A reminder that taxes don't fund the government they curb inflation. The government funds itself by printing money and taking out loans.
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Sort of. Modern monetary theory ignores any stocks of money or money-like instruments at the government, focussing instead on flows. Spending and paying debt is inflationary, taxing and issuing debt deflationary.
As an economic model it’s nice. As a policy framework in a democracy it’s nonsense. Practically nobody during the inflation scare proposed raising taxes to destroy cash.
I personally would prefer if MMT didn't exist. Or rather, I don't know. I had a marxist/neo-marxist critique of MMT, but I'm post-marxist now (for the dumbest Canadian psychoanalyst fans: it isn't the same thing, even though your idol seems to think it is).
I am, but in a fun way.
> removing money supply (I.E paying back debt and raising taxes) is deflationary
Government paying debt is inflationary (in its own currency). Lender had a debt and not money. Now they have a money and not debt. More MMT ignores money stocks on the government side; we went from investor had paper asset to investor has money. The system has more money than before.
This, by the way, is how monetary policy works. The Fed buys bonds (and sells cash) when it wants to boost liquidity. It sells bonds (and buys cash) when it wants to drain it. The Fed has an infinite pool of notes, the Treasury of debt. MMT conceptually fuses these in an academically interesting and politically useless way.