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View Diary: American culture is failing us right now.....We need to evolve. (18 comments)

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  •  Does this mean that taxes are not really (0+ / 0-)

    necessary since printing all the money we need isn't a real concern?

    Money is no object and the only thing holding us back from maximizing our most precious national asset, our people, is ironically.....our own people's culture.

    Never argue with an idiot. They will drag you down to their level and beat you with experience.

    by thestructureguy on Wed May 22, 2013 at 07:50:47 AM PDT

    •  Taxes are not necessary to fund Federal Govt (2+ / 0-)
      Recommended by:
      FG, psyched

      spending.  The only economic restraints on the the amount of money the Govt creates is A) Inflation and B) Exchange rates.

      If the Govt created and spent a dollar amount equivalent to 20% of GDP without taxing anything (20% of GDP deficit).  Then we would very quickly get back to full employment and economic capacity.  Its only after an economy is running at maximum capacity that general demand inflation can become a problem (The classic too much money chasing too few goods).  At this point, any spending that wasn't offset with an equivalent increase in production quantity or a reduction in demand from the private sector through taxation, would increase relative prices (RE:inflation).

      And of course, foreign exchange rates are something that can be effected as well.  As there are more US dollars in the world circulation relative to the demand for those dollars, the exchange rate "value" would go down.  But this is a complicated issue because, so many nations peg their currency to ours and keep their currency values relatively low so that they can employ their people by exporting to us, its hard to predict exactly what the global response would be.  Since, global trade is by definition a zero sum game.  Your exports are my imports etc.

      The point is that, Inflation and Exchange rates are the two things to concern ourselves with when it comes to deciding how much new money the Govt should create each year......the question is never "can we afford this or that"......its will this cause an undesirable increase in inflation or reduction in the global trading value of the US Dollar

      "The Earth is my country and Science my religion" Christiaan Huygens

      by Auburn Parks on Wed May 22, 2013 at 08:22:45 AM PDT

      [ Parent ]

      •  Taxes are necessary (0+ / 0-)

        to establish and maintain the value of the currency. See here. Apart from that they are also useful for containing inflation and for reducing inequality. I notice that at the bottom of the post New Economic Perspectives and Mythfighter are both cited as MMT. But Mythfighter doesn't reflect the MMT point of view either on taxes or on the Job Guarantee program, two essential elements of MMT even though it has many wonderful posts by Rodger Malcolm Mitchell.

        That said, it's great to have you blogging on MMT, Auburn. I've republished this post to The Money and Public Purpose blog and thank you for your contribution to our efforts. I hope you'll do many more.

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