by This guy describes MMT in a way which fits in really well with what my theory of what money is. No goods and services can be provided for free, so people will always have to work to provide them. So, if the government can just print money to pay for public services without taxing, then is it providing a free service? No, society simply gets the money and works harder to provide the healthcare staff what they require.Let's say the government decides to spend deficit created money on a state provided health service, then the healthcare workers will spend their wages into the wider economy. Companies see the new money as an opportunity to earn more income and will gear up production employing more staff. In our present society there are a lot of under-employed and unemployed people, many of
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Let's say the government decides to spend deficit created money on a state provided health service, then the healthcare workers will spend their wages into the wider economy. Companies see the new money as an opportunity to earn more income and will gear up production employing more staff.
In our present society there are a lot of under-employed and unemployed people, many of whom want more work, so these people will find more employment and will generate more output.
Also, the staff that was already employed may start to earn more money as more managers will be required. And there will be new start ups too, meaning more entrepreneurs. All these people will want more goods and services, and so the wider community will do the work to provide them. In this way the deficit money eventually filters out into the whole of society.
The government didn't increase taxes to pay the hospital staff, but society, in a way, paid them by working harder to provide them with what they needed. But when the economy is unable to provide more goods and services the government may have to raise taxes because too much money could flow into society - but it can do this in ways that encourages a more green environment, or encourages people to look after their health better - there are many good ways in which to use taxes.
But the good news is, with all these new people in work taxes can be shared more widely and so will be less punitive.
This video explores five principles that underly money monetary theory including the role of money, government debt, and budget deficits. The video also looks at three risks with modern monetary theory including inflation, higher interest rates and asset bubbles.