This is a deep dive into Warren Mosler’s easy to understand book on how macroeconomics really works. Do you know how the Federal Appropriations process works? Then you have no idea how we pay for any policy that becomes law. Listen in and change the conversation forever.
1:20 Jump right in with “How do we pay for it?”
Members of Congress think they need to raise taxes or secure lending to pay for programs and they have it backwards. Mosler explains the real flow of money at a federal level using the analogy of a waiter at a restaurant who needs to pay taxes. The waiter pays in cash and the IRS agent then credits his account and then SHREDS the money. They literally sell shredded funds as a tourist gift in Washington, D.C.
The federal government does not operate the way states do because no state can create currency.
“The dollars to pay taxes come from the government…if you have a twenty-dollar bill in your pocket, where did it come from?”
9:50 A look at spending
Myth: The government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow.
Fact: The dollars to pay taxes come from the government. This begins the life cycle of the currency. The private sector cannot create money.
“President Obama said that. He said, ‘Look the dollars come from the government’ and he got shouted down. Everyone said, ‘No real wealth comes from the private sector. The government only transferred it,’ and [Obama] backed down because there is an ambiguity there between real wealth and dollars.”
Do not confuse dollars (currency) with real wealth. Tax liabilities allow for government spending, not the tax payment. It is the taxes applied to the private sector payable only in a specific currency, that create demand for the currency and spending power
“Once there is a football game announced then people need a ticket to see the game. In the same way, once there is a tax on your house, you now need dollars as a way to pay that tax or else you will lose your house. You don’t need Yen; you don’t need Pounds – you need dollars. If you can sell something to get dollars, fine, but you need dollars.”
21:20 Warren described himself as a libertarian and outlines his view on the Public Purpose.
Public infrastructure should serve public purpose: education, health, etc. That provides a public use/good for those who are not in government. The gains for the private sector are net positive. The goal is having the right balance without too much in the public sector, or as we have now – too much burden on the private sector.
29:01 The Detriment of Created Unemployment
Mosler describes the fallacy of an unemployment rate above zero as somehow being necessary, when it isn’t. He shares the historical examples from British colonial influence on other cultures who had no substantial employment system prior. The coercive nature of unemployment is contradictory to a stable market and financial ideals.
Follow along in this series by reading Warren’s seminal work, SEVEN DEADLY INNOCENT FRAUDS https://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
WRITINGS of WARREN MOSLER(found on www.moslereconomics.com)
- The Seven Deadly Innocent Frauds
- Galbraith/Wray/Mosler submission for February 25
Mosler Palestinian Development Plan
- Soft Currency Economics
- Full Employment AND Price Stability
- A General Analytical Framework for the Analysis of Currencies and Other Commodities
- The Natural Rate of Interest is Zero