This MMT sub seems to be more about US economics but I hope someone can help me out.

If we take Germany for example. In my understanding the German government finances itself by issuance of government bonds. They are sold to private banks. No new money is created with this step.

New money is only created when the European Central Cank (ECB) buys the government bonds from the private banks. This is my understanding at least.

I think in Germany 25% percent of government bonds are held by the ECB. The rest are in the pirvate sector. So in my understanding the German State financed itself until now by creating 25% percent new money and 75% existing money. Is this correct? At first I thought everytime the government spends money, new money is created by the issuance of bonds, or am I wrong?

I would be very glad if someone can answer my questions or can link an article or paper.

Thanks.

This is my first time posting ever on here so I apologize if it sounds weird or confusing. I just watched "Finding the Money" this weekend. It was absolutely fantastic. I do have one nagging question thought and its far more likely due to my lack of understanding. If our tax dollars are in fact just burned as soon as we pay them, and the government doesn't rely on tax revenue for spending, then how does a surplus happen? Is a surplus just as arbitrary as a deficit? I appreciate any help understanding this, thanks!

I want to ask a question regarding https://www.levyinstitute.org/pubs/op\_72\_.pdfOne-Pager|No. 72 If Government Can Print Money, Why Does It Borrow? May 8, 2024 L. RANDALL WRAY

Is it possible to meet the Fed regulations and still not sell bonds?

1/ USA Treasury must have a positive balance

2/ USA Treasury cannot sell bonds directly to the Fed

Are there any other reddits, forums, or discord servers where I can ask this question directly?

How does MMT (Modern Monetary Theory) explain State Taxes

Okay. So. As I understand it (I'm not an economist, quite a layman tbh) My understanding is - according to MMT - Taxes are not a revenue for the government to use. They spend money into the economy and then taxes it. Tax in this description is an engine to keep money moving, it's a social incentive, etc. but the government does not need my taxes to spend money. In fact any money the government spends did not come from taxes. If this is the case, how does that work at the state level. If the federal govt is the issuer of the currency and the taxer of the currency - what are state taxes!?!? Does the state get revenue from my taxes that they spend??? The state isn't the issuer of the currency, I think, right?? Bit confused on this if someone could explain how MMT would explain this.

Hello, following questions dont relate directly to MMT, but I think it stills fits the subreddit because they came to me reading economics who refer to MMT themselfes.

1.I read that we should seek an increase of wages of the productivity increase + targeted inflation. This makes a lot of sense to me, but we all know this hasnt happened in the last 50 years because wages didnt rise like productivity did. If we would implement sensible wage increases from now on, the working class still wouldn't reach the level of income it would be at without the last 50 years of slow wage increase. My question is: should we compensate for the last 50 years and let the wages rise even faster, or should this be avoided because of inflation?

2. Imagine very high inflation like we had last year, lets say 10%. Imagine productivity increased by 1% and targeted inflation is 2%. What would be the optimal wage increase? Inflation + productivity would be 11%. I read this is not adviceable because of wage-price-spiral. Targeted inflation + productivity increase would be only 3%. The working class would be a lot poorer and the economy would take a heavy hit.

What is the optimum? Are there formulars do calculate this you guys believe in?

I hope you understand my questions and excuse my english. Thank you.

According to the MMT, the JG policy is a better option for controlling inflation than increasing the interest rate or/and having an austere fiscal policy. However, I wonder how that policy would have played during the pandemic. I mean, the real problem was that the inflation was coming from the supply side and that´s why the interest rate increase was not giving the desired results. Nevertheless, I can´t imagine how the JB would have relieved the pressure because given the sanitary restrictions was really tough to work and even if it were possible I´m not sure the supply of goods will have been fast enough to suffice the demand. Any thoughts?

mmt says that printing more money won't create inflation, more money in circulation does. but even if say most of the new money printed went to savings, won't it create a time bomb of inflation? like when lot of those savings do come into circulation, mostly in a crisis?

I'm new to MMT & sorry if my question is silly.

Credit providers operate by the Collateral Multiplier, which causes lending expansion or contraction depending on the Bond market volatility (MOVE index). Is there a way to calculate this Collateral Multiplier with data from FRED or any other free sources?

So if money is just IOU's from the government and taxes are the removal of these IOU's, would it be accurate to consider this as the government breaking their promise to owe you?

Here's a primitive example. If the government wants to buy a goat from the farmer, the government buys it with their IOU. So in this case the government owes the farmer a goat. But the farmer also has to pay taxes to the government with their own IOUs, so the farmer must give back their "I owe you one goat" to the government (as a tax), but the government does not actually ever return a goat back to the farmer. If the farmer decides that they dont want to give up the IOU they received from the government, then they are essentially not paying their taxes and will end up in jail.

Is this narrative supposed to sound coercive? Is there something that I am missing?

