MMT
Would argue that in a time where aggregate demand is down, the government should cease taxation (or drop it to the lowest level possible) and increase spending. You have to remember taxes only “cool inflation” but you have to address aggregate demand before you even consider inflation. As long as you can remember that taxes don’t fund the government or government entitlements, the conclusions of MMT are easy.

My belief
The problem being taxes and debt fund the government not fiat currency and the government should make capital available (for both supply and demand – econ people sometimes forget the producers need capital as well) put those together and the government should reduce it’s own spending, reduce taxes and reduce regulations in the market place that prevent the moving of capital (Barney Frank I am looking at you) or restrict supply.

The only thing I presumed was I had floating up in my brain some pieces of information that you did not (this being much different than presuming you incapable of acquiring the knowledge were to take the time). I made this presumption because BB’s responses about FICA are entirely reasonable inside a belief system of MMT. The contradiction you see is indicative of one of the weaknesses of MMT (there are many and they have been pounded to death); it breaks down when you add people to the equation.

Straight MMT theory would be to reduce taxes to increase capital so people can spend it to drive demand; the problem is people mess it up by deleveraging their debt they would otherwise continue to finance (i.e. they didn’t buy a cheeseburger and they didn’t free up money to buy a cheeseburger – they freed credit they won’t use or the bank won’t give them). This is a problem with lots of economic theory, people screw up the theory because of their hopes, dreams and fears.

I didn’t think about a canned response (I am not even sure what that means) or your ability to google (I am pretty sure I didn’t think about it one way or the other because well it doesn’t matter to me).

My point is bbjaylive isn’t going to find your argument compelling; no matter how you couch it; phrase it; scream it. In return, you don’t buy his argument and never will. The discourse had dissolved to one guy calling one a moron and the other demanding an answer. As to how I would respond…I’d really not care that you were telling me this other guy aint going to agree with you because he’s a lefty. I’d just say “You’re right. But this guy is just baking my biscuits”

are going to go full Devil Anse and Ole Ran’l on us.

In fact it’d be close to Austrians for ones, he thinks is worst hooey. Even though the conclusions of MMT on public policy end up in line with him, there are times when he remembers he was once Dr. Paul Krugman, Professor of Economics, Nobel Prize Laureate. Here is Dr. Paul Krugman writing about MMT…

Dr. Paul Krugman on MMT…

“But I do get the premise that modern governments able to issue fiat money can?t go bankrupt, never mind whether investors are willing to buy their bonds. And it sounds right if you look at it from a certain angle. But it isn?t.

Let?s have a more or less concrete example. Suppose that at some future date ? a date at which private demand for funds has revived, so that there are lending opportunities ? the US government has committed itself to spending equal to 27 percent of GDP, while the tax laws only lead to 17 percent of GDP in revenues. And consider what happens in that case under two scenarios. In the first, investors believe that the government will eventually raise revenue and/or cut spending, and are willing to lend enough to cover the deficit. In the second, for whatever reason, investors refuse to buy US bonds.

The second case poses no problem, say the MMTers, or at least no worse problem than the first: the US government can simply issue money, crediting it to banks, to pay its bills.

But what happens next?

We?re assuming that there are lending opportunities out there, so the banks won?t leave their newly acquired reserves sitting idle; they?ll convert them into currency, which they lend to individuals. So the government indeed ends up financing itself by printing money, getting the private sector to accept pieces of green paper in return for goods and services. And I think the MMTers agree that this would lead to inflation; I?m not clear on whether they realize that a deficit financed by money issue is more inflationary than a deficit financed by bond issue.

For it is. And in my hypothetical example, it would be quite likely that the money-financed deficit would lead to hyperinflation.

The point is that there are limits to the amount of real resources that you can extract through seigniorage. When people expect inflation, they become reluctant to hold cash, which drive prices up and means that the government has to print more money to extract a given amount of real resources, which means higher inflation, etc.. Do the math, and it becomes clear that any attempt to extract too much from seigniorage ? more than a few percent of GDP, probably ? leads to an infinite upward spiral in inflation. In effect, the currency is destroyed. This would not happen, even with the same deficit, if the government can still sell bonds.”

The depart on how they see the functioning streams of the government; Krugman believes those streams are taxes and debt and that the debt is financed through bonds (pretty much how we all see it) i.e. Government spending is constrained to what it can raise through taxes and bond sales not infinite. That’s the key difference Krugman doesn’t believe government funding is infinite where Mosler does.

He doesn’t see fiat currency as a funding stream for the government i.e. he sees the Fed as separate from the government and it’s mission as to provide capital to banks when they need it – at a rate that banks can then push out to stimulate demand.

I’ll agree the difference is subtle (and that they are both wrong and that they lead to similar policy conclusions). I try to remember, Kruggie is running a con; he knows what he is selling is chicken crap. Just remember though, MMT is the big government economic theory that not even Kruggie can sell. Think about that last sentence and smile.