At the national level, our money is a utility owned by the people of the U.S. The government loans money to the public when it spends in the anticipation of repayment in the form of tax revenues. Savers of all sizes remove their money (temporarily or permanently) from this cycle by buying tax-favored assets of various kinds. Federal bailouts periodically protect the value of the assets of the savers from credit crises and deflations. Tax laws and Fed policy are determined by the representatives of the wealthy. The government's outsourcing of retail money-creation to the banks and the public's clinging to the concept of dollars as precious metal or backed by precious metal has made virtually all Americans believe that one's money (always "hard-earned") is a private commodity that the government periodically (and supposedly illegally) tries to confiscate. Michal Kalecki was right when we warned that all confusion in economics boils down to the mistaking of flows for stocks and vice-versa. Financial assets are stocks. Liquid money is a flow. Poor people spend it as soon as they get it. Then it moves upward to those who can afford to save some of it; they immunize it from taxes in assets. We'll be mired in this trap of higher inflation, higher interest payments, and higher inequality until we recognize the reality and accept the justice of the loan/repayment cycle of federal spending/income taxes. Such recognition isn't possible in any foreseeable information market; only MMTers and fellow heterodox economists embrace it. No competing explanation fits the facts. But it will always be hard, politically, to decide precisely whom to tax and how much to tax. And the tax system will always be gamed by the wealthy.
It may not be enough, but it would be a good start.
Gene -- would you consider a future column discussing the distribution impact of tariffs compared to a VAT and or Flat Tax (in the US).
However, consumption at the low income end is investment in human capital. Sustaining health and social cohesion is value creation.
At the national level, our money is a utility owned by the people of the U.S. The government loans money to the public when it spends in the anticipation of repayment in the form of tax revenues. Savers of all sizes remove their money (temporarily or permanently) from this cycle by buying tax-favored assets of various kinds. Federal bailouts periodically protect the value of the assets of the savers from credit crises and deflations. Tax laws and Fed policy are determined by the representatives of the wealthy. The government's outsourcing of retail money-creation to the banks and the public's clinging to the concept of dollars as precious metal or backed by precious metal has made virtually all Americans believe that one's money (always "hard-earned") is a private commodity that the government periodically (and supposedly illegally) tries to confiscate. Michal Kalecki was right when we warned that all confusion in economics boils down to the mistaking of flows for stocks and vice-versa. Financial assets are stocks. Liquid money is a flow. Poor people spend it as soon as they get it. Then it moves upward to those who can afford to save some of it; they immunize it from taxes in assets. We'll be mired in this trap of higher inflation, higher interest payments, and higher inequality until we recognize the reality and accept the justice of the loan/repayment cycle of federal spending/income taxes. Such recognition isn't possible in any foreseeable information market; only MMTers and fellow heterodox economists embrace it. No competing explanation fits the facts. But it will always be hard, politically, to decide precisely whom to tax and how much to tax. And the tax system will always be gamed by the wealthy.