Your Taxes Pay for Nothing
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- Опубликовано: 6 сен 2024
- They never have and they never will.
Nobody likes paying taxes, so if the government doesn’t spend your taxes, what are taxes for? This video busts a few myths about how taxes work and explains some of the real uses of tax in modern economies.
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Sources:
Taxes are for Redemption, Not Spending - L. Randall Wray
wer.worldeconom...
Colonial Virginia’s Paper Money Regime, 1755-1774: a Forensic Accounting Reconstruction of the Data - Farley Grubb
lerner.udel.ed...
The Deficit Myth - Stephanie Kelton
Podcast with Alan Kohler and Professor William Mitchell
• Podcast with Alan Kohl...
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Written by Andrew Johnson and Jackson Winter
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So, the federal government should be the one to pay for healthcare, education, public transportation, and other social goods. This would allow low income cities and counties to afford quality services without putting too much pressure on the people
Realistically all they're doing is giving us the resources to care for each other. That they don't currently pay enough means people have to earn a livelihood elsewhere through avenues that are profitable but don't necessarily benefit society.
*Yes.*
It's far too large of a task to put on one government. That's like having the EU pay for those things.
Second Thought mentioned you!
^ and you! and here I'm watching both of your videos after watching Second Thought's one :)
Great job! Clear, concise, and barely over 5 minutes : )
Thanks so much
I am absolutely mind blown and I have no idea why this RUclips channel hasn’t blown up. Amazing job.
That would rob the government of their corruption charge, I mean taxes.
I hadn't heard the part about taxes being used to create demand before. That may have that effect. However, I do not believe it is necessary. You can do that by legislating that all debts are settled in that currency or that all businesses must accept that currency or that all businesses must pay their workers in that currency. That is essentially what we do now. So, you certainly don't need taxes for even the purpose of creating demand. Also, in the intro it said that almost all countries are sovereign and create their own money. That was not historically the case, but became the case with the founding of the USA which escaped the slave economic system of the British Empire. However, that system ended when the British Empire and the surrounding oligarchy did a coup and instituted the private central bank. After that the private central bank would create the money and loan it to the government with debt. So, the treasury was no longer creating the money. If the treasury created the money it would be like the Greenbacks under Lincoln or the notes that JFK started to issue. The British Empire killed both of them. The president of El Salvador recently gave a speech explaining much of the same information in this video, but also got some parts wrong, because he said it would be a bubble. It would only be a bubble if you have a private central bank with debt. If you have a national bank like the Hamilton Plan and the American System of Abraham Lincoln and his economic advisor Henry C. Carey, then that is not the case. You can read books on the Hamilton plan by Nancy Spannus, or national banking by Robert Ingraham. The banking economist Richard Werner always understands much of this and explains it some videos, but I think he has not figured out a way to really explain it well.
You should add more clarification that this only applies to the federal government (or any government that can create money). You mention it at the beginning of the video, but the end just uses the word "government." City and state governments must still raise taxes for spending because they can't issue new currency.
You're absolutely right. We do try to make a very clear point of this when we can, but I can see there could be confusion there.
Although we're hoping these videos can stand alone if needed, this is something we'll be covering in more detail in future videos.
this is why city-states are always more prosperous than cities within states.
iiuc all banks create currency locally when they approve loans. public banks working with local municipalities should be able to do this and help create more stable local economies. for example, cities, though locally public banks can or maybe might want to create basic income for their citizens not only for addressing automation but addressing outsourcing, downsizing, gig economy, stagnant wages, saturated markets, loss of the commons and because our society and way of life we have been born into is both broken and rigged much like late stage monopoly. a basic income, abolishment of rent and limits on owning more than you can use personally would be a start
@@velara314 the currency 'created' by banks is not real, it's costs manifest years down the line when the debt needs to be paid. it creates demand for real currency to pay off debts, bidding up the prices across the board in all sectors lent to. in otherwords, it creates inflation.
