How should the US handle its debt?

[The Artist formerly known as Sappho]

So you can’t explain it?

Lol. I'm having fun by learning how stupid you are. Not even the pink writing, which was a clue for you to help you find the relevant text you seek, caused any neural activity.

[Jovial Monk]

You didn’t/couldn’t explain it last night. This morning you got the hump.

Give this stupid person, oh all wise Sappho, a simple clear explanation of what that piece of gobbledygook of yours means, if you can.

[The Artist formerly known as Sappho]

You didn’t/couldn’t explain it last night. This morning you got the hump.

Give this stupid person, oh all wise Sappho, a simple clear explanation of what that piece of gobbledygook of yours means, if you can.

I am not Sappho. What matters more; who you are talking to or the ideas you are talking about?

As to clear, simple explanations, I have done that. I'm sorry you are not bright enough to understand the concepts, but in your defence, they are not as simple as you would hope them to be. No wonder you merely provide links and no discussion beyond one liners. However, maybe Leftwinger will rejoin the discussion and pick up where you cannot.

[Jovial Monk]

I doubt you have a clue WTF you are talking about. You wish to appear all-knowing but you never do, you just sound false and pretentious.

You made a statement and still have not explained it.

[Leftwinger]

I'm heading out this evening and don't have time to respond - Wile E, I really think you're just drawing your own interpretation here. I can't really see much evidence that you actually understand what you're talking about but I'll read you again thoroughly in the morning.

[The Artist formerly known as Sappho]

I'm heading out this evening and don't have time to respond - Wile E, I really think you're just drawing your own interpretation here. I can't really see much evidence that you actually understand what you're talking about but I'll read you again thoroughly in the morning.

Leftwinger, all I have done so far is outline the MMT/FFT concept and then question the function of tax in that concept. I am not looking at the current system through MMT/FFT lenses, nor am I looking at the MMT/FFT system through the current currency perspective. To do so would result in questioning the existence of tax and the federal reserve.

Rather I have isolated the concept and have questioned the function of tax in that concept, which is deemed to be a 'should' of that concept without justification of why it 'should' be.

What you need to appreciate is that the MMT/FFT does not describe our currency system, it describes what our currency system should look like. Our current currency system applies some principles of MMT/FFT and some of a gold standard currency.

Second, this system in its current format is not very old and most of the people in power currently were educated by a generation in which this system was not largely applicable. Despite the fact that the world changed dramatically in 1971 when Nixon closed the gold window, we continue to work under theories and textbooks that don’t fully account for this change. Therefore, the theories of old run rampant in modern economic circles.

http://pragcap.com/resources/understand ... ary-system

Enjoy your evening.

Edit: To add a quote. It has been decided by Leftwinger and Monk that if you cannot prove what you say with an appeal to authority, you don't know what you are talking about; apparently.

[Jovial Monk]

What you need to appreciate is that the MMT/FFT does not describe our currency system, it describes what our currency system should look like. Our current currency system applies some principles of MMT/FFT and some of a gold standard currency.

Actually, that statement isn’t quite correct.

I think MMT does describe our fiat currency system, however the Treasury etc do not use MMT principles, behaving as if our monetary system is still Bretton Woods style.

[The Artist formerly known as Sappho]

Now, bringing this back to my first criticism of MMT/FFT which was the necessity for tax.

In the gold standard system, as wiki says;

Taxation has four main purposes or effects: Revenue, Redistribution, Repricing, and Representation.[citation needed]
1. The main purpose is revenue: taxes raise money to spend on armies, roads, schools and hospitals, and on more indirect government functions like market regulation or legal systems.
2. A second is redistribution. Normally, this means transferring wealth from the richer sections of society to poorer sections.
3. A third purpose of taxation is repricing. Taxes are levied to address externalities; for example, tobacco is taxed to discourage smoking, and a carbon tax discourages use of carbon-based fuels.
4. A fourth, consequential effect of taxation in its historical setting has been representation. The American revolutionary slogan "no taxation without representation" implied this: rulers tax citizens, and citizens demand accountability from their rulers as the other part of this bargain. Studies have shown that direct taxation (such as income taxes) generates the greatest degree of accountability and better governance, while indirect taxation tends to have smaller effects.

