

Actions that should have fucked us ten times over and signaled the end of the Republican Party at a minimum. We should have gone broke. Our currency should be toilet paper. Instead, the republic carried on and Republicans (and Democrats, but mostly Republicans) unwittingly unmasked the biggest flaw in economic thinking, then covered their tracks by doubling down on the false logic of balanced budgets. 

Okay, so what the fuck is MMT?

Essentially, MMT posits the idea that any government that issues its own currency can run extraordinary deficits to finance basically anything without fear of negative monetary or fiscal consequences. Now, to wrap your head around MMT you have to unlearn almost everything we’ve been told about monetary theory, balanced budgets, national debt and budget deficits. Everything you know about money and how the government operates. 

Here’s conventional theory: 

The government should operate like a household. 

We talked about this in the priorities episode. It shouldn’t. 

If you tax the wealthy, it stifles growth, investment and incentives. 

We covered this under Reagan. It doesn’t. 

Too much stimulus spending will overheat the economy and lead to hyperinflation. 

Check out our Stimulate This Beyotch episode. It hasn’t.

The government should operate like a business. 

Listen to Fuck Milton Friedman: The Chicago School of Economics. It shouldn’t. 

We’re saddling our children and grandchildren with debt. 

Literally everyone on every news channel ever. We’re not. 

These are the conventions of economics that have been drilled into us. What if it’s not true? That’s what MMT challenges us to think. 

Not a Household

Our main source of inspiration is a book called The Deficit Myth by Stephanie Kelton. As I said, she’s sort of the spiritual leader of the MMT movement right now and in large part because of this book. It’s smart, yet accessible and it offers readers a solid entry point into macroeconomics. 

What I appreciate the most about it is how she skillfully breaks down each convention by making them relatable and placing them in context. But we’re also drawing upon the work we’ve done in prior episodes, the theories of John Maynard Keynes, Bernard Harcourt’s concepts of illusory free markets and more. The first and most important concept is this notion that the government operates like a household. So let’s talk about that. 

If a household spends more than it earns, it has to take on debt. Something that plagues most Americans. In fact, the average household debt in the United States is upwards of $90,000 including mortgages, credit cards and student loans. And 35% of us don’t even own a home. Between half and three quarters of a million Americans file bankruptcy every year as a result of their debt burden. Per capita, we’re second in the world on this measure. Yay for us!

So when a household gets over its skis and can’t pay its debt, it goes bankrupt. Boom. Done. But the United States government never seems to. Last year we ran a $4 trillion dollar deficit. And guess what? Investors still purchased our treasuries. Inflation didn’t run amok and we’re not burning twenty dollar bills to heat our homes. Why? Because the United States isn’t a household. 

Now, some people will point to crises in other countries as evidence that running up massive debts and deficits brings catastrophe. The Greek debt crisis was one of the most popular examples of this, but the one difference between us and the Greeks - aside from souvlaki - is the ability to print more money. When Greece dropped the drachma and joined the EU currency family, it lost the ability to control the amount of money in circulation and was subsequently subjected to austerity measures from European central banks that only worsened their situation. 

To clarify the household example, Kelton takes great pains to explain the difference between being a currency user and currency issuer. You, me, your home, your business, even local and state governments in the United States; we’re all currency users. We can’t print money when we take on too much debt and lose the ability to service it and go broke. But the federal government can. And it does. 

So why doesn’t every country do it? That’s another story and we’ll get there in a moment. But for our purposes right now, the governments in control of their own currencies that are big enough and stable enough to manage massive deficits are the United States, Japan, the U.K., Australia and Canada, with the U.S. leading the pack as 90% of all global transactions are settled in U.S. dollars. 

What is money anyway?

Let’s talk about money. What the fuck is money anyway if certain countries can just make it up? Well, it’s a good question. Money is a way to settle an obligation, first and foremost. Goods, services, food, gasoline, whatever. We all need to get by in the world. A government that prints its own money, on the other hand, doesn’t really need to settle obligations with anyone in this specific way. It seems like it does because it taxes us for what it calls revenue, but think about the order of things for a second. 

If money, in the form of taxes, was required for the government to do things, it would need it before, not after it does a thing. I know this sounds weird, but follow me for a second. If the government builds a highway, or a tanker or a space program, it doesn’t ask you for money first. It just spends the money. Then it refills theoretical coffers by taking money back from you, but it’s not like they ever take the full amount dollar for dollar. And they didn’t need your money to build these things in the first place because they print the fucking money. 

