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The modern idea in MMT (which is a pretty old philosophy by now) that taxes create demand for the currency. Which helps with stability, since businesses/people

The modern idea in MMT (which is a pretty old philosophy by now) that taxes create demand for the currency. Which helps with stability, since businesses/people can't just abandon trade with the currency in the event of devaluation. It should not be seen as a mechanism primarily used to finance government spending (that's what debt is for). For a country the size of the USA, balanced budgets (tax inflows = government spending outflows) create currency issues, since there's demand for government debt as a store of wealth. What can Apple do if the government decides to stop issuing t-bills? They'd pay a dividend, but then that leave the receiver of the dividend with the same problem. Or maybe they'd purchase an existing t-bond for over market value (effectively increasing interest rates). The government will issue as many bonds as the market has demand for as a store of wealth, but the government also decides the interest rates it is willing to pay. The idea being, the government has better control over inflation, since government spending drives inflation, but high interest rates curb it (though, I believe this is still an active area of research).

hgomersall 2y ago
MMT largely rejects interest rates (and monetary policy in general) as a useful tool in macroeconomic policy in favour of fiscal policy. The general position is that since the marginal cost of money is basically zero, the markets in useful stuff are better able to operate if the money markets don't complicate things, and that monetary policy is not a very good tool to achieve the desired objective (weak, and potentially counterproductive at times). If a particular political objective is desired, then use more direct government tools to do that - laws and regulations, rates and duties.
- result2vino 2y ago
  And that’s the beauty of it. When has “simple is better” not ended up being true!? Whenever I read about ‘interest rates’ and other monetary policy blah blah, all I see is a group of people high on their own supply, all thinking that they’ve come up with something ‘cool’ and ‘smart’ and ‘elegant’. But, in reality, it breaks with some degree of regularity.

hgomersall 2y ago

MMT largely rejects interest rates (and monetary policy in general) as a useful tool in macroeconomic policy in favour of fiscal policy. The general position is that since the marginal cost of money is basically zero, the markets in useful stuff are better able to operate if the money markets don't complicate things, and that monetary policy is not a very good tool to achieve the desired objective (weak, and potentially counterproductive at times). If a particular political objective is desired, then use more direct government tools to do that - laws and regulations, rates and duties.

result2vino 2y ago
And that’s the beauty of it. When has “simple is better” not ended up being true!? Whenever I read about ‘interest rates’ and other monetary policy blah blah, all I see is a group of people high on their own supply, all thinking that they’ve come up with something ‘cool’ and ‘smart’ and ‘elegant’. But, in reality, it breaks with some degree of regularity.