Another #FAKEMMTer goes 0 – 4


1) “Taxes don’t fund spending.”

Swing and a miss…The MMT pillar is that, operationally, “Taxes ARE NOT NEEDED to fund spending (not that they don’t.)”—Warren Mosler, final comments, MMT Conference, Sept 2017

2) “Taxation destroys money. Physical notes are shredded, and in accounting terms, the liability represented on paper is cancelled (-100 + 100 = 0).”

Swing and a miss…When paying taxes, physical cash is shredded, checks for federal taxes due made payable to the US TREASURY are cancelled, any other dollars used to pay federal taxes are debited from the money supply; AND, at the same time, an equal & opposite amount is credited (is ‘created’) into the Daily Treasury Statement (the exact same account where all federal gov’t spending is drawn).

3) “I’ll let Ben Bernanke explain it.”

Swing and a miss…In that clip Ben Bernanke was talking about dollar creation for the Fed’s Large Scale Asset Program (aka QE) to ‘buyback’ (read: ‘unprint’) bonds to lower long-term interest rates (a swap that doesn’t add dollars to the private sector); and NOT talking about dollar creation for federal gov’t deficit spending (an outright addition of dollars into the private sector)—two totally separate things that the MMT kiddie pool routinely conflates; and why, even though there is no financial ‘funding’ constraint, #FAKEMMTers in the MMT Party continue to be frustrated by the modern monetary formality (the political ‘funding’ constraint) that, albeit unnecessary, still gets in the way of the modern monetary theory.

4) “That taxes don’t fund spending was one of the lessons learned by the FDR administration which lead one former chairman to publish a paper with the title ‘taxes for revenue are obsolete.'”

Swing and a miss…In that brilliant 1946 article, NY Fed Chair Beardsley Ruml wrote that the federal gov’t is “free of money worries and NEED NO LONGER levy taxes for the purpose of providing itself with revenue”. SEE #1


P.S. Beardsley Ruml, the guy that wrote ‘Taxes For Revenue Are Obsolete’ in 1946 which is quoted by every single ‘prescription’ MMT ‘academic’ from Pavlina Tcherneva to Bill Mitchell, also said this: “The corporation income tax must go, taxes on corporation profits have three principal consequences and all of them are bad.” As chairman of the Federal Reserve in New York, Mr. Ruml insisted that the case for ending the corporate tax was overwhelming. “It is evil…it should be abolished,” he said.

Which begs the question: Why don’t the same MMT ‘scholars’ that love to quote Beardsley Ruml, ever mention that, or ever give the current administration any credit for dropping the corporate tax rate to 21% from 35% which Beardsley Ruml would have approved of (?)

…because they are #FAKEMMTERS (!)


Thanks for reading,


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“Not Worth A Continental”


No, that’s not quite exactly how they did it in the late 18th century.

Our own central government issued paper money ($241,552,780 in Continental currency) when the Continental Congress printed Continental Dollars from May 10, 1775 to January 14, 1779 during the Revolution.

By the end of the war, they had become worthless (“not worth a continental”) which left the colonists with a searing memory (read: a legitimate fear) of ‘printing money’.

Price stability depends less on whether money is issued by fiat (‘created out of thin air’) or fixed (with a convertibility rate ‘created out of thin air’) and more on the credibility of the fiscal and monetary authorities to manage the price stability of the economy’s money supply in a responsible manner.

To explain price instability leading to hyperinflation, you don’t need to go all the way to Wiemar, or Zimbabwe. Nor do you need to go all the way back in time, just look at what is happening right now in Turkey (a monetary sovereign, a net-importer, using a free-floating, non-convertible currency).

Pure MMT For The 100%…Beyond The Memes

It was interesting to see that at the end of the same week when many had (yet again) gotten all excited about a brand-new, easy-to-remember, catchy meme that smugly checkmates fiat ‘money printing’ (deficit spending) causing higher inflation; or fiat money printing causing bond vigilantes (speculative short selling) driving interest rates up; or fiat money printing causing losing confidence in the currency; can now all be pooh-poohed by the (fake) ‘academic’ MMT community, by simply saying “JAPAN”…which…like most of the dopey memes always regurgitated…is not necessarily accurate…and why…(?)…because….”TURKEY”.