So it’s really about what that money is worth. In theory, as long as money holds its value and the value of it is accepted - milk costs X, cocaine costs Y - then it can be used to settle an obligation. The value of a government good or service, or even something you buy or rent in your own life, isn’t dependent upon whether the government has a deficit or a surplus. They’re completely disconnected. It’s about the intrinsic value of this money and our collective belief in its purchasing power. 

The real price of something in the economy is determined by the value we place on it, the availability of it and agreed upon settlement value. 

State and local governments are currency users like the rest of us and must therefore follow household rules of balanced budgets. Countries that gave up their sovereign currencies, like the ones in the European Union or others that lack the intrinsic financial wherewithal to settle obligations with security, aren’t as fortunate. 

So the logical next question if you live in a sovereign currency nation like Canada, Japan or the United States is, why the fuck do I have to pay taxes at all? The answer is, from a federal perspective, that you really don’t. 

Mind = Blown. 

Now remember, I’m not talking about property taxes, sales tax or park and recreation fees, the taxes all of us have to pay. I’m talking about federal income taxes and deductions like Social Security. The federal government technically doesn’t need that money to settle its obligations if its currency is stable. State and local governments do. Taxes have more of a societal impact than a budgetary impact. For example, they can discourage negative behavior or encourage positive behavior. Alleviate the concentration of wealth in a few hands that have the ability to sway the political process. 

More importantly, where managing the economy is concerned, there’s a limit to what we can accumulate as citizens but it has less to do with federal debt than it does with the one thing that can derail unlimited money supply in an economy. The “I” word. 

Inflation. 


The ‘70s fucked with our heads

As we discussed in the Fuck Milton Friedman episode, the ‘70s really did a number on us psychologically. The rapid rise in inflation created panic - real panic - based on pain at the pumps, in the supermarket, prices of all important daily necessities. Deficit became the bogeyman from this era instead of the real issues behind inflation, notably the oil crisis and the impact of Nixon’s tariffs finally presenting themselves during a recession. 

“Deficits cause inflation” was the mantra that stuck and we’ve been living with this concept ever since. But even before this time, because the nations of the world were tied to the gold standard, which meant that there was a finite amount of currency that could theoretically be in circulation, debt was a critical monetary issue. In other words, it was possible that a country could run out of gold reserves based upon their level of debt. 

Recall also from the Milton episode that Keynes was desperately trying to obtain financing from the United States in both World Wars because the U.K. was dangerously close to running out of gold. It needed to finance beyond its ability to sell against its reserves and this came at a high price from the United States at the time. So there was a financial imperative prior to the Bretton Woods agreement that finally weaned the world off of the gold standard and pegged the U.S. dollar to gold, thereby allowing currencies to float on top and borrow more against it. 

This was the main idea behind Keynesian economics. Manage an efficient budget when employment was high, obligations were being met and currency was stable. Print more money and run deficits when the economy turns as it inevitably does under capitalism because the extension of money supply won’t affect the value of currency so long as the government has the ability to expand the money supply to meet its obligations. 

When Nixon ripped off the bandage and allowed the U.S. dollar to float freely, only the United States was prepared for it and in a position to benefit. But still the myth that deficits and debt would cripple the economy, saddle future generations with debt and cause hyperinflation persisted irrespective of who was in charge. 

Think about it this way. Bretton Woods formally ended in 1973. Proposed in ‘72, done by ‘73. The ensuing chaos lasted about seven years due to the oil crisis, tariffs and the rest of the world coming to terms with the new world currency order. Since that time, over the past 40 years, the average inflation rate in the United States is 2.9% and that includes two years of double digit inflation in ‘80 and ‘81. 

During the same time we had six recessions, nine technical stock market crashes and only four years of a budget surplus. And through all of these events, nothing impacted inflation. Nothing

Democrats are as much to blame for not understanding the relationship between money supply and fiscal policy. For all of the posturing around “tax-and-spend” Democrats and “fiscal conservative” Republicans, both parties have been prone to running up extraordinary deficits to pay for their pet projects, whether it’s Republicans giving tax breaks to the rich or Democrats wanting to “shore up” entitlement programs. Both are built on false premises and both parties are either lying or woefully misinformed about the nature of taxation and spending. 

