HailSeitan

@ HailSeitan @lemmy.world

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Joined

2 yr. ago

20h ago

YSK: 1930s Germany used Jim Crow America as a model, which was a resurgence of Antebellum American racist policies — segregation, imprisonment, enslavement, and homicide.
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HailSeitan @lemmy.world 20h ago
Minnesota goddam

21h ago

How Mamdani’s Democratic Socialists Sought Ties With Chinese Officials - Newsweek

Genetic fallacy lol

It sounds like your friend has been exposed in a rudimentary way to Modern Monetary Theory (MMT), some of the tenets of which are controversial but which makes some solid conceptual points.

One of those more plausible points is that a sovereign currency issuer (like the US, which is the sole issuer of the US dollar), by definition, creates the currency it issues. The federal reserve creates dollars not by taxing or borrowing, but by entering zeroes into a spreadsheet and then spending (or lending) those dollars into the economy, which are only then available to be taxed or borrowed. This is the STAB (spend, then tax and borrow) model.

This differs fundamentally from all other users of the currency, including households (like you and me) as well as US cities and states, which even if they have the power to tax are not currency issuers, and thus have to operate on a TABS (tax and borrow, then spend) model. (They typically can’t run a deficit either and have to balance their budget, unlike the federal government.)

Now, just because conceptually the federal government doesn’t need taxes in order to spend or create money doesn’t mean it’s a good idea! In particular, it may cause inflation. But once we realize that the purpose of taxation is to control the amount of money in circulation, rather than being strictly necessary, it reveals that the limits to spending by a currency issuer are practical (such as how much we can spend before inflation creeps up) rather than conceptual.

One immediate upshot is that if there is enough slack in the real economy to allow spending that wouldn’t create inflation, there’s nothing in principle stopping a currency issuer from doing just that. Another upshot is that this conceptual model gives the lie to all those naysayers who claim that we can’t have nice things because “there’s no money.” In practice we might not do it because we don’t want hyperinflation, but that’s a very different reason from it being impossible in principle.