Hi👋 Still learning about MMT, and I got a question about taxes. In many books I read that the state doesn't finance itself by taxes, but by making debt by selling bonds. But it is never explained what actually happens with the taxes. In one textbook on MMT it says:

Let’s start by looking at what happens if you pay your taxes by writing a check. When the U.S. government gets your check, and it’s deposited and “clears,” all the government does is change the number in your checking account “downward” as they subtract the amount of your check from your bank balance. Does the government actually get anything real to give to someone else? No, it’s not like there’s a gold coin to spend. You can actually see this happen with online banking—watch the balance in your bank account on your computer screen. Suppose the balance in your account is $5,000 and you write a check to the government for $2,000.

When that checks clears (gets processed), what happens? The 5 turns into a 3 and your new balance is now down to $3,000. All before your very eyes?

The government didn’t actually “get” anything to give to someone else. No gold coin dropped into a bucket at the Fed. They just changed numbers in bank accounts—nothing “went” anywhere.

And what happens if you were to go to your local IRS office to pay your taxes with actual cash? First, you would hand over your pile of currency to the person on duty as payment. Next, he’d count it, give you a receipt and, hopefully, a thank you for helping to pay for social security, interest on the national debt, and the Ira? war. Then, after you, the tax payer, left the room, he’d take that hard-earned cash you just forked over and then send them out to be shredded (any older cash used to make payments to Federal Reserve Member banks is sent to the shredder).

I find it hard to believe that it's just "deleted" out of existence. It's not so much that I find it hard to believe because I think it's not possible, but more because if something like this would happen, there would be a huge public outcry and scandal. In Germany I have never heard of this too. And many official government websites say that the state is funded by taxes. Normally if there's some misconception held by the population it usually comes from people not reading official texts or something while the information is openly given on some official thing (hidden in plain sight), but not in this case. Are there any official institutions who describe this process of "deleting" taxes? Or I'am missing something? 🤔

Total Assets, All Commercial Banks - https://fred.stlouisfed.org/series/TLAACBW027NBOG

I'm trying to find out the components that make up this metric. I would imagine it would have UST, MBS, Cash, Loans, and Reserves in it?? If so, can I get the FRED ticker for these?

From my understanding, debt is just a tool to manage unemployment and inflation. So in that sense, the current debt load isnt really as big an issue as most people make it to be. The issue stems from the fear that the US will miss an interest payment and the global economy will collapse

But since we are running on a different economic model from those of the past, is the current fear of high debt out of control or is the public misinformed?

What mechanisms does MMT have to prevent the debt from becoming unmanagable?

How the US Debt Crisis Affects Us All

Hi 👋 It’s not a very deep post, but I really love everything that I learn about MMT. What's most awesome is the fact that we don't really depend on monetary constrains, but only on the actually existing productive capacity of the economy.

I thought about it for a while, and it's really astonishing that I didn’t see this, or we as humans don't see this. Because what could be more obvious than that? If we put away all of the goddamn ideologies that we have been fed, this is what reality really is. Why should we be constrained by something like money, which is a thing we made up? If we have the tools and the people to do something, we should do it.

Sometimes I have the feeling that we are so instilled with ideology and false narratives that we don't see what reality is. It's really unbelievable how this shapes our perception. Marx always stressed this, that capitalism creates these abstractions and illusions that mislead us about how things actually are. I think this is one of the biggest problems we need to solve. We need to educate people in every way possible. 👏

I did a bit of searching and couldn't manage to find the answer to this, forgive me if I missed it.

In my understanding, a job guarantee essentially "pegs" the currency to the minimum valuable amount of labour, which makes sense for fiat.

My question is: why this over simply removing the minimum wage? The market is better equipped than the government to determine the value of work. JG essentially seems to just inflate all work priced below minimum wage to be nominally above minimum wage, so in real terms we are just getting rid of min wage anyway. The drawback of JG is that the government (via complex processes) decides what constitutes the "cheapest" type of work. This could (would) result in the government over/undershooting the "real" floor price of labour. It seems to make more sense to me to just scrap the min wage and let the market decide where the floor is. Of course, if the market fails to deploy the entire labour force, we just hit the printers until it does, since that would indicate a shortage of money.

Again, apologies if the answer is right in front of my face somewhere and I missed it.

Hello, i have no background in economics but i am interested in MMT for political reasons. So, have I understood MMT correctly if i think the process of government spending amounts to the following:

the treasury has a reserve account at the central bank. When it spends, it orders the central bank to credit a deposit account, as well as the reserve account of the bank where the deposit is kept. (so the same amount is spent twice, one in the form of deposit, the other in the form of reserve). At the same time, it issues a debt for the amount that is spends. This debt is purchased by a bank and paid for with reserves held by that bank at the central bank.

If you're interested in MMT you should definitely check out this blog:

https://www.taxresearch.org.uk/Blog/

Bank of England clarifying about the fiat-system back in 2014.

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Just wanted to make sure you're all aware that this documentary now is available on demand worldwide at findingmoneyfilm.com