@@cageybee7221 correct. none of its real. we type numbers into a computer. what i'm saying is technically the banks create currency when they create a loan and destroy currency when the loan is paid off. that's ignoring interests and all other details. the bank has to reconcile but it has been granted the power to create money. what you use it for is irrelevant. we as a society have the power to use it for a ubi or public services. the limitation is real resources. also, inflation is also completely defined by interest rate.
Watching from Africa, I searched online for an answer that would make the most logical sense and this is the best so far! Major respect my friend you've earned a subscriber!
You should look into the work of Fadhel Kaboub. He is African and has some fantastic contributions in this area.
@@PEGSInstitute thank you!
Thank you for doing this. Excellent video! Very clear and to the point. I would suggest adding “Federal” taxes to the title, since states and local municipalities are dependent upon taxes to pay for things because (as another person commented) unlike the federal government, they don’t have the ability to issue currency.
very good video! 3:38-4:11 is CRUCIAL to understanding inflation and price increases
I always think that Taxing is when money dies. It needs to happen to stop hyper inflation.
Inflation on the other hand happens when there is a lack of something in the economy. This could be goods or services. The limited supply drivers up the price people have to pay.
This is just the beginning of the deception
When someone harasses a police officer and says “I pay your wages”, they don’t pay them at all.
Exactly. It's public money, not tax money. We should be able to decide where it's spent via our politicians, but it's not coming out of our pocket.
If it's a federal officer yes, but if it's a state or city officer, then you are, indeed, paying their wages through taxes . City and state governments must still collect taxes to pay for police because they can't issue new currency.
@@rtbenson it's important to differentiate between Fed & State or Local taxes & spending.
Absolutely. We're actually covering this is our next video released on Monday.
@@PEGSInstitute sadly here in the U.S. corruption is 100% legal & commonplace - lobbying is fucked
they did a study at Columbia University i believe where they found that there is almost zero correlation between what the average american wants and what gets passed by politicians
Not sure about the first inflation argument (money supply causes inflation). Also did not mention that taxation can be used to create a more equal society and limit corruption and immunity to legal conseequences. Nice otherwise though.
Bukele brought me here. We absolutely need more leaders like him 🙏🏼
Dictators? No thanks.
@@blublubblubblu yes cause dictators get elected with 85% of the vote you npc
@@blublubblubblu yeah because dictators get elected with 85% of the poeple’s vote you npc
@@blublubblubblu yeah because dictators get elected with 85% of the people’s vote
@@blublubblubbluyeah because dictators get elected with 85% of the people’s votes
thanks for explaining this concept so well.
So TL;DW: your taxes aren't _technically_ used to pay for government services, but for pretty much all intents and purposes your taxes do pay for those services they just aren't the _only_ thing paying those services.
It seems to work like a credit card. The Federal Reserve pays for everything, then the people pay off a loan to the Reserve.
@user-zu5do6ri6r no, it doesn't work like that at all. If you want to use the credit card analogy, then what you just said would be more like saying "the government spends frequent flyer miles, and then customers pay off the frequent flyer miles later".
Credit card companies don't have a debt held in frequent flyer miles, and customers can't pay them off. The credit card company issues them, and if the customer chooses to redeem them, then the frequent flyer miles are simply erased from the customer's account.
Similarly for government currency, check government balance sheets and you'll note that the currency is listed as a liability on the government, not an asset. The liability was created when the money was spent, and it will be expunged when paid to the government. The government can not fund spending with taxation any more than a credit card company can fund spending with frequent flyer miles.
The constitutional basis of the power of levy taxes and contributions is financing expenses. You did it right by stating that your theory does not apply to EU.
Could the government just not tax and through some chicaneries achieve the same end?
Theoretically, but it might not work as well. The government can target where the currency goes into the economy, but then they're pulling it back out of the economy elsewhere. It goes into the hands of a contractor, or some other beneficiary, but after they've interacted with the rest of the economy it's ended up in the account of the retail store owner or similar. The tax is there to try to balance things somewhat when the currency has moved downstream.
