A perfect, crystal-clear explanation of why we need to get over deficit hysteria (and fast), from the father of Modern Monetary Theory. (Thread)
“So why does the Federal Government tax us?
No, not to get money to spend!
In fact, if you pay your taxes with actual cash, they give you a receipt, a thank you, and then throw that cash into a shredder.
True!
And suppose you pay by check.
When the check clears, all the Federal Government does is change the numbers in your checking account downward for the amount of the check. They don’t get anything.
When they write you a check, and when the check is deposited, they change the numbers in your bank account upward by the amount of the check.
This doesn’t use up anything.
They just change numbers.
So this means, operationally, Federal spending is in no case dependent on tax revenues (or borrowing).
So then why does the Federal Government tax us?
Answer: to take away some of our spending power.
But why?
They tax us to take away some of our spending power, so their spending, combined with our spending, doesn’t cause inflation.
If they tax too much, we don’t have enough spending power to buy what’s left for sale after the Federal Govt’s done with its spending.
That’s exactly what’s happening now.
But the Federal Government has taxed away too much of our spending power, so sales are way down and unemployment sky high.
How can it? It’s just changing numbers in our bank accounts in its own monetary system run by its own Federal Reserve.
Because they don’t understand their own monetary system and it’s ruining our lives!
Every year, taxes can be adjusted to make sure we have enough spending power to buy whatever we can produce and want to have.
moslereconomics.com/2009/07/17/fed…