I think the fourth, consequential effect of taxation is a misnomer. Surely, accountability is found within the democratic system itself. The catch cry of the Boston Tea Party was to rally people to the idea of American independence and not a demand for accountability from government. The concern is better expressed by saying that only the government under which you live, has the right to tax your assets, because other governments do not seek to satisfy the conditions of the first three points in the quote above in that nation in which you live. Rather, they are taking taxes from another country so as to redistribute amongst their own nation and not the nation from which they were taken.

Under the MMT/FFT system;

We tax in order to create demand for the currency. In addition, it controls aggregate demand or effectively, the money supply

http://pragcap.com/resources/understand ... ary-system

I can find no justification for this statement. So Leftwinger, please explain what that quote above, from a MMT convert, means. So far as I understand it is supply and demand that create a demand for currency and not tax. It is GDP that gives the currency value. Regulation controls how that money can be used.

[The Artist formerly known as Sappho]

Under the MMT/FFT system;

We tax in order to create demand for the currency. In addition, it controls aggregate demand or effectively, the money supply

http://pragcap.com/resources/understand ... ary-system

I can find no justification for this statement. So Leftwinger, please explain what that quote above, from a MMT convert, means. So far as I understand it is supply and demand that create a demand for currency and not tax. It is GDP that gives the currency value. Regulation controls how that money can be used.

Taking this further;

There is one important fact here that cannot be overlooked, however. In order for the citizenry to transact in my currency (and ultimately pay their taxes) I must spend some amount of currency into existence FIRST. This is important to understand because I must issue notes BEFORE I can tax. Therefore, you can see that I am not funding my spending by taxing. In fact, it is exactly the opposite. I am funding the private sector’s ability to pay their taxes when I spend money into existence. When the citizens pay their taxes, the government doesn’t “have more money”. After all, they have a computer system that credits accounts and prints up bills. It is impossible for them to “run out” of money. So, from a very technical perspective, it is better to think of the government as never having money.

http://pragcap.com/resources/understand ... ary-system

So tax controls the money supply, yet supply is determine before they can tax the amount of currency they will spend into existence! Do you not see an contradiction here? How can you spend into existence without also controlling the amount supplied?

Surely GDP, labour costs and financial mechanism (properly regulated) determine the amount of currency to be spent into existence and so satisfy supply and demand.

[Rainbow Moonlight]

Tax provides for the social good in general. It allows building roads, which benefits the private sector and workers. It keeps workers healthier. It provides an incentive to work in the form of the old age pension in retirement. It keeps a work force active and ready for employment. It helps prevent the spread of disease(which spread impacts on work and productivity. It helps educate a workforce. It helps provide infrastructure that supports for export and domestic sales.

Yes, in a currency system that has finite currency, such as the sea shell standard in the example provided previously or the gold standard, that is the case. But in a currency system that has infinite currency, tax becomes irrelevant. If the people need a common good, then the government credit the funds needed for that common good to be created.

My argument may be shaky now as I am not sure I get the idea of MMT.

However, if it is to do with floating the dollar and not having a gold standard then it seems to me that what that enables is that all floated currencies are relative to one another and are bought and sold(as they have varying relative values). However what can be bought with a US dollar or an aussie dollar or a yen or euro is still going to be related to the amount of the curr4ency in circulation. so there is still a sense in which there is a limit to printing currency or creating credit or whatever you call it because relative value and purchasing power is real.

As that is the case, it still makes more sense to tax productive industry to provide the social/economic good necessary to support productiev activity in an economy, even in a MMT scenario.