The real reason for taxation

A fellow named John in the post below linked us to a blog, Mike Norman Economics, that linked to a Bloomberg piece on “MMT,” or Modern Monetary Theory. Economics has never been my thing, but I did at one time follow Australian economist Steve Keen, who wrote the book Debunking Economics, which I enjoyed. I loved seeing the dreary science torn apart, as even without expertise I noticed that economists are usually wrong about all things, all the time. As JFK is said to have said, when his economic advisers screwed up he had to take the fall while they merely moved on to new advice. Since presidents are just actors, that is BS, but still a nice quote.

Steve Keen also runs the blog Debtwatch, which I visit on occasion, but still, it is economics. I just don’t absorb it well enough to claim anything more than a passing interest. I sat through threee quarters of Econ 101, 102 and 103 as a freshman in college. It was like having nails pounded in my forehead, ever so slowly.

Anyway, I mentioned in the comments a conversation I had as I sat next to a banker at a luncheon back in the 1980s. He told me, just making conversation, that during the war the government issued war bonds and there was advertising everywhere getting people to invest in them. He said that the reason had nothing to do with paying for the war, but rather to get people to spend less on consumer goods, which were in short supply. It was done to keep prices under control by easing up on consumer demand.

This is where John chimed in: “The U.S. federal government is monetarily sovereign: It can issue it’s own currency for spending, it never has to borrow money. Ever. And it can never go bankrupt.”

I followed the links above. Here is, in my view, the money quote from the Bloomberg piece:

“The reason the government doesn’t need to sell treasury securities, or levy taxes, to spend money is that the central bank, under the control of the treasury, can pay for everything by conjuring up electronic money. In MMT’s ideal world there would still be taxes, but their main purpose, aside from lessening inequality, would be as “offsets” to keep inflation under control. Taxes would drain just enough money from consumers and businesses so total spending in the economy won’t be excessive.”

That is the best explanation (and justification) for taxation that I have ever come across.

18 thoughts on “The real reason for taxation

  1. I’m no expert, but I can tell you MMTers say that’s ALREADY how taxes work, not just in their ideal. In fact they claim to be neutral on good or bad, they’re just tellin ya how it is, ie descriptive.

    The idea that taxes fund the federal government is a convenient lie so people won’t demand social spending, infrastructure, etc. (Taxes do fund states, which have no currency of their own.) Plus other motives probably. Keeps people confused about a very basic fact of life, once one understands it. And maintains status quo class groupings I guess.

    But still I’d be wary of the MMT touts to a certain extent… I don’t have a critique, just an inchoate hunch..


    1. TIMR-Great observation on the institution you reference; it has long maintained close ties with the KC FED.

      I do not dispute that MMT proponents can feel marginalized. The describe a very important phenomenon.

      You ask a couple of important questions.

      My shortest possible answer is MMT is descriptive. It shows the negative effects of too much credit relative to capacity to repay. I don’t view it as neutral but I don’t need to be right.

      The QE’s, monetizing the debt (inflation) incentivize borrowing and spending which seems to have favorable short term consequences. The long term results are another way of ensuring the downfall of America. The plan of the globalists all along. Money and globalism are transnational. They know no homeland.

      The middle class has been decimated by FED monetary policies. Individual and collective debt matter. Wealth is now concentrated in the hands of the very few. That’s what happens with each successive asset bubble. The system is rigged-the business cycle has been replaced by credit cycles- and those who pull the strings always benefit at the expense of the many.

      The final result is tyranny and totalitarianism. Default and/or war. And World War 3 which i believe began in September, 2001, is rapidly accelerating.


      1. Thanks Paul. It’s still very broad brush so while you may be right, it’s difficult for readers to connect the dots themselves between MMT and collapse/ tyranny. But I appreciate that could take a whole book to explain perhaps.


  2. Having taught 94 economics courses over my lifespan I concur with the ideas conveyed relative to MMT.

    Concurrently, I can also attest that many in the economics community-especially academia-will find this information disagreeable to the point of hostility.

    Where I can give Econ as a legitimate discipline a non-biased promotion, endorsement, is micro-economics: the study of the business enterprise, or individual units within the macro economy. I dare call it elegant in some respects.

    That being said for the readers benefit -at the risk of being tautological-economics is a field of study that assumes scarcity of resources such as land, labor, and capital and insatiable wants or demands for said inputs. Ideally entrepreneurship should be included in the equation.

    Macro economics, the study of economics, is based on the assumption of scarcity of inputs and limited ways to meet demands; it commences with what’s called a production possibility frontier (PPF). Inherent in the formula and graph demosnstating “opportunity costs” is there is always a trade off between guns and butter.

    Theoretically and technically the above is true. Alas, what’s equally true is that there are many economies within the macro economy and the criminal economy may be as large as the so-called real economy. MMT is designed to promote optimal “affective demand” in the real economy. It’s a partial canard.

