Interesting. It hardly matches what I know of chartalism at all. Maybe my understanding isn't really MMT. (Also, odd that it's regarded as a new thing, since ch

Interesting. It hardly matches what I know of chartalism at all. Maybe my understanding isn't really MMT. (Also, odd that it's regarded as a new thing, since chartalism goes back a good century.) I do take exception with questioning chartalism's validity based on the workings of our system with a federal reserve bank. The existence of a federal reserve is a choice, and one made to limit the ability of the government to print money. My understanding is based on a flows among parts of a financialized system, that is, one in which a large part of the interactions among people have been converted to exchanging units of a currency issued by some institution with a near-monopoly on violence. This happens usually by charging a "hut tax" on all households that everyone is required to pay in the institution's currency, and you can only get it by working for the institution. It can be an indirect hut tax. In company towns, the only access to necessary goods and services like, say, food was via the company store, and you could only purchase there via company scrip, which you got by working for the company or by transacting with someone who did. The English did this in Africa several times, the French did it in Madagascar, etc. Once you have a financialized system, if we look at the flow of dollars around, you have dollars spent (created) by the federal government, dollars taxed (destroyed) by the federal government; you have dollars loaned (created) by banks, and dollars received (partially destroyed) by banks; and you have dollars transacted without loss among non-financial actors. Most of the money created is created by banks in the form of loans. The bank creates $X as a loan to someone. That person uses the $X to do something that hopefully grows the economy, and then pays back $X + $I (interest). The bank destroys the $X again, and keeps the $I (which they use to pay employees, cover loans that default, disburse as profit, etc.). But where did the $I come from? It could have come from dollars created by other commercial banks, but in the end those dollars get destroyed or covered by assets. Eventually, all new dollars have to come from the issuing government. Which means every time the economy grows, you either deflate the currency (fewer dollars chasing more goods) or increase government "debt" (put more dollars into circulation than you take out via taxes). In any growing economy that doesn't have deflation, the government must accrue debt. If your currency is the reserve currency, it's even worse, because basically you have to accrue debt for the whole world's growth, and pay interest on it. In exchange you purchase certain powers over the world's economy. This, for me, is the crucial point of MMT: reporting federal debt isn't the right number, nor the right number to cap. You want to the ratio of increase in federal debt to increase in GDP. To go with that crucial point, you have a crucial question: when you have economic growth, reflected in the currency, whose hands do the new dollars go into?