Real Progressives Interview1
I recorded an interview with Steve Grumbine (Real Progressives) this morning (US time Tuesday evening).
Dr Bill Mitchell joins Real Progressives to discuss MMT, Money Creation and a Progressive Agenda2
Links and Commentary3
First things first we have a sovereign, non-convertible, free floating fiat currency that is backed by an obligation: taxation.
Second: no one says we can just “print da muney”… all dollars are merely a tax IOU and are created by keystrokes. The birth of a DOLLAR is congressional spending and the death of the DOLLAR is taxation
Third: QE is not creating money. It is merely swapping debt for liquidity. Banks do not lend reserves… so even a cursory understanding of the hierarchy of money would be excellent.
4th: taxes do not fund spending at the federal level but they do at the state level. This is universally true.
Greece is a currency user. Puerto Rico is a currency user. Flint Michigan is a currency user. They are dependent on taxes and investments to fund their operations.
The USA, The UK, Australia, Russia, Canada, China and Japan for example are currency issuers. They are state driven fiat currencies. They are each MONETARILY SOVEREIGN.
Some are fixed to a gold peg. Some are fixed to a dollar peg… all are fixed to a tax obligation that gives value to the currency
The dollar is not backed by oil. It is backed by the tax that drives it. It is constrained only by real resources and not solvency.
Money creation occurs with every single dollar the Federal government spends. An actual new net financial asset.
Everytime a dollar in taxes is handled via end of year or quarter returns, accounts are adjusted… tax dollars DELETED.
The real constraint on government spending is found in the following conditions
1. Are we at full employment ? No? Then the deficit is not large enough.
2. Are we a net importer or net exporter? In other words, do we have a current accounts deficit? If so, the federal spendimg deficit is not large enough.
3. What is the level of private debt? Do Americans have any disposable income at all? If the private debt is too high, then we need to offset it with spending on the 99% or we will go into recession.
I could go on and on… perhaps this was helpful… if not… there are good resources (…)
Debunking economic lies helps you put the false MSM and conspiracy narratives in thwir place because they are lethal to progress. They have their foundations not in Marx but neoliberal fairy tales.
Sometimes it is just better to be a student and not presume to teach.