3 ms·
"Conceptually the answer in the theory is to suck up the excess money with taxes" Huh, why is that the answer? Why wouldn't the conceptual answer be "do the op
by eigenvalue 5y ago
"Conceptually the answer in the theory is to suck up the excess money with taxes"
Huh, why is that the answer? Why wouldn't the conceptual answer be "do the opposite", i.e. sop up the excess liquidity by removing money from the money supply, by doing things like raising interest rates, increasing bank reserve ratios, and selling some of the trillions of dollars of securities already on the Fed's balance sheet? The last thing anyone should want is the government to take a lot more in taxes so it can be squandered on foolish projects. Also, once government programs start up and build/lease buildings and hire a bunch of people, they are almost impossible to get rid of (the process of terminating a Federal employee is a Kafkaesque nightmare).
- hfourm 5y agoI would love more "foolish" infrastructure projects in my area. In my state/city, We are dealing with increasing flooding, overcrowded roads, and could always use more green space. I get your sentiment, but the government could be using that money in positive ways that don't involve spinning up whole new organizations
- 8note 5y agoMMT would say that the government takes the money in taxes, then just burns it The money the government spends is then unrelated to that which it taxes