, 4 tweets, 2 min read Read on Twitter
This piece by @MattBruenig makes the same error that @jbarro made in his critique of, which is the assertion that since MMT prescribes higher taxes as a possible way to combat inflation, that it just gets you back to the classical view of taxes as a means of funding spending...
But if the government undertakes a major new spending endeavor (say, expanding childcare), then taxing some totally unrelated areas (yachts, plane travel, etc) won't do anything to combat inflation, even if the dollar amounts were to match up.
The conventional view would be that as long as the dollar amounts raised from taxes roughly equal the new spending, then that would suffice to contain inflation. But the MMT claim (taxes don't fund spending) points to why this is a problematic assumption.
Unless the taxes somehow free up the real resources that would go to the new endeavor, then they won't get you very far in maintaining stable prices.
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