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…As per Ben Bernanke, dollar creation for the Fed’s Large Scale Asset Program (aka QE) was to ‘buyback’ (read: ‘unprint’) bonds to lower long-term interest rates (a swap that doesn’t add dollars to the private sector); and NOT dollar creation for federal gov’t deficit spending (an outright addition of dollars into the private sector). Those are two totally separate things that the MMT kiddie pool routinely conflates; and why, even though there is no financial ‘funding’ constraint, political ‘prescription’ #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

By the way, 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 surely have approved of (?)

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