Government Must Tax To Spend. Many economists value complexity for its own warren mosler bitcoin price. A glance at any modern economics journal confirms this. A truly incomprehensible argument can bring a lot warren mosler bitcoin price prestige!
Money is created by government spending or by bank loans, which create deposits. Taxes serve to make us want that money — we need it in order to pay the taxes. Nor is the public debt a burden on the warren mosler bitcoin price. How could it be? Everything produced in the future will be consumed in the future. How much will be produced depends on how productive the economy is at that warren mosler bitcoin price.
This has nothing to do with the warren mosler bitcoin price debt today; a higher public debt today does not reduce future production — and if warren mosler bitcoin price motivates wise use of resources today, it may increase. Fiscal policy is what economists call tax cuts and spending increases, and spending in general.
Whenever there are severe economic slumps, politicians need results — in the form of more jobs — to stay in office. The federal government must raise funds through taxation or borrowing in order warren mosler bitcoin price spend. In other words, government spending is limited by its ability to tax or borrow. We all know how data entry works, but somehow this has gotten turned upside down and backwards by our politicians, media, and, most all, the prominent mainstream economists.
The dollars we need to pay taxes must, directly or indirectly, from the inception of the currency, come from government spending. So while our politicians truly believe the government needs to take our dollars, either by taxing or borrowing, for them to be able to spend, the truth is: These include debt-ceiling rules, Treasury-overdraft rules, and restrictions of the Fed buying securities from the Treasury. They are all imposed by a Congress that does not have a working knowledge of the monetary system.
And, with our current monetary arrangements, all of those self imposed constraints are counterproductive. This, however, does NOT mean that the government can spend all it wants without consequence. Over-spending can drive up prices and fuel inflation. Governments, using their own currency, can spend what they want, when they want, just like the football stadium can put points on the board at will. The consequences of overspending might be inflation or a falling currency, but never bounced checks.
There is no solvency issue. There is no such thing as running out of money when spending is just changing numbers upwards in bank accounts at its own Federal Reserve Bank.
Taxes create an ongoing need in warren mosler bitcoin price economy to get dollars, and therefore an ongoing need for people to sell their goods and services and labor to get dollars. With tax liabilities in place, the government can buy things with its otherwise-worthless dollars, because someone needs the dollars to pay taxes.
Keep in mind that the public purpose behind government doing all this is to provide a public infrastructure. This includes the military, the legal system, the legislature and the executive branch of government, etc. So there is quite a bit that even the most conservative voters would have the government do. However, that number by itself is of no particular economic consequence, and could be a lot higher or a lot lower, depending on the circumstances.
And federal government spending is set at this right amount, given the size and scope of government we want. In fact, with no taxes, nothing would even be offered for sale in exchange for the government money in the first place.
But as long as government continues to believe this first of the seven deadly innocent frauds, that they need to get money from taxing or borrowing in order to spend, they will continue to support policies that constrain output and employment and prevent us from achieving what are otherwise readily-available economic outcomes. Next Post Banking with our own Bank.
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