To see through MMT, follow the resources:

I want to drink beer. So I knit and sell socks for $99, which could buy me 99 bottles of beer and a comfortable weekend.

But instead I forego the weekend's consumption and buy a T-bill, because that promises 100 bottles of beer a year from now.

The Treasury doesn't produce beer or any other physical resources. I'm expecting it to get other people to forego their consumption to free up beer for my fridge. It could do that by taxing away someone else's paycheck before he can buy beer for himself, or printing money so his savings buy him less beer than he expected, or inducing him to likewise put his paycheck into a T-bill on the promise of even more beer in the future.

One way or another, physical resources have to be diverted out of some citizen's hands back to me the T-bill holder. I'm buying the T-bill precisely because it's a claim on citizens' future output. If there were genuinely a "full stop" between the Treasury and the private sector economy, no one would buy T-bills.

Of course MMT's advocates don't want to talk about physical resource flows--a "category error" they might say. The whole game is to distract from the physical resources with technical arguments about fiat operations--whether the dollars going in are the same as the dollars going out, whether taxing or spending happens first, and so on.

If you still think it's not a scam, Charlie, show me where the physical resources come from that government spending supposedly "pumps into the economy."

Tech guy trapped in the data mines of San Francisco. Follow me at

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