There are many moving pieces that have caused Japan’s lost decades (mainly demographics), so it’s disingenuous for #FAKEMMTers to say that what is happening (or more specifically, what ISN’T happening) in Japan is ‘because MMT’ (or that Fed rate hikes will cause the dollar index to weaken ‘because MMT’).

Similar to the U.S., Turkey is a monetary sovereign. Similar to the U.S., Turkey is an importer. Similar to the U.S. Dollar (USD), the Turkish Lira (TRY) is a free floating, non-convertible currency (Turkey adopted the free-floating exchange-rate regime between 2002 and 2007). Once a currency is no longer backed by gold (or fixed to another currency), then the currency, just like the USD or just like the TRY, is now ‘only’ backed by the full faith and credit of the gov’t that issues it.

In other words, once you change from a fixed-currency regime to a floating-currency regime, the ‘value’ of the currency changes from whatever it was backed by, to other moving pieces like the ‘value’ (real and perceived) of the federal gov’t, the issuer of the currency. Note that this is just one, of many, fundamental BIASes, meaning one of many moving pieces that affects floating-currency valuations that shouldn’t be ignored (which is presently costing USD short sellers like Mike Norman and his subscribers dearly).

MineThis1 (correctly) reminds his followers over at IMMT that it is important for Pure MMTers to remember that just because a monetary sovereign can never ‘run out of money’, you can run out of something else, so MMT doesn’t mean you can print print print…because “JAPAN” (…because ‘MMT’).

So, what are they (Turkey) going to do now?

That’s a good question.

The answer (and fully grasping MMT) goes beyond the memes.

Thanks for reading,




Deficit Owls (that lost their glasses)

Accounting 101 was never a strong suit over at the ‘Deficit Owls’ (that lost their glasses), nor for their followers, and here’s yet another demo:

“All money created has two parts: Asset & Liability”

Accounting (reality) translation: All transactions (including all money created) have two parts: Credit & Debit.

“Federal spending: Recipient gets asset, Gov’t keeps liability.”

Better: ‘Federal spending: Recipient gets asset (tax credit), Recipient gets liability (federal tax liability).

“When returned, both liability and asset are destroyed.”

Better: ‘When returned (when the Recipient pays federal taxes) both liability and asset, OF THE RECIPIENT (on the Recipient’s balance sheet), are destroyed; but only those who are fully grasping MMT know that the amount of dollars in the banking system (the amount of net financial assets) are unchanged.

Fake MMT: ‘Taxes don’t fund federal spending.’

Pure MMT: Operationally, taxes are NOT NEEDED to fund federal spending (not that they don’t at all).

Fake MMT: When Recipients pay federal taxes, those dollars are ‘destroyed’.

Pure MMT: When Recipients pay federal taxes (when Recipient’s dollars are debited) there is NO CHANGE in the amount of dollars in the banking system because those federal tax dollars ‘drain’ (are credited) to the Daily Treasury Statement, the exact same account where all federal spending is drawn.

(Don’t take our word for it, ask any plumber, and they will confirm, that the water, after it goes down a drain, is not ‘destroyed’.)

Thankfully, most folks are now seeing that these silly ‘deficit owls’ (just like the dopey ‘REalproGRESSIVES’) are pushing fake ideological ‘prescription’ mmt under the guise of promoting Pure ‘description’ MMT. It’s becoming more obvious by the day that these kids are not happy that the American economy is strong and would rather dismantle capitalism (to replace it with a post-modern neo-marxist cradle-to-grave welfare state).