Not so full employment

One of the most diseased ideas that is pervasive among both parties is the idea that statistical full employment is actually not full employment. Economists refer to this as “slack” in the labor market. That it’s technically impossible to have full employment in ordinary times, or basically when we’re not at war. And that full employment is technically undesirable because there would be too much money circulating. That a healthy economy requires there be just enough people unemployed to maintain a level of demand competitiveness to prevent wages from going too high and causing inflation. 

There’s a bit of logic to this, but mostly it's just a monstrous philosophy that we take as gospel. 

As Kelton says, “it’s easier to blame immigrant workers, foreign currency manipulators, or even global technology than to come to terms with the fact that joblessness is an official policy in the United States.” 

What she’s saying here is that the Federal Reserve will use its toolkit to try and maintain a level of acceptable unemployment to prevent the economy from running hot and causing inflation. This artificially maintains a level of unemployment that leaves Americans in the precarious position of hoping a favorable political climate leans toward offering reasonable unemployment benefits. 

MMT’s proposal to mitigate the natural slowdowns that occur in capitalism as we move through cycles is a form of national labor force that can be put to work during a downturn. Kelton calls it a “twenty-first century Civilian Conservation Corps” style concept that puts out of work labor to work on public works projects that can be governed and managed by local municipalities that have a greater understanding of community needs and shovel ready projects. 

One of the historical facts is that a significant percentage of the workforce will experience unemployment at some point in their working lives and the vast majority do not remain on the rolls permanently, they move off after only a few months. 

Don’t think it will work? Well dig this:

Argentina launched a similar initiative to put unemployed people to work in federally funded, locally administered jobs programs starting in 2001. As Kelton writes, “at its peak the program employed some two million people, about 13% of the labor force. Almost 90% of the jobs were in community projects and 75% of the participants were women. Just six months after launching the program, extreme poverty had fallen by 25%. Within three years, half of the participants had left the program, most for jobs in the private sector.” 

But the prevailing wisdom in the United States is that unemployment helps keep down inflation, welfare of any kind is evil, and we can’t spend on things like healthcare and education, only war, destruction and sending people to the fucking moon. Why? Because human shitbags like Larry Summers preach this bullshit and warn against people having jobs and healthcare and quality of life because it’s dangerous, expensive and will lead to inflation. 

And speaking of Larry Summers - who is often asked to offer his opinion on MMT - he’s the fuckhole who put a governor cap on Obama’s stimulus, which helped stave off a depression but also ensured that the recovery would be painful and protracted. He’s not alone in his thinking here as almost every major economist, every federal elected official and every titan of finance and Wall Street sings the same fucking tune. 

Unless, of course, it’s in the so-called national interest of defense or competitiveness. 

For example, when it was clear we were losing the space race to the Russians, Kennedy asked the United States Congress to open the purse strings to win the race. 

When we decided to retaliate against the 9/11 attackers and go to war, George W. Bush asked Congress to open the purse strings to defend the nation against two countries that had literally nothing to do with 9/11. 

When Wall Street fucked the entire country over with reckless behavior in 2008, Obama went to Congress to open the purse strings and help Americans recover from the financial crisis.

And when the pandemic hit and the country came to a standstill, President Orange von Fucknugget appealed to Congress to open the purse strings once again and help businesses and Americans get by. And now Biden is doing the same. 

Inflating Inflation

The one fucking constant in all of this that no one wants to talk about is the fact that nothing happened to inflation or the value of the dollar. Are we experiencing an uptick in inflation right now? Sure. But only as compared to last year when the world was shut down and because inventory levels have yet to recover because we’re still in the early innings of recovery. When the wealthy got historic tax cuts under Bush, re-upped by Obama then cut further under fucknugget, the debt exploded and nothing fucking happened. Why? Because those dollars aren’t fucking real. 

That’s the ha-ha of this whole thing and the heart of MMT. 

Inflation occurs when dollars are coursing through the system and put to work to purchase goods and services that are finite. Give tax breaks to the wealthy, they just save the money. They don’t spend it. They hold it. Finance war and the defense industry makes a shit ton but it doesn’t change the price of bread. Blow up the budget by sending people to the fucking moon, (which is a ludicrous fucking idea when people are literally starving) and it doesn’t increase the price of housing or wheat or lumber or anything. Because it’s new money that is of no consequence to supply and demand consumer items.

Now, once again the inevitable question that Unf*ckers will likely return to now is why the fuck do we collect taxes at all? And on this I point you back to our two parter on Corporate Irresponsibility. You’re going to hate this, I just know it, but trust me that it will be helpful information to you in a minute. 

