Sunday, December 27, 2020

The real numbers behind MMT

 I skipped Stephanie Skelton's book as most reviewers consider it a politico manifesto of unconnected ideas.

But, ignore all the delusions and stick with her inflation tax vs real tax. How much inflation do we suffer? less than two percent. But the real federal taxes are closer to 15-20 percent of GDP; a  one to ten ratio. 

The proposed inflation tax is not that large, relatively speaking, and should be about the same as Fed siegniorage taxes. So, it seems to me, why suffer the trilemma of having the Fed collect the inflation tax and cause deflation? Fix the trilemma problem, let Treasury implement the inflation tax, Congress implements real taxes, and the central bank is much closer to market neutrality.

This part of MMT makes perfect sense, just ignore the delusions about getting 'nice things'. What we really get is accurate money and markets less distorted by the trilemma.

Fit this idea in the culture of post Nixon Shock syndrome.  Having Skelton inject a politico manifesto only makes the solution more difficult, she unnecessarily freaks out the hysterics at the Fed

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