He says, yes taxes are sometimes necessary.
I say that, the people end up with more money in the short run and in the long run.
In the short run, deficit spending is in the economy so small business owners make more sales, so they hire more people, so wages in general rise, and big corps end up with the money after the effects above have happened.
. . . If there is too much deficit spending, then there will be inflation. [There will be inflation because that was assumed. If deficit spending had been a little less there would not have been inflation.]
. . . OK, now that there is the assumed inflation, what policy does MMT say should happen and then will happen when that policy is applied? MMT may call for more taxes to reduce demand to reduce inflation. And this will reduce the inflatin so that taxes can be reduced as unnecessary any longer.
. . . The result is that in the short run the workers and small business owners earn a lot of additional money; and then for a while some but not all of that extra money is taxed back out of the economy.
MMTers are calling on their being a system to raise and lower taxes in response the the economic situation.
. . . Yes. I know that is unconstitutional in the US.
. . . This is why I have suggested that the system not be raising and lowering taxes.
. . . MMT asserts that the economy requires that the trade deficit and people's savings needs to be replaced every month to keep the economy going. This total can be fed back into the economy each month as a UBI payment to everyone.
. . . So, instead of changing taxes, I have proposed that the UBI system be handled by the Fed. Every citizen would be given an account at the Fed. Each week or month the Fed would deposit the UBI money into every account. The acc. holder would spend the money into the economy. The Fed would raise and lower the UBI payment as necessary to regulate the economy.
. . . My hope is that this can be done like the QE operations that the Fed. has been doing since 2010, and therefore is constitutional.
Of course, every Fed board member would have to be an MMTer to make this work.
Bill Mitchell wrote: There was an unedifying and fairly undignified war on Twitter recently about whether Modern Monetary Theory (MMT) economics advocate using taxes to deal with inflation. Like all these Twitter ‘debates’, the opening proposition was a ‘gotcha’ attempt that was correct from one angle but then missed the point when it was applied to whether MMT is a valid framework or not. The responses from the MMT ‘activists’ were also overly defensive and reflected the fact that they had fallen for the framing trap presented by the antagonist. In this blog post, I want to clarify the MMT position on the use of taxes and inflation policy. What you will learn is that both positions presented in that Twitter war were largely erroneous, and, conflated concepts, either knowingly (probably not) or unknowingly, to leave a muddy mess. As the cloud became thicker, the ‘debate’ descended, as all these Twitter exchanges seem to, into unhelpful accusations of racial insult, claims of ignorance and stupidity, and worse. Not very helpful.