It might be better to start with your concluding challenge-

"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.""

MMT in fact begins with an analysis of physical resource flows. Namely, a government's desire to provision itself with resources and labor, which is the foundation for all monetary economies. The government levies a coercive tax in its unit of account, and then offers its tokens in exchange for resources and labor. These tokens (money) can be used to satisfy the tax obligation. Physical resources come exactly from where you would expect- the physical world. The government employs them via its spending and taxing authority, which doubly serves as the genesis of the monetary economy.

"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."

No, in fact physical resources and their utilization is the prime focus of MMT. This is why MMT economists argue federal budgeting deliberation should focus on inflation and real-resource constraints rather than arbitrary financial accounting balances, which are no constraint at all.

"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."

Once again, MMT economists typically advocate for doing away with T-bill issuance altogether, so I'm not sure why you keep bringing this up. The government does not need to tax or issue T-bills in order to spend.

You are also missing the fact that if the government does not provide sufficient financial net assets to the private sector, a significant amount of "beer" in your example will simply spoil and not be consumed since consumers cannot afford it. In the long run, it will not be produced in the first place. This is a very bare-bones example of how austerity causes both unemployment and labor/resource underutilization. Unemployment is the result of the government deliberately creating a shortage of the net financial assets it issues, and/or failing to directly employ the labor slack left by the private sector.

Taxes are the source of unemployment, but they are also the necessary original condition of monetary economies (there is no unemployment in non-monetary economies). If the government fails to issue enough tokens to accommodate the savings desires of the private sector or employ excess labor directly, unemployment is the inevitable consequence.

Corporate accountant and former auditor with degrees in philosophy and accounting.

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