*Well the tax is there to make you need money, which is what forces you to get a job and produce the real things the economy needs. So if no one was tax and kept all your money, soon you'll have so much money that you don't need to work. If no one needs to work and produce then what can you buy with your worthless piece of paper? During WW2 they didn't raise taxes to control inflation, because that would demoralize your military and workforce. So what they did was promote the war bond. They told everyone buy a war bond and help fund the war. The war was already paid for, what they were doing is controlling inflation by temporarily removing money from the economy. Taxes are a permanent deletion of money and bonds are a temporary deletion of money.*
I prefer to think of your tax money as being reincarnated in government spending-not necessarily in the same denominations, but not a constant creation and destruction of "new" value.
I'm not sure if I like that thought process because it puts additional emphasis on the balance between spending and taxes, which is what ultimately controls the supply of money, or if I just dislike the idea of value being created and destroyed _ex nihilo._
@@adamsmith21stc I don't think it's a matter of being more or less accurate. The end result is the same either way-it's just a matter of how you come to that result. And how you describe it, obviously.
@@timothymclean no, the end result is NOT the same when tax money gets recycled and does in fact fund spending. It alters the entire argument.
@@adam8mith Alright, important question: Do you think the same amount of revenue needs to come in as spending? Because that's not what I'm trying to say at all. There's obviously a difference between needing revenue to equal expenses and viewing the balance between them as more about controlling the money supply, but different ways of describing that control are the same.
Do you know where the money for the lending comes from? We did make a video that explains it ruclips.net/video/M2cyqpvzk1Q/видео.html
*Reincarnation doesn't make sense. That's like saying I need to kill grandma to have a child, you're reincarnating her? Your child is not your grandma reincarnated, but a new human being.*
So you’re saying that high inflation rates is because people that make a ton of money are finding ways to NOT burn out their fair share
This video is OK, but you botched the explanation of inflation a bit. The money supply is not directly connected to inflation, because the money supply is not directly connected to spending. For example, suppose the government gives me 900 trillion dollars and I put it in a shoe box under my bed and never spend it. Does this create inflation? No, it does not. On the other hand, even if the money supply remains fixed, consumers might change their spending behavior: they might start to spend more money on goods and services. Since a dollar can be reused over and over again, consumer behavior can change in this way even if the money supply remains fixed (the so-called "velocity of money" increases). Such increased spending _might_ cause excessive inventory depletion, which might cause a capitalist to choose to ration the limited inventory to those with the most money - i.e., to raise prices (inflation). [Other options would include increasing production or doing some other kind of rationing, like first-come-first-serve rationing (toilet paper in 2020, vulnerable to scalping) or fair rationing based on need (ration cards in the USA during WW II).]
[Furthermore, the nongovernment sector can increase the supply of money without government involvement. It does this with mortgages, car loans, credit cards, etc. The money created in this way, unlike money created by government spending, is not "high-powered," since there is an obligation to repay the principal of the loan. When the loan is fully repaid, an amount of money equal to the original amount created by the loan, has been destroyed.]
There might be some kind of relationship between the money supply and the amount of spending, but it's not the simplistic thing that you put forth in this video, where you seem to imply that any increase in the money supply automatically creates inflation in all circumstances (not true).
Yes that 900 million still creates inflation. That 900 million sitting in a bank for 70 years, sitting in a shoe box for 100 years, in someone's underwear drawer for a week; was still printed and recorded, and serialized, and tracked by the fed and counted into the money supply regardless. Even destroyed bills (guess why it's illegal to destroy currency) are still recorded until they're removed from circulation by the fed.
So if currency issuing governments are spending first and then taxing, how do governments decide how much to tax back?
It's just a policy choice.
I never knew this! thanks for enlighting me!
Correct me if I am wrong, but I thought this is how it works:
Fed prints money, loans to government, government spends, our taxes pay back the spending.
While yes you are correct, our taxes don't directly pay for things, they pay back the loan.
We run on a debt based system, hence why taxes are done at the end of the year, to pay back the year of spending our governments just did.
