MMT describes how money is created – Politics is about how money is taken back

There is an article on ‘Open Democracy’ – to which, for openness, I should indicate that I subscribe – and which I fear is well below their normal standards.

The author broadly endorses Modern Monetary Theory (MMT) but suggests its execution entails increased inequality.

If he endorses MMT – which is, after all, actually the way the system of money creation currently operates – why on earth can he not join up the dots and realise that money creation does not entail that that is automatic creation for the wealthy – that is simply a political choice? Money can be created for any number of people – it doesn’t follow that because Quantitative Easing – where at least he admits the government is owing money to itself – has benefited the wealthy, that that is a consequence of MMT.

He concludes that the wealthy should be taxed. Almost all would agree – including MMT afficianados. But this is a completely separate concept from how money is currently created.

MMT certainly describes how money is created. Politics is about how that money is taken back in order to prevent too much inflation.

And taken back from whom is the ultimate political division – and decision.

Comments

  1. MigT -

    He’s right (IMO) that the distributional effects of QE need redressing by progressive taxation.

    But the assertion that “There is only one group in society who have the wealth to get us out of this crisis, and that is the super rich” is an entirely different, wrong and dangerous idea.

    1. Peter May -

      I agree in all respects…

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