Spreading the Gospel of Modern Monetary Theory

The New Republic has the article Spreading the Gospel of Modern Monetary Theory.

It is a very good article, but I want you to go into reading the article with the following caution firmly in mind.

A government that issues its own currency cannot run out of money in any real sense and needn’t rely on taxation or budget cuts to make up funding shortfalls. The true limit on spending isn’t the numbers on federal balance sheets but inflation, which MMT proponents argue can be managed by taxation and other policy mechanisms.

All the above is exactly true, but somehow the implications of the message still get lost. We need taxes to control inflation. If we spend and spend until the economy recovers to the point where we need more taxation, it will take too long to get increased taxation through Congress. That’s why now is when we need to introduce the ideas of more steeply graduated tax, fewer exemptions for the wealthy, and a wealth tax. These taxes need also to be flexible to accommodate current economic conditions. (Or maybe it is the government spending that needs to be flexible. Or both)

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