    What this means is economics is not as much about scarcity as it is about incentives. And almost all incentives are perverse relative to objectives and outcomes. Activities are not pursued because they are good for community and society. Instead the autocrats, those in power at the very top, have opposite motives.

    Readers on this site likely fit the axiom succinctly outlined in Wealth of Nations by Adam Smith that suggests every man in the NWO-modern economy needs to be a Scotsman. Wise producers and consumers and financiers (debtors and savers) in all the ways of the world.

    Alas, Any logician will explain if there’s a flaw in the core assumptions the whole argument is bogus. Macroeconomics and it’smany models such as MMT are all totally flawed.

    For the sake of oversimplification it’s all one big con.

    Do any of the so-called masters of the universe believe it? Unlikely, they’re in on the game. But I have encountered so many people that work in the field and related industries that believe in initiatives such as MMT, or are dependent on the deception, that even when provided solid and irrefutable data they go blank. It’s also called denial.

    I get responses such as someone would have told [me] them. When I say I just did, I just showed you, things go south especially for me.

    There is a strong delusion that has taken over every academic field at the modern university. Grant money now controls what gets funded and promoted. Compartmentalization (elegantly diabolical based on the Catholic Church structure) and peer reviewed journals exist to promote yesterday’s right answers and today’s new shibboleths.

    Reality doesn’t matter. The lies get repetitive.

    Which brings me to a point that goes beyond the MMT canard, one which may outrage some readers. The “modern” university was created post-civil war to promote Darwin’s dangerous idea which is natural selection and random mutation. We exist by chance. Life has no meaning or purpose beyond what we determine. Complexity is explained by two phenomena. And if Life exists by chance there can only be one explanation: Evolution.

    Evolution is a theory. An unproven theory. There is no evidence to support evolution. No missing links. In fact it violates almost everything we can prove scientifically. Not so curiously Darwin’s partner Herbert Spencer was so unconvinced by naturalism and scientism that are the foundations for evolution that he spent the rest of his life as a spiritualist.

    Darwin was promoted by The Royal Society. I provide this information because the Royal Society’s agenda has always been clearly clearly defined as “survival of the fittest, might is right.” It’s most pronounced byproduct is eugenics. A practice that is alive today known as depopulation by almost every method conceivable. The reader can fill in the blanks.

    MMT is a method, a means, promoted by those with power to ultimately fund depopulation through creating vices and sickness and wars.

    Many can understand but have trouble articulating what the end game of disciplines like biology which reduces to chemistry which reduces to physics which reduces to math have become. I exclude economics and its offshoot MMT because neither is, or has been objective fields of study. Nevertheless, these four so-called hard sciences listed previously have and are being used for neverendending deception and destruction initiatives.

    The agenda, the end game, for the ruling cabal is tyranny. Totalitarianism. And they’ve used academia and it curriculum elegantly and diabolically to further their cause. In the late 1980’s I produced 800 years of data relative to monetary polices from multiple geographical location. The result is always default or war. I was told by three separate colleagues we don’t like your data, we don’t like your sources, we don’t like your interpretations. To their credit no one said your data is inaccurate. But I received no validation because they had too much to lose by not going along to get along. They chose to buy into an agenda where the goals of debt-slavery, power and control by very, very few at the top should have been very clear.

    But beyond the previous three goals and the tyranny and totalitarianism I’ve articulated there is an overarching goal!!

    Their goal, the promise they are pursuing is H+. Transhumanism. Immortality. To be as gods. And to achieve their goal they believe they have to eliminate the human race. To become no longer human themselves. It’s not ending well for them or us.

    As always, I welcome rebuttals.


    1. This is all pretty far afield of the post, which is fine. I wish I understood all of this better, but it reads like Braille, and I am not blind. I hope you get some intelligent responses. Starting with the one right after this one.

      Liked by 1 person

    2. Paul-
      You seem to lump MMT with mainstream economics, which may be correct. However, they paint themselves, w some justification, as marginalized outsiders… Heterodox, they call it. Most of the field either ignores them or disparages them. They critique the mainstream as lackeys to power, or brainwashed, etc etc.

      They do get funding, but nothing like the big boys (so far.) They have a small redoubt at UMKC, and a couple others have posts here and there. Currently they are swamped by the Orthodox economists though.

      Not to say they might not be part of a dialectic or whatnot. Just that you might be more specific about what THEIR con is? How will MMT be used for evil as you describe? They claim it opens the “public purpose” ( debate over use of resources) to democratic input, by demystifying economics, and by telling the truth about sovereign currency.

      Liked by 1 person

  3. Deuteronomy 20: 10-15

    “When thou comest nigh unto a city to fight against it, then proclaim peace unto it. And it shall be, if it make thee answer of peace, and open unto thee, then it shall be, that all the people that is found therein shall be TRIBUTARIES unto thee and they shall serve thee. And if it will make no peace with thee, but will make war against thee, then thou shalt besiege it: And when the LORD thy God hath delivered it into thine hands thou shalt smite every male thereof with the edge of the sword: But the women, and little ones, and the cattle, and all that is in the city, even all the spoil there of, shalt thou take unto thyself and thou shalt eat the spoil of thine enemies, which the LORD they God hath given thee. Thus shalt thou do to ALL the cities which are very far off from thee, which are not of the cities of these nations.”


