5 ms·

As I understand it taxes in MMT are just destruction of money, it's the essential counterpart of money creation used to balance supply. It's irrelevant to GDP a

As I understand it taxes in MMT are just destruction of money, it's the essential counterpart of money creation used to balance supply. It's irrelevant to GDP and spending in that model, since in MMT the government doesn't need taxes to spend, it just print what it needs, that's the core idea.

Scarblac 5y ago
I seem to recall that France used to do this -- create money for government spending, taxed money ceases to exist, no need for government debt. But I can't find anything about it, and I don't know if I'm just not using the right search terms. Has this been put into practice in large countries before?
- zer0tonin 5y ago
  Is France a small country now?
  - tatersolid 5y ago
    > Is France a small country now? Frances’s GDP is 15% smaller than the single US state of California, and its population is only about 1.67x that of California.
    - zzleeper 5y ago
      Well Cali has 1/7th of the entire US GDP, so it's an unfair comparison. By itself, it would be the 5th largest economy in the world.
  - Scarblac 5y ago
    It's not, I'm just doubting my own memory so was wondering in general if there was an example, France or elsewhere.
nostrademons 5y ago
Interestingly, the mechanics of this seem backward. A major problem with the Fed's operations is that operations on financial markets take 12-18 months to spread to the real economy, so they have to target interest rates now based on what they think the economy is going to look like in 12-18 months. Conversely, money going into or out of the average person's checking account now affects what they do in the real economy now, without a lag time. When we've recovered from significant economic crises (2008 and 2020), it's often been through direct fiscal stimulus. It seems that the logical thing to do would be to put money into the economy through directly giving it to citizens, and then take money out of the economy through interest rates, by making it more expensive to borrow and reducing business investment. Typically you want to put money into the economy in a hurry, in response to a crisis, but you want to take it out gradually, so that businesses can plan ahead. MMT's framing of this still seems backwards, even if they've realized that fiscal and monetary policy are two sides of the same coin. You'd also get a lot less political resistance to the fiscal policy side if it involved giving people money rather taking money away from them.

Scarblac 5y ago

I seem to recall that France used to do this -- create money for government spending, taxed money ceases to exist, no need for government debt. But I can't find anything about it, and I don't know if I'm just not using the right search terms. Has this been put into practice in large countries before?

zer0tonin 5y ago
Is France a small country now?
- tatersolid 5y ago
  > Is France a small country now? Frances’s GDP is 15% smaller than the single US state of California, and its population is only about 1.67x that of California.
  - zzleeper 5y ago
    Well Cali has 1/7th of the entire US GDP, so it's an unfair comparison. By itself, it would be the 5th largest economy in the world.
- Scarblac 5y ago
  It's not, I'm just doubting my own memory so was wondering in general if there was an example, France or elsewhere.

nostrademons 5y ago

Interestingly, the mechanics of this seem backward. A major problem with the Fed's operations is that operations on financial markets take 12-18 months to spread to the real economy, so they have to target interest rates now based on what they think the economy is going to look like in 12-18 months. Conversely, money going into or out of the average person's checking account now affects what they do in the real economy now, without a lag time. When we've recovered from significant economic crises (2008 and 2020), it's often been through direct fiscal stimulus. It seems that the logical thing to do would be to put money into the economy through directly giving it to citizens, and then take money out of the economy through interest rates, by making it more expensive to borrow and reducing business investment. Typically you want to put money into the economy in a hurry, in response to a crisis, but you want to take it out gradually, so that businesses can plan ahead. MMT's framing of this still seems backwards, even if they've realized that fiscal and monetary policy are two sides of the same coin. You'd also get a lot less political resistance to the fiscal policy side if it involved giving people money rather taking money away from them.