The “debt” of a monetarily sovereign state is really nothing like the debt of a household or business. The US could pay off all its debt in an instant by an act of Congress. Not saying that would be a good thing, but there are no financial constraints stopping Congress from doing that; only political ones.

I agree on how yield curves work. My point is that issuing bonds are not necessary to begin with. It is completly voluntary on the part of Congress. It is purely a political choice that the Treasury must issue bonds approximately equal in amout to the budget deficit. The bonds are not used for financing the government, as it is able to issue the currency it spends, but rather as a drain on reserves in the baking system to help the Fed reach its interest rate target.

Bond sales are only politically connected to the budget; not financially. Not selling bonds would in no way hinder congress from passing a budget.

Increasing the government “debt” isn’t bad in itself though.

Now fix climate change by global reduction of CEOs.

How is that? In my view, MMT follows logically from the simple accounting idintity that debits and credits must balance, and the oberservation that the government is the monopoly issuer of its own currency. I’d be glad to hear your perspective though.

Noone gets it really. The government collects it, but then it “burns” it, just like it does tax revenue.

Totally agree. The intial tax liability declared in a currency has the purpose of creating demand for the currency so that people, either directly or indirectly, want to work for the government to get the money they are issuing. This effect is probably most import when the currency is first created, but at the same time also the most important function of tax: It is what goves the money its value.

Totally agree. I am definately an MMTer myself. The mailman example is very good, by the way.

True, but somene has to, and they will create a demand for the currency. If I hear that Joe the baker needs money to pay taxes, and I want to buy bread from him, I know he will accept the government currency as payment for his bread. This in turn makes me demand money to be able to buy the bread.

That is true, but Bitcoin, like all other crypto"currencies", is a Ponzi scheme. Its value is driven purely by speculation, and the hope that it can be passed on to a “greater fool” for profit. This is true for a lot of financial assets, by the way.

The government “debt” is not a problem whatsoever. It cannot be a problem. The so called debt is simply the difference between the amount of money created and the amount taxed. If there was no “debt” there couldn’t be any saving in an economy. If the government wanted to, it could simply “print” the money to pay off all its debt tomorrow. It souldn’t necessarily be a smart thing to do, but there wouldn’t be any financial constraints stopping them from doing it.

I agree, but that leads to an infinite regress of your parents observering their parents, etc. My argument is really about the start of this chain.

• that people always act in their own best interest (they fucking don’t)

Totally agree

• that people can actually choose not to buy the product

This is actually pretty well deacrived by what’s called the price elasticity of demand in standard neoclassical models. For things like housing one might say that the demand is very inellastic: A change in price does not affect the quatity demanded.

The reason that you and everyone else believe in it is primarily because you need it to pay taxes, so the belief is not arbitrary.

There actually isn’t such a thing as a “natural rate of unemployment”, so all of those 4% are part of the excess productive capacity.

There will always be some people out of work for various reasons

If those people are unemployed simply because their previous contract expired a bit before their new one started (frictional unemployment), then I agree it is totally unproblematic. If it is because there aren’t enough jobs going around (structural unemployment), it isn’t.

That money comes from somewhere

All money in monetarily sovereign countries come from government spending: It is spent into existence by the central bank marking up the reserve accounts of the banks of the people and businesses it pays to. The money in circulation and saving is simply the difference between total government spending and revenue. It is important to realize the order of operations here: The governments has to spend before it can tax, or else there wouldn’t be any money to tax.

[…] pulls resources (employees, production, etc) from other parts of the economy, increasing the costs of the remaining resources since there’s less available.

That is why I specified that there needed to be excess productive capacity for whatever they are buying. As long as the economy is not at full employment, the government isn’t bidding up the prices with its spending.

At full employment though, you are absolutely right.

Both Weimar and Zimbabwe, and all other examples of hyperinflationary economies (many Latin American countries come to mind), had large debts denominated in foreign currencies, or had fixed exchange rates with such. This makes the government depenent on aquireing these forein currencies which they themselves cannot issue. Printing your own currency to pay these debts is definately inflationary, but doing so to pay for goods priced in your own domestic currency, when there is excess productive capacity, is not.

Fiat currencies are actually backed by the tax liabilities denominated in them. If you are liable for one of my business cards, else a guy with a gun shows up at your door, you suddenly have demand for my business cards.

Then, imagine if the comic printing company had a guy with a gun going around demanding everyone give him an amount of comic books each year. Now suddenly everyone is looking to get the comic books, driving their values up.

This is how taxes are driving the value of modern money.