The entire US economy is floating on the stock market rn and that's scary as hell.
The Fed is now primary market maker.
This now closes the MMT circle of value, where those companies which pay taxes are now directly owned in part by the state.
This allows the Fed to infinitely inflate their balance sheet while not actually weakening the dollar.
This now closes the MMT circle of value, where those companies which pay taxes are now directly owned in part by the state.
This allows the Fed to infinitely inflate their balance sheet while not actually weakening the dollar.
In cryptocurrency terms, the money you pay in taxes is now "burned" by the state.
Here's an example of how that works:
Fed prints money -> Fed buys Boeing stonk -> stonk goes up -> Boeing pays taxes
Now... if that tax money isn't destroyed... it effectively doubles the amount of USD in circulation, weakening the value of the dollar.
Fed prints money -> Fed buys Boeing stonk -> stonk goes up -> Boeing pays taxes
Now... if that tax money isn't destroyed... it effectively doubles the amount of USD in circulation, weakening the value of the dollar.
But what then is the federal budget?
It's allegedly based on the taxes collected, but it's not.
Taxes collected and the data from which taxes are computed, are used to calculate Gross Domestic Product (GDP)... which is the overall value of the US economy and a vital MMT metric.
It's allegedly based on the taxes collected, but it's not.
Taxes collected and the data from which taxes are computed, are used to calculate Gross Domestic Product (GDP)... which is the overall value of the US economy and a vital MMT metric.
The federal budget and the process of "balancing" is actually an anachronistic practice as of this year.
Payroll taxes, which impact low income earners the most, are quite literally theft to keep the poor, poor.
Modern Monetary Theory is what happens when Austrian economic systems reach such a scale that the value of the economic systems themselves becomes predictable and stable without the need for physical backing.
MMT is to economics what quantum physics is to Newtonian physics.
MMT is to economics what quantum physics is to Newtonian physics.
In much the same way as one wouldn't use quantum physics to predict the path of a cannon ball, one would not use MMT in order to describe the economic function of any individual facet of the US economy.
This "event horizon" between operating economic theories is going to continuously confound purists for the next decade until they either have their come to Jesus moment or just shrug and find a new occupation.
Now since the Fed is buying billions of dollars in public companies we can measure the amount of new money leaving the markets and going into greater economic circulation as a function of the amount of purchases to the rate of increase of the market, itself.
People who sell into the Fed's buy orders and then exit those funds from the market are the real measure of how much inflation is actually occurring.
Money that never leaves the market... isn't real.
Money that never leaves the market... isn't real.
Tracks.
Not to mention, economic battles between super powers rely on pegging ubiquitous commodities to their central bank currency.
Inflating the US dollar has the potential to increase liquidity and standards of living for all nations who use the USD for their own fiat valuation.
Inflating the US dollar has the potential to increase liquidity and standards of living for all nations who use the USD for their own fiat valuation.
That increased liquidity through trickle-down economics (via economic assistance packages) will never increase the price of milk on grocery store shelves, having a zero net impact on domestic inflation.
So under MMT as currently implemented where does inflation actually happen?
a) overspending of the federal budget
and
b) money exiting the stock market
a) overspending of the federal budget
and
b) money exiting the stock market
The first thing you learn in crypto after being a one-minute millionaire for the first time is that regardless of the price of the asset or the depth of the order book, money that isn't in your pocket isn't actually yours.
Also under MMT, those people who say "taxation is theft" are more correct than they have ever been, as 70% of taxes collected by the federal government are income taxes and payroll taxes.
I can't help but think we are a couple of years away from a real conversation about a national sales tax, as the disparity between taxes paid by citizens and taxes paid by corporations are now greater than ever before.
A national sales tax would also flatten compliance across the board, so money made in markets wouldn't be taxed as cap gains, creating positive incentive for money made in markets and withdrawn (inflation) to be spent on things like houses and washing machines and Teslas.
The increased spending then translates into profits, which appear on quarterly or yearly filings w/ the SEC, which in turn translate into valuation of the stock price and the circle is closed.
There is also now less incentive than ever before for companies to remain private.
It's going to be really tough to compete against public cash flows.
It's going to be really tough to compete against public cash flows.
FWIW I feel this has been the overall plan since 2008, but the coronavirus crisis allowed for its acceleration with minimal complaint.
Exactly.
Universal healthcare and 100% employment let’s do this
Universal healthcare and 100% employment let’s do this
That’s...not how that works.
