Thank you for your reply. You are absolutely correct in that you and I, and everyone else outside the issuing bank, cannot have something for nothing, there is indeed, no free lunch for us. But that government can and does issue money into existence is undeniable. To say that the government requires income from tax before it can spend is nonsense, it’s as if you sit down to a game of monopoly and the banker says to all the players that they have to hand over money before the game san start. It makes no sense.
I must correct one huge misunderstanding. MMT guys do not think inflation does not exist. MMT recognise inflation very clearly. It is central to MMT thinking. MMT says that inflation is the real limit to government spending. The limit to government spending is not the availability of money, because as the issuer, government has a never ending supply. The UK government cannot run out of £’s. Unemployment is the other side of the coin. So rather than balancing the books, which is no more that balancing numbers on a spread sheet, MMT say we should balance the economy, that we should balance unemployment with inflation. The numbers on the spreadsheet don’t matter much, what happens in the real world matters a lot more.
Also, you mention borrowing. But government borrowing is another accounting exercise to balance the books. In order to cover ‘the deficit’, government sells bonds and securities that are bought by the private sector. But paying back that ‘borrowing’ again comes from the central bank issuing the money to pay the returns when they’re due. Government borrowing is not like the borrowing that you and I understand where we have to pay back from our income. The government pays back by issuing the money.
Finally, I don’t think it helps to see MMT as a right/left thing. Many aspects of MMT would appeal to right wingers and some would appal left wingers. For example, MMT describes the means to full employment, Warren Mosley talks of Transitional Employment which could appeal to the right wing supporter of Welfare to Work. As a proponent of Sovereign Money, MMT is against giving up a sovereign currency such as our for another currency such as the Euro, something that might have a few radical Remainers up in arms?
Whatever your political beliefs, MMT deserves serious consideration. Its difficult because it involves turning our thinking upside down, but if we’re not prepared to turn our understanding on it’s head, we’d still believe that the sun goes around the earth