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"The People's Money": A crisp, simple, thorough explanation of how government spending is paid for

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Modern Monetary Theory is an economic paradigm that treats money as a utility that governments issue and tax in order to mobilize resources needed to provide the services that the public wants; it explains why some kinds of government spending leads to inflation while other kinds do not, and how sovereign states use different levers to control inflation, even when they're spending extraordinary sums, as in WWII. MMT is key to understanding how bold and vital social programs -- from Medicare for All to a federal jobs guarantee to the Green New Deal -- can be enacted, and why austerity and its absurd comparisons between sovereign nations' spending and household or small business budgets are cruelty dressed up as prudence. In The People's Money, MMT theorist JD Alt takes a swing at a comprehensive explanation of what we mean when we say "money" -- and what the difference is between "money" in the national bank, "money" in your local commercial bank, and "money" you have in your pocket right now. It's a crisp and comprehensive explanation, blissfully easy to follow and light on finance or accounting jargon. This is only part one, and Alt has promised a sequel dealing with the relationship between the public and private sectors. Reserves, then—even though they are the “real” U.S. fiat dollars—are not the “money” American citizens and business borrow and spend every day. That money comes in two other forms: Federal Reserve Notes (the cash dollars we have tucked in our wallets) and bank-dollars which is the money we have on balance in our demand bank-accounts (checking and money-market accounts). Read the rest

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