Everybody got the MMT meme by now. Unfortunately, neither MMT academics nor the social media sales force ever understood its full implications.
It is trivially true that “… a government is not a household. It has a wider remit (objectives) than a household and must consider a broad range of concerns when it uses its currency-issuing capacity to shift real resources (as goods and services) from the non-government sector to the government sector to fulfill its elected mandate.” (Mitchell)
The problem comes in with the ‘use of currency-issuing capacity’ because there is, as always, good and bad use of a capacity. It is trivially true that Organized Crime in the definition of the Organized Crime Control Act OC≅OCCA has the capacity to print money and ‘to shift real resources (as goods and services) from the non-government sector to the OC≅OCCA sector.’
So, from the currency-issuing capacity of the government does NOT follow that it is a good policy to resort to deficit-spending/money-creation. In fact, it is a bad policy. Translated into MMT jargon: government is NOT a household but it is NOT a counterfeiter either.
The crucial distinction is this. The correct way to bring additional fiat money into circulation is to finance a growing wage bill. The incorrect way is to spend the additional money on goods and services, i.e. current output. This is analogous to going on a shopping spree with counterfeit money.
The first thing to grasp is: it is the household sector that pays in real terms in the form of a tiny price hike which is indistinguishable from a random price fluctuation. A government that resorts to deficit-spending/money-creation does NOT “fulfill its elected mandate” but in effect applies stealth taxation to the household sector.
The second thing to grasp is, because of the macroeconomic Profit Law, i.e. Public Deficit = Private Profit, deficit-spending/money-creation increases macroeconomic profit by exactly the same amount.
The correct way for the central bank to inject out-of-thin-air money into the economy is by financing a growing wage bill. The incorrect way is the counterfeit-money-printers' way.#1, #2
True, the government is not a household. But equally true, the government is not OC≅OCCA either. Why Bill Mitchell claims that by deficit-spending/money-creation government fulfills its “elected mandate” is anybody’s guess.
#1 Keynes, Lerner, MMT, Trump and exploding profit
#2 The Kelton-Fraud