“Federal Taxation doesn’t fund Federal spending” sounds like a simple statement, but for the amount of cognitive dissonance one sees when trying to express this idea to the unaware, it would be. The reason for this dissonance is because this information goes counter to the narrative pushed by our leaders and orthodox economists. People have gone through their whole lives believing that the hard-earned tax dollars they contributed each year went towards paying the country’s bills, that their tax money provided welfare and food stamps to people too lazy to get a job, and funded our mighty armed forces.
The ruling elite want these beliefs held for multiple reasons, chief of which is to force austerity. If your population believes that your federal spending is constrained by taxation, you can claim to be broke; thereby, offering concrete reasons for spending cuts: Social Security, federal unemployment extensions, food assistance, Medicare, and any other entitlement is fair game for these deficit hawks. The crazy part is that the decades-long misinformation campaign has been successful to the point that people argue fact with belief and defend their misinformation tooth and nail against all logic.
I recommend 7 Deadly Innocent Frauds Of Economic Policy by Warren Mosler as a jumping-off point: I’ve hyper-linked the full PDF free version here for anyone interested in educating themselves about macroeconomic reality and a detailed expression of how our current monetary system works today. So exciting! I understand the dryness of the topic, but we need to transcend our aversion to learning such topics as this is. MMT (or Modern Monetary Theory) knowledge is vital to saving lives right here in America and all across the world as a result of the Neoliberalism we’ve unfortunately exported. Simply because it answers the age old question of “how ya gonna pay for it” definitively with the answer: “The same way we’ve paid for 15 years of constant war in the Middle East — sovereign spending.”
For any naysayers or non-believers, I implore you to do a little research and a lot of critical thinking and see for yourselves where logic leads you. It is really quite intuitive once you can get your brain around the new information. Some other great sources for fiat currency explanation are Stephanie Kelton, L. Randall Wray, Pavlina Tcherneva, and Bill Mitchell. They all have many published articles and YouTube videos that are wonderful resources. I encourage you to keep at this material: it is literally life-saving equipment.
When you feel the urge to join in this nonsense, please #resist.
” Stephanie Kelton (@StephanieKelton) April 26, 2017