1/ @PatriciaNPino Matt’s right that “surplus” is super problematic in MMT-speak. I struggled with it for a decade+. It’s not an accounting term, and its usage is slippery, befuddles many conversations.
2/ Eliezer Yudkowsky’s great solution to these tangles: remove the word from the conversation, replace it with more precise terms.
If the gov uses magic money-tree money to buy existing private-sector-held assets, gov balance sheet expands: +Ls, +As. No change in NW.
If the gov uses magic money-tree money to buy existing private-sector-held assets, gov balance sheet expands: +Ls, +As. No change in NW.
3/ If gov instead taxes-then-purchases assets, it’s +As and NW of course but only Because it Taxed (then swapped). Ls unchanged. So PS: -As and -NW cuz tax.
4/ In either case the asset purchase itself has no accounting effect on private sector total assets/NW. It’s just a swap. (AND a change in PS portfolio mix: more “cash,” less other assets.) Economic effects are another matter entirely.
5/ Assuming gov wants to build a portfolio of collectively-owned assets, should it add Ls (so no change to PS As/NW, just portfolio mix), or tax and buy, moving assets/NW (cash then swapping for equities, land titles, whatever) from the PS to the gov sector? Political Q.
6/ But that question is much easier to discuss clearly without using the word surplus.