While in Australia we have a PAYG system because our government can't wait to get their grimy mits on our money 😂
All money is evolved from debt. The system you're describing might be broadly accurate for lower levels of government (state, council) but for most federal governments they can create new money at will. They have their own sovereign currency, so what's stopping them?
There are real world limitations, but tax revenue isn't one of them.
I do understand the perspective of the video though, "we shouldn't be paying taxes if they can just print money", but if we don't pay those loans back, inflation goes through the roof and our money is worth nothing. We should all be investing in any store of wealth that is not a fiat currency.
Taxes are still crucial for fighting inflation and other reasons (see our followup to this for more detail on inflation) but when federal government decides to not spend on something, they might tell us is because they can't afford it, but we must understand that it's a political choice, not a revenue restriction.
@@PEGSInstitute most definitely. Government greed is disgusting.
@@omfgishBenneh
The government is just a tool, that's supposed to work for the people, but at least in the US, it's been co-opted by the corporate class. Which is why they get socialism out the ass, while the rest of us just get fucked
The point of this video, at least for me, is that instead of making lame excuses like "But how are we going to pay for it!?" it's on us to demand that the government take care of everyone, not just the 1%
Great video. Keep informing humanity.
When one sees their nation's GDP outpaced by their nation's debt, they may rest assured their taxes pay for nothing, that all government projects are paid for with borrowed funds, further increasing debt.
And who is obligated to repay these loans? Obviously not the wealthy politicians who accrued them, on behalf of Us, the People.
If only money worked the same for everyone, no one would have to work again.
We'd be free at last. 🙂
Alas.
Doesn’t this assume that money does not recirculate though? Imagine no new money is printed from this point on. Now imagine the government collects a tax to build a road, the money doesn’t just disappear, the road builder has it. He can spend it on whatever he wants, which is income for another person. This gets taxed again and the cycle continues, perpetuating the economy.
As long as the builder and other members of society have confidence in the currency, it benefits them greatly to use it rather bartering or trading directly, so they do it. The value of money is the overwhelming convenience provided to avoid archaic systems of bartering that is inefficient and prevents effective specialization of labor. I agree that taxes enforce a standard within a nation, but that has nothing to do with the value of currency itself.
Barter isn't an archaic system. There's no anthropological evidence that barter was ever used as a system of exchange. It may have been used between individuals, but larger economic systems have always run on gift exchange, which eventually evolved to debt exchange. The monetary system we operate in today is as much a debt exchange as monetary systems going back 5,000 years.
so it's same as saying "peeing is vital to ensure water supply to your organism". it's not refined pee that you drink (propably). it's just excreting excess water so you don't get overfilled with water
State taxes, OTOH, are spent on government expenditures.
Love your channel bro.
If the government can create money from thin air than why do we bail out corporations through taxes and by simply creating a deficit (government spending)?
@ChucklesMcGurk i get that, by what not simply print more money instead of taxing people to death. Is it to reduce the monetary supply in the economy and potentially reduce inflation?
Great job keep up spreading the truth
I'm not sure about the U but this certainly does not apply to my country Germany. Firstly, the government spending is capped by the amount of taxes collected. Then the government cannot just create new money, it has to lend it. Anyways, I dont really get the point of the video. Whats the difference if I collect 10 $ taxes, delete them, create them new and spend those?
While the German government is indeed restricted by the ECB, I assure you that the Bundesbank is indeed an issuer of Euro. It does not spend money redeemed through taxation, because tax redemption is the fulfilment of debt created at the time the currency was issued. Money collected by the currency issuer is literally being removed from the economy. It can't pay for new spending.
Very true very true.
Big difference between government printing $ to fund society vs Government acquiring $ via loans from the private central banks that come with interest which you pay off via your taxes with $ backed by debt, creating a never decreasing debt amount with a constantly decreasing currency.
Big difference that you chose not to mention.
First is how things should work & the ladder IS how it currently works.
Where do the "private central banks" get the money to loan to the federal government? Most private entities don't have the power to create new units of a national currency at will, so who imbues the central banks with that power?