  4. This is John again:

    Social Security (and other programs like medicare, etc.) being a federal program is perfectly safe. It’s existence is purely a policy matter NOT a funding issue. In fact, it should be, and very well can be, expanded.

    MMT is descriptive of precisely how our U.S. dollar federal money system functions. It sounds like science fiction, but it’s true: The federal government can fund itself and all of it’s programs without federal income taxation. Federal taxation has other purposes as alluded to above.

    Similarly, the Post Office office, obviously being a federal program as well, is perfectly safe as well. I have to chuckle to myself whenever I see these recurring news articles about the Post Office not operating at a profit and in danger of going bankrupt, and needing a bailout. It can’t. Just more senseless fear mongering. Think about it: Do we insist that the EPA, the FDA, NASA (LOL!), the military and a host of other federal government programs and departments, operate at a profit and not go bankrupt? Where are those news articles?

    None of these federal programs need a “bailout.” I suspect something else may be going on here, a moneygrab. The general public is clueless about these issues as always.


    1. The social security fund administrator took Bill Moyers to a locked filing cabinet to show him the social security fund. It was a promisory note. There is no physical money to a program that urban legend claims goes directly to the Crown Corporation to fund the Queen’s retirement. Social Security has been carefully calcluated to pay out when people reach a certain age and that age has always been set at the average when people DIE. SS is more of a tauntine scam than a you’re-to-stupid-to-save-your-own-money-so-Nanny-will-do-it-for-you program. The CAFRs show profits in the billions for ‘states’ that show bankruptcy via their second set of books. Lysander Spooner correctly pointed out that there is no such thing as ‘money’ in this system so nomenclature has to be held in strict definitions here for any discussion on the topic to be anything other than arguing the shade of Peter Pan’s tunic. Gold and Silver are commodities. Any exchange unit even if coined has to be time and value invariant so the Debt Notes of the Federal Reserve have never been money but another scam like chips at a casino. The Post Office has to have quietly gone bankrupt and went into recievership since it was against federal law for even your neighbor to put a used newspaper in a post box but now all common carriers are leaving packages in there. There never really was separation between Public and Private because Publius means: The People and The People have alwasy been Private FFV.


      1. So long as these debt notes are agreed upon to be money, they work. I have no choice but to deal in dollars, trying to place real assets behind them.

        It is all we can do. Fed Chairman Alan Greenspan said the SS Trust Fund is real because 1) It is a legal obligation, and 2) because it is a claim on real assets. He left out one important aspect, intent to repay. There is none. There is no honor behind it. Ergo, it is fake.


        1. But the agreement is that Peter Pan’s tunic is green, not that it is Forest Green or Kelly Green or that Peter Pan does not exist; therefore they cannot be money since Debt Notes do not fit the definition of time and value invariant. The cannot be ‘money’ because the are not Credit Notes but Debt Notes. Because Bernanke said that inflation/deflation can be caused by an agreement on paper at a moment’s notice, and he said it was totally artificial, then the time and value invariance of ‘money’ exposes their scam. People ‘agree’ that Santa Claus is real because they tell the story to their kids, retailers capitalize on it and movies are made about ‘him’; but Santa Claus doesn’t exist. Tacit agreement to the dollar is based on extortion. I say that money is Mulberry Tree Leaves. I have a really big tree, so that makes me rich. But I will be laughed out of the world for suggesting that it is ‘money’ let alone trading units and will be told it has no value. The cholorphyll that can be extracted from them, notwithstanding, there is no social agreement that my collection of leaves has value, yet the entire world will accept another form of tree material that is also green yet holds the economic price tag of 3 cents. So to your point of FRNs working: yes, they do work as a means of incrementally defrauding people of real wealth for casino chips that are meaningless except in the minds of those who wish to run harder and harder in the gerbil cage each year to acquire them as their value and buying power approaches zero. Locals have tried to introduce their own trading script but the failure was that you had to buy them with FRNs and the hippie good intentions went to Hell because of lack of consumer interest and sellers honoring the system. You can’t eat money but you can eat food. The way I see it that is the only use for the Debt Notes since no one can ‘own’ land. Read the Deed (I like that, has a ring to it) the ‘purchaser’ is listed as a ‘tenant’ in common, so assests other than the impermanance of fuel for the corporeal body is about the only thing that is not licensed or usafructed away. The whole system has to be destroyed to sterlize the Evil Taint.


  5. It’s another tool used by the elite to control the masses. Bottom line. Media & it’s fakery does what? Control of your attention-reaction-emotion. Conforming to them is bowing to them. George CArlin has a great vid clip that has a quote….”THEY OWN YOU”. True.


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