I don’t give a fuck if the rich are taxed or not taxed for practical economic purposes because the government doesn’t need the money. Do I think they should be taxed at a higher progressive rate? Yes. Why? Because it helps even the playing field and reduces the tension that comes from inequality. We can’t turn into a nation of servants to the wealthy. 

It also reduces incentives to innovate and be competitive. But more than that, it works hand-in-hand with the fact that we have allowed for a system where the wealthy can simply purchase political power and legislation. That’s the most unhealthy aspect of allowing such preposterous accumulation of wealth. Instead of taxing the über-wealthy, just stop allowing them to get that way. We’re focusing on the wrong end of the problem. 

To be absolutely clear, with respect to MMT, taxing the wealthy doesn’t change anything in terms of our ability to run the country, settle transactions and debt obligations and take care of the poor and working class in the country. This is where progressives have it backwards in their “tax the rich” stance. This idea will never fly in America for the sole reason that each and every one of us carries within us a fantasy or belief that we will one day be wealthy and that it’s a uniquely American right to possess it, flaunt it and roll around it. 

In terms of the rest of us and not just the millionaires and billionaires, there is a practical reason to maintain a minimum requirement of taxation and it indeed has to do with money supply and inflation. If we are all awash in cash, as normal people, we will act on an impulse to spend on goods and services that will heat up the economy. In this respect, there is a balance and it’s where the Federal Reserve has the ability to manage interest rate expectations to encourage or discourage savings and investment, and the treasury has the incentive to cool things off lest we all purchase seven cars. 

But for us not to have our basic needs met in terms of healthcare and education, things that have no finite supply but possess infinite social upside, is absurd. 

And mean. 

And stupid. 

Where taxation matters more, in my humble opinion, is on large and multinational corporations. If we can’t get money out of politics, then take money away from the entities that produce wealth and close down provisions that enable them to hide this wealth offshore. Again, I refer you to our Corporate Irresponsibility episodes. 

Taxing corporations at a higher level does a couple of things. One is that it incentivizes higher compensation because companies would rather pay people than the government. Great. Two, is that is also allows us to impact behavior and incentivize healthier and more productive outcomes. And three, it encourages research and development which helps foster a culture of innovation. If you know that your profits are taxed at a higher rate then you want to increase your piece of the pie. And the only way to do that is to keep that money working for you in house and the way to do that is through R&D. This isn’t a groundbreaking concept, mind you. It’s how we built the United States during the greatest period of innovation and economic development. 

But won’t we saddle future generations with all this debt and go broke?

That’s not a thing because guess what? We have the money to retire all of the debt either by stopping the production of Treasuries into the markets over time or by simply pressing a button at the Federal Reserve and wiping it from our balance sheet. Seems stupid, but remember that these are just accounting mechanisms moving balances from one side of our ledger to the other, it’s not actually real. 

Not to mention, we’re nowhere even close to the indebtedness of other currency sovereign nations like Japan for example. Right now, as ridiculously high as our debt is at a 107% to GDP, it’s 2.5x less than Japan’s debt to GDP ratio. And still, once again, neither of us is experiencing rapid inflation, deflation, stagflation or currency devaluation. And in Japan, oh-by-the-fucking-way, the highest unemployment rate they’ve ever had is 5.5% and they only got there twice in the last 70 years. 

Oh, and they have universal healthcare. 

And unemployment insurance.

And wage closing stipends for any household that falls below the poverty line. 

Bringing it home

Sovereign Currency nations around the world are awakening to the reality that is Modern Monetary Theory. Canada is finally beginning to have these discussions. Japan and China already know what’s up. The U.K., on the other hand, is going in the opposite direction because they’re still recovering from the Brexit hangover and governed by their own Frumpy von Fucknugget. Hopefully they come to their senses soon.

The pandemic sealed the deal. It proved the concept. Currency sovereign nations flooded the systems with money and the increase in monetary supply barely impacted inflation because the velocity of money coursing through the system didn’t match the supply. 

Did certain raw materials like lumber and finished goods like automobiles go through the roof? Sure. Because of specific elements of demand and the interruption along the supply chain. Lumber was difficult to move and the demand was enormous from people looking to complete home remodeling projects. Automobile demand skyrocketed because people stopped taking mass transit. Now as the economy heats up and people get back to business and leisure, we’ll see a small spike in inflation but it will calm down as we head out of the summer months and completely normalize. 