@@PEGSInstitute The assets they own is leverage against the government as they can be sold to foreign entities for a profit in the currency that they prefer. This creates a national security concern and is why the U.S treasury has a policy of always paying out national debt holders first and foremost and covering investments in Treasury Bonds. And this has happened throughout history in many instances.
The U.S prints out bonds to these people, they agree on paper that they'll put up their assets as secured loans to the government on the governments good will and trust that they will guarantee a repayment on those bonds, they will pay a guaranteed interest rate, and thus the government is able to acquire new funds not allocated by congress in the federal budget, or can be put into projections on the next budget.
@@theangrycanuck8331 You're almost there. So when the Treasury issues bonds, do they borrow those from somewhere, or do they just create them out of nothing? And what about how the fed owns 16% of Treasury debt? Did the fed have to go earn the dollars they used to buy those securities from the private market, or did they simply create new dollars as needed? And when the government pays interest on the bond to the Fed, does the Fed save that money, or is it simply one side of a balance sheet being cancelled out by the other side?
@@PEGSInstitute They allocate the funds to be printed and circulated in some cases, in other cases they add in the funds to corresponding budgets and then release tender upon payment.
@@PEGSInstitute Everything is on the basis of growth. The government expects growth in each quarter to cover some of the interest. As the economy grows, they have more trust and good will as well as investments, assets to leverage in negotiating with the private sector. They also use their legislative powers to give tax credits where needed and increase taxes and tarrigs where they believe they can to raise capital on returns.
If your country operated soley on currency out of thin air, why would I sell you good and services to import? Your currency has no value domestically, and if the rest of the world thinks like me, what good is your currency globally?
What guarantees the USD? There's some gold that backs it though not enough and there hasn't been a proper audit in decades. The U.S military might and NATO alliance is another form of insurance that backs the USD, and the financial systems put in place that's run out of New York and London that over see multi national trade securities and can impose sanctions.
With two out of three no longer having any signicant power, the US military and financial system, we see BRICS forming, the Yuan/RMB expanding and the USD being dropped.
That's the literal outcome for a currency with no value based off of printing. However on a domestic scale, it's far worse. The GDP and PPP of communities is directly affected by the reintroduction of large quantities of dollars returning. This devalues US Treasury bonds, causing the good faith that the private sector to rely on to falter, causing calls in bonds, causing massive debt and loss on the part of the lenders as the US can do a currency and debt wipe; however now you'll have civil issues where people will sell assets and leave or move to other countries and bring assets with them due to bad transactional history and lack of trust in the government.
Excellent video!
great video! I have a question. I live in the US and since our government creates it own currency could they fund something reparations hypothetically? and if they did would that cause inflation?
Any form of increase to the money supply without the goods, services, resources, and revenue to support it, causes inflation.
This is a an oversimplification of the idea of federal spending and the value of money. The value of money is its ability to accurately measure how much something is worth. Government or no government, this measurement happens between two parties that would each like to benefit from each others products and/or services be that an actual product or service or capital (loans). When the government 'creates' money, it is doing so without creating any real product, service, or work being created/done. That is the primary purpose of money; to measure the value of something done or produced. When the federal government taxes it is taking money away from citizens and their desires to spend it from the value they added to the economy and allows government officials to do with it as they please. That includes destroying it. Your video mentions that the government can always afford something. This is not true and is misleading. If citizens do not want to work because so much money has being 'created' by the federal government rendering its ability to accurately measure value of goods/services, they simply don't have to. Since the federal government has been creating imaginary paper then that is what it turns into for citizens. This is seen all around the world in centralized governments. The government needs real work, goods and services to be created for money to be useful at all. You cannot have money without the real value produced (real economic activity through the exchange of many people every moment in time). The government artificially reduces or supplies money, but they cannot reduce/supply value produced. Many governments have tried and it did not end well.
The government creates money by spending it in exchange for a resource or labour. There's no mechanism for the government to simply magic money into the economy unless there's an agent in the economy that is willing to accept the government money in exchange for their product.
