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,