Realist, not conformist analysis of the latest financial, business and political news

MMT – Taking Your Money So Stuff Remains Affordable

Now The Magic Money Tree has taken root and is swiftly growing in our society, I’ve looked for a way to explain it to the average person.

Einstein once said that if you can’t explain something simply then you don’t understand it well enough, so I’ve put some time into understanding MMT well enough to explain it to my 7-year-old niece.

Here’s where I’m up to with it.

It’s been said that the government doesn’t need our money in order to pay for things. Apparently we need the government’s money in order to pay our taxes.

Neat summary, right?

They are like a mafia that issue as many tokens as they need to do whatever they like, and we must contend for ownership of these tokens in order to give them back to them, lest they come to our houses and drag us away to be incarcerated, or worse just shot to death in our own homes (try resisting when they come to arrest you and you’ll soon see what I mean)

In a way, it’s like a contemptible and terrifying Easter Egg Hunt – they hide the tokens and we have to compete to find enough of them to buy our safety.

But there is trouble in Paradise. When their dreams of avarice become sufficiently wet, the number of tokens proliferate and the price of goods we need to survive rises past the point where we can afford to buy them. And hungry people are angry people who don’t vote the way you want them to.

How to stop that?


They print the money, and then in order to prevent the inflation that would make you unable to afford things any more, they tax you so that you…….can’t afford to buy things?

Got that?

They create inflation by printing money, and then cause deflation to counter it, by taxing you so you can’t afford to buy the things and in turn drive their prices up.

Consumer prices thus remain stable because you can’t afford to buy stuff.

So this is a way for government to take your money and spend it on the things they like, without creating the inflation that you would blame them for. The reason you can’t afford things is not because they are expensive, but because you are being taxed in order to prevent inflation.

How do you imagine they will present this oddity? Will they say “We’ve had to tax you heavily so that inflation remains under control”

I doubt it.

They want you to feel good about all this – having so much skin in this game needs to feel virtuous.

So they’ll claim that you are a hero for paying the tax.

They will pat you on the head and tell you how vital you have been in the fight against inflation (“Everyone must do their bit”) as your standard of living falls lower and lower.

So here’s what I’ll be telling my niece – the government needs to tax us more so that we stay poor and stuff stays cheap, so we can still afford to buy it.

P.S – For those who have aspired to MMT for many years, the coronavirus has been an enormous boon, allowing them to implement their scheme not as an experimental imposition, but a response to a crisis.

COVID-19 – if it didn’t exist someone would have manufactured it.

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