SO WHY ARE YOU AGAINST REPARATIONS?
FINALLY, a correct analysis of what money is, and what taxes are for.
What about European countries which use the Euro, which is issued by the ECB?
What is the purpose of taxation in these countries, if not to fund spending?
Taxes do not funding federal government spending in the Eurozone. Money is still created by central banks, it's just the national central banks also defer to the ECB. If you read a paper published earlier this year by Dirk Ehnts and Randall Wray it goes into this in more detail. In fact national central banks in the Eurozone are still the currency issuers, just now they issue the Euro instead of Francs or Deutschmarks. The issue for nations in the Eurozone is not that taxes fund spending.. they don't. It's that those nations have a lower degree of monetary sovereignty. They are bound by rules enforced by an external authority, and have less control over their own economy.
For more on that I'd suggest reading Peter Mair. He particularly highlights the case of Ireland's response to the GFC, and how the ECB constrained Ireland's democracy due to fiscal rules. Many southern-European nations have also faced similar challenges due to restrictions placed on them by the ECB.
@@PEGSInstitute Thanks for your prompt and detailed reply.
If I understand you correctly, the governments (via their central banks) Eurozone members can no longer create new money, but they can still destroy it via taxation?
They've effectively given up the sovereignty to create their own currency to the ECB, thereby limiting their own fiscal spending?
However, their commercial banks are unaffected, as they still create new money via loans.
Brown Laura Lopez Ronald Moore Ruth
MMT is the best way to promote socialist ideas :)
Tax the Federal Reserve
I know this but when you tell people they don’t want to hear and look at you like you’re completely insane. Simp,y put the government issues credit. When it’s paid back the debt is cancelled. The govt then repeats the cycle. If there was no tax the govt would be putting too much credit into circulation, devaluing the credit (increased inflation). So while the tax doesn’t pay for anything directly it effectively does indirectly, because without the tax, the government will issue less credit.
Want to see what happens when a currency has no inherent demand built into it via taxation, look at crypto. Its value is driven exclusively by the idea that it will continue to rise in value, which is what the very few people who own most of it want you to believe - so you buy more and drive the price of _their_ holdings up. When it is revealed that it won't go up forever, it drops like a rock. Bitcoin is down more than 52% YTD as of this writing. What kind of currency loses _more than half_ of its value in less than 8 months? That is not a currency any rational person would ever find value in beyond pure speculation.
*Exactly, if the dollar ever lost 52% of its value that would be called HYPERINFLATION.*
Taxes dont give a value to a currency... Stupid bs
Thank you, professor. Can you link to your anthropology paper where you proved otherwise? We can update the video with your research as a source.
@@PEGSInstitute The value of a currency is messured in how much you can buy with it. If products go up in price because the government introdruces new form of taxes or sets taxes higher, then you can buy less with your money so the money becomes less valuable, that is wanted from the government to have the ability to always print more money then they get from taxes. Also called inflation and Fiat system.
They burn tax money, that is correct, but they must do that to have some kind of price control. The supply of money and the gdp are better indicators for the value of a currency.
So saying you cant speak about the european union is false, because 1€ in Germany is the least valuable in all of the eu countries. Germany has the by far the highest tax rate of all the countries in the world. So your statment isnt compleetely false if the governments would print money to raise the gdp and the overall wealth of a democratic country, but they dont, so your premise is incorrect. What you could mean is the value in the international comparrison, but thats not the value in the common sense.
What is a reichsmark worth to an American in 1940? Right nothing so the curreny is worthles? Whats a rubel worth to an american? Right nothing. Your economic brain functions in a way what people think something is worth. So tax rate to be correct is not an indicator on the value but an indicator on how much value the currency could possibly have in the future.
Why is a Euro worth something in Germany, but not in the US? Both currencies can be exchanged for goods and services, but why would US businesses not accept payment in Euros? Because they are taxed in dollars.