It’s a good thing that these #FAKEMMTers have no idea how ridiculous they sound when they tell the person looking at a brand new dollar bill (or one of the 2000 employees of the Bureau of Engraving and Printing) that ‘we don’t print money anymore’; or when they tell the football player that he doesn’t know how the game is played (that his touchdown didn’t put the 7 points on the ‘scoreboard’); or when they tell a lawyer who wrote the US appropriations law that ‘federal taxes don’t fund spending’ (because ‘there’s no such thing as a taxpayer or taxpayer dollars on the federal level’); or when they tell the bookkeeper that a debit is a ‘destruction’ (without a simultaneous creation, aka credit, on another ledger). Hopefully they’ll remain as clueless to how ridiculous they sound to anyone outside their choirs (to the accountants, to the lawyers, to the bankers, to the policymakers, and to the hard-working, patriotic, law-abiding American constituents) as they are about PURE MMT.


P.S. Although the gold-standard era ended and the financing function of federal gov’t revenue took a back seat to other, more important, functions (mostly to maintain price stability and to maintain demand for the currency); the pure MMT enlightenment is that, operationally, any monetary sovereign, issuing its own fiat currency, no longer needs to collect federal taxes or sell Treasury bonds to fund spending (not that they don’t at all). That modern monetary ‘formality’ (albeit unnecessary) is still getting in the way of the modern monetary theory (is still frustrating the Deficit Owls). MMTers would be able to follow those seesaws (debits & credits) much easier if they just tried to keep it simple (to keep it pure).

Thanks for reading,


Now if you say ‘printing money’ the #FAKEMMTers get triggered as well

First it was saying ‘federal taxes fund spending’, then it was saying ‘federal taxpayer’ or ‘federal tax dollars’ and now if you say ‘printing money’ the #FAKEMMTers get triggered as well…

Agreed that “a misinformed public believes ‘printing money’ will create inflation”, or even worse, “a misinformed public believes that when the government ‘prints money’ it will eventually create hyperinflation” (Ellis Winningham), but that doesn’t mean you should be reprimanding them for saying ‘printing money’ (unless you want to convince experts in the field outside your choir that you are not fully grasping how the federal gov’t works)…

When the federal gov’t deficit spends, meaning that when there is an addition by the federal gov’t of net financial assets, of dollars, being added to the banking system, this ‘net issuance of currency’ (Ellis’s preferred way to say it) ADDS TO AN OUTSTANDING FLOAT OF FIAT DOLLARS. That is the paradigm difference since 1971, that unlike before, during the gold-standard era, when federal gov’t deficit spending added to an actual debt denominated in (a limited amount of) gold-backed dollars; now, federal gov’t deficit spending instead adds to an outstanding float denominated in (an unlimited amount of) fiat dollars. Granted that this deficit spending DOES NOT have the same dilution that can be measured with the same precision as a net issuance a stock does to all the rest of the current stockholders, but printing money does have an inflationary BIAS. The key word there is BIAS because that inflationary (dilution of fiat dollar) bias of newly-printed money, unlike newly-printed stock, can evaporate on impact (as an aging demographic all worldwide now well know). Rather than scolding people for saying ‘printing money’, the MMT enlightenment is that what the mainstream should be more worried about is NOT ENOUGH money being printed by the federal gov’t, or wrongly thinking the federal gov’t should be surplus spending, which would have a deflationary bias, or even worse, thinking we should have sustained federal budget surpluses, which would cause hyperDEFLATION….

Until that day comes when society is 100% cashless (trust me it’s coming), you are only insulting people’s intelligence and hurting the MMT cause by saying things like “We don’t print money anymore! You need to catch up to the 20th century!” (Geoff, You need to catch up! We’re in the 21ST century!). Instead of over seasoning your MMT, just keep it simple and perhaps try this approach:

In the post-gold standard, modern monetary system, since the federal gov’t (any monetary sovereign) is now spending its own fiat currency (since it doesn’t need to be funded anymore), when the gov’t is ‘printing money’ (deficit spending), it only now means that they are ‘supplying’ a growing economy with more currency needed to accommodate that growth. Same as you constantly needing to add more cans of oil to your hard-working car every 3 months to keep all those moving pieces inside the engine lubricated otherwise they will seize up.



Thanks for reading,