Warren — I think it would help people understand your position better if you made the connection between our desire to have a functioning government, and that a functioning government “costs money,” and therefore we are willing to honor US currency, and government spending. The points in a football game is a good analogy, but you can’t spend those points elsewhere, so it is a little too dissimilar to currency to work as an analogy for some people.
You don’t want people to start thinking… “so you’re saying everything is a sham?”
You want people to say “Yes. I’d like a government to protect my freedom. Why thank you for this paper money. I will go overseas and fight.” Or “I will build a federal courthouse” Or “I will use my Law Degree to be a judge for the courthouse.” Or “I will use my car knowledge to fix this judge’s car, because I want the Judge to continue to honor the paper money because I, too, love this country and believe in contributing a portion of my labor towards a functioning government.
See where I’m going with this?
Also, in theory, you could tax 100% through inflation. If people never paid taxes, and no money was ever “thrown in the paper shredder” … the supply of money would keep going up, as government has ongoing costs to function, and would continue “printing money” (I know you don’t like that term). We could just do like a reverse stock split with our currency every once in awhile, shave off two zeroes every 25 years or something. We’d still have a target inflation rate, but it’d be much much higher.
Of course that would be disastrous because other countries who use our currency wouldn’t want to be taxed through inflation, but if there was only one country in the world, say.
So maybe you’ll want to take a different approach, but you need to remind everybody that government is a good thing, government takes human labor to run, and the reason people honor the paper money is because the people WANT government in one form or another, and are willing to work towards that end.
Hi Warren and everyone
This is out of subject but I just found that petition on change.org and I though it’d be great if you started a counter-petition, explaining everything.
It could be a great channel for MMT and a good way to stop these horrible scrooges from destroying a hundred years of social progress. Thanks ;-)
Is it in paradigm to describe the effects of additional currency into our economy as too little will lead to deflation, too much will lead to inflation? We must steer the ship based on economic indicators such as unemployment numbers?
@Chris, prices are sticky so too little spending does not necessarily lead to deflation. Nor is all inflation caused by too much spending in the US, since we live in a global economy and are impacted by demand for copper in China, the Russian wheat harvest, and how much the Sauds want for oil, etc.
Too much spending when the economy is running near full capacity would cause demand-pull inflation, but when is the last time the economy was running near full capacity ? WWII ?
@Colin, we give goods and services in exchange for pieces of paper issued by government because we need those pieces of paper to pay taxes. If we get a functioning government out of the deal, that’s icing on the cake.
Given all the talk on Eurobonds ..lets assume they go for it ..but without the ECB guarantee(so continued ponzi) …how do you think it will play out in the markets ?
i am getting the sense the majority think it will be positive so the initial reaction could also be +ve ..
I like the “The federal government doesn’t ever “have” or “not have” any dollars” in explaining to newcomers. Once you accept this concept and understand the govt is a scorekeeper, it comes quite easily. Saying that, it is not an easy concept to accept for most.