If every merchant in the US decided tomorrow that they were going to start trading in Biden Bucks, every exchange, every salary paid in Biden Bucks...whatever they do, at the end of the financial year they need to pay their taxes in US Dollars. They will then need to find a way to exchange their supply of Biden Bucks for US Dollars, and suddenly the value of trading in Biden Bucks becomes a lot less attractive.
The US dollar has value because we all agree it does. If everyone in the US decided they were going to use Biden Bucks (of course they’d be worth 30% less than the dollar), then the US government would accept it for taxes. The government would pass a law to accept it in lieu of the dollar because no one would accept dollars anymore when the government paid for personnel or services. The dollar is only worth anything because we all agree that it is. BTW, your video is full of holes and kinda sucks. Kudos.
The historical evidence of the first colonial American currency tells a different story. The Virginia colonies created a paper currency and issued it despite it having no intrinsic value. Its only value was that it was required in order to pay tax debts.
And actually we have anthropological evidence of similar currency arrangements going back thousands of years.
Guys don't listen to this. There are lots of oversimplifications and gross misunderstandings here, put together with some facts which makes it sounds somewhat believable. Central banks do have these powers, but the explanations of how they operate are wrong
To clarify:
- Fiscal policy i.e. government budget is mostly funded by taxes.
- Monetary policy i.e. printing money is in the realm of the central bank, and is primarily used to manage inflation.
- Demand is driven mostly by things OTHER than taxes. Spending, corporate spending, foreign exchange markets
- Lots of other things are crap, can't be bothered writing it all
How do you know someone's a well-informed academic?
When they start debunking your message by saying it's accurate and then end it by saying they can't be bothered to continue.
@@PEGSInstitute Can you address my points maybe, rather than an ad hominem attack? Maybe then I'll spend / waste my time on a longer writeup.
I've never claimed to be a well-informed academic. My sibling works for a European country's Central Bank (which has and prints their own currency), dealing with monetary policy and knowing enough about fiscal policy. That's why I'm calling BS, at least within Scandinavia.
@@karl2405 Do you remember a couple of months ago when the US Federal Reserve published this www.federalreserve.gov/econres/feds/files/2021062pap.pdf and the entire world of economics was talking about it?
Do you know why? Because it's an official central bank publication that on page one says "Mainstream economics is replete with ideas that 'everyone knows' to be true, but that are actually arrant nonsense." and central banks are usually known for being more than a little conservative when it comes to understanding or even acknowledging heterdox economics. So you'll forgive me if I don't take your being related to someone who works in a central bank as evidence that your refutation of our video is accurate.
@@PEGSInstitute So yes mainstream economics has lots of flaws. And Central Bank's inflation expectations are almost always wrong.
Nevertheless, your video states 'tax money is burned, instead the government prints money for public spending' - that's just wrong. The CB does enacts QE every year to control inflation, but not for public expendature. That's only done during economic crises. Nor is 'tax money burned' - it's stored and used by the FED, who also sell bonds to make up for any remaining budget deficit.
I don't think the system works radically different for the Eurozone does it? The euro is not a foreign currency but controlled by the EU member states themselves. The EU thus acts as a sovereign pseudo-federation which prints and taxes its own currency, albeit with an extra layer for now.
Technically, yes. The major difference is that member states have no sovereign authority over the ECB. In fact, sometimes it's very much the opposite. Check out Peter Mair talking about the issue of ECB and Ireland.
@@PEGSInstitute Ah thanks, will check it out. Indeed, as far as I know each member state needs to keep a certain budget but its regularly exceeded. I'd say it can be inconvenient since countries like Greece benefit from different fiscal policies than rich Western EU countries. In fact austerity only worsened their crisis after 2008 while it was quickly 'solved' with QE. Varoufakis explains this well. I believe he also said this power of the ECB and making the states depend on each other might be by design to push towards federalization. Or something in that capacity.
Money creation does not cause inflation...
First time I'm first.
Modern Monetary Theory. May be right, may not be.
This video is running a main stream nerrative thise at top want you to believe.