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Mmt

Welcome to the WikiEdit

A Crash Course in MMT MacroeconomicsEdit

  • Taxation creates unemployment in the monetary economy.
  • Taxation does not raise money - it destroys it!
  • Issuing government debt does not raise money - it destroys it!
  • Budget Deficits drive interest rates down!
  • Budget Surpluses can cause recessions!
  • Budget Deficits are limited by their effects on inflation, not GDP ratios.
  • If you believe otherwise, how do you explain Japan?!!

Once More with FeelingEdit

  • Taxation creates unemployment in the monetary economy.
  • Taxation does not raise funds for the government - it destroys spending capacity in the private sector!
  • Issuing government debt does not raise funds for the government - it takes funds from the private sector!
  • Budget deficits drive interest rates down!
  • Budget surpluses can cause recessions!
  • Until you you see accelerating inflation the government is either taxing too much or spending too little.
  • If you believe otherwise, how on earth do you explain Japan?!!
  • Private sector savings comes from budget deficits or external account surpluses
  • Loans create deposits (the money multiplier is a myth)
  • Trade surpluses are a cost to an economy, NOT a benefit

Modern Monetary TheoryEdit

Modern Monetary Theory is a monetary standard in which government-issued tokens are used as the unit of money. In such a system, fiat money is created by government spending. Taxation is employed to reclaim the money and control the total amount of fiat money in existence. Reclaiming most of this issued money via taxation is essential to maintaining its value in exchange.

Modern Monetary Theory states that under a fiat money system, net currency is created by government through deficit spending. Because the issued currency is not tied to or backed by a commodity, currency can only be created when the government spends. Government may, or may not, ask for that currency back in taxes. The demand to hold and acquire this government issued currency is driven by taxes levied by the state – which typically can only be paid in the state-issued fiat currency.

The theory was developed by economist G.F. Knapp into the 1920s, with important contributions by Alfred Mitchell-Innes also. It was influential on the 1930 Treatise on Money by John Maynard Keynes – Knapp and Chartalism are cited approvingly on its opening pages.Chartalism experienced a revival under Abba P. Lerner, and has a number of modern proponents, who largely identify as post-Keynesian economists.

Many proponents of chartalism argue that a fiat system is preferable to a commodity money system, particularly because it allows for government deficit spending for fiscal stimulus in ways not possible under a commodity money system.

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