It’s the other countries that are fucked and will need sovereign currency nations to stay strong so we can purchase their goods and services. They are entirely reliant upon our success and the ability of our consumer class to purchase their exports. They gave up the right to control their currency destiny and have to hope that we get our poop in a group to build a more resilient global economy that can take care of the world’s population and slow the disastrous consequences of climate change. 

A couple of final points for Unf*ckers and Subf*ckers on MMT. First is that this is not an exhaustive examination of its principles. Just the most pertinent to the line of thinking that we have been encouraging in our little pod world experiment thus far. There are deeper and wonkier places to take the MMT discussion such as trade wars and deficits and Social Security. So I really do encourage you to check out The Deficit Myth by Stephanie Kelton to dive deeper down the MMT rabbit hole. We have it posted on our bookshop.org account so buy it there and support a local bookstore instead of Jeff Bezos. 

I also want to call back our PITOTWIU moment where we kicked things off today. This infrastructure debate is a fucking joke. As Kelton notes, prior to the pandemic and talk of Biden’s infrastructure bill, “the American Society of Civil Engineers gives a D+ grade to America’s infrastructure. They estimate it will take $4.59 trillion over a ten-year period to get it up to appropriate standards.” 

To be clear, this initial plan at $700 billion takes a small bite out of it but spends just as much on new energy infrastructure like charging stations - valid, but not what the civil engineers are referring to - as it does on shoring up our physical infrastructure. So even if Biden is successful at getting through the entirety of his plan, which is highly fucking unlikely because of people like Joe Manchin and Kyrsten Sinema, it’s just slightly above what is supposedly needed to “get to appropriate standards.” So when you hear progressives like Bernie and AOC say, “great start, not enough,” they’re not being difficult. They’re fucking right. 

And that brings us to our Tyson Principle for today. It’s pretty basic really. The only people in the country talking about pressing an agenda to create a public works program to lean into what Kelton calls a “care economy” are progressives. And as she goes on to say, “the benefits of a federal job guarantee not only include the production of goods, services, and income. The guarantee also features on-the-job training and skill development; poverty alleviation; community building and social networking; social, political and economic stability; and social multipliers.” 

I know this feels rudimentary to Unf*ckers but the imperative here is to borrow from the conservative playbook to stack the congressional deck with progressives. To mobilize in your individual communities around fresh progressive candidates in primaries against establishment Democrats. They’re the only ones reading and understanding concepts like MMT. The only ones who understand that our debt can be managed with a keystroke at the Federal Reserve, the issuance of currency to retire outstanding debt or the gradual decrease in treasury sales over time. The only ones that grasp that Japan’s 240% debt to GDP ratio had zero impact on inflation because it too is a sovereign currency nation. 

To bring it back to our Trump episode as well for a minute, where we offered tips on how to speak to a Trump supporter to gain their trusts and shift the narrative away from us versus us to us versus the monied class, try not to get caught up in the “tax the rich” argument because you won’t change anyone’s mind. Tax the multinational corporations and show how it will help both the rich and the working class as we build a more competitive economy that can adapt more effectively to combat the effects of climate change. 

Understand from MMT that taxation doesn’t actually pay for anything. It’s why rules like Paygo in the House and the Byrd Rule in the Senate were meaningless and destructive. The government doesn’t need our tax money to fund its initiatives. If it did, we would have bankrupt the country ten times over already paying for moon landings and war. Taxation levels the playing field in terms of inequality and prevents über-wealthy people from buying the political process, but going after individuals instead of corporations is a losing strategy. 

These ideas have been around for quite some time. In fact, some economists like Paul Krugman are almost insulted and annoyed by the simplicity of it because they know fiscal Keynesian policy, even to the extreme, to support spending on beneficial goods and services with infinite need and supply like healthcare, like infrastructure, like broadband, don’t cause inflationary pressures and that a sovereign currency nation has the ability therefore to pay down these debts. 

MMT is the nail in Milton Friedman’s coffin and marks a shift away from the balanced budget and debt trap that has guided public policy forever. If we can pay to destroy the planet and its inhabitants through tax breaks on fossil fuel companies, maintaining 800 military bases worldwide and spending nearly $800 billion per year on our war machine, then we can pay for healthcare, eliminate extreme poverty and ensure that no child is homeless or food insecure in this, the wealthiest, currency sovereign and misguided nation that ever existed. 

FMF. FRM. MMT. 

Here endeth the lesson. 


Book Love

Stephanie Kelton- The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

Pod Love

UNFTR Economics Playlist: spoti.fi/3yH2O9Z


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