>>"This is one of the most absurd claims of the supposedly "descriptive" MMT. Taxation does not delete money from the economy. When the federal government collects taxes, it doesn't take that money and burn it in a giant pit. It turns around and immediately spends that money."
I didn't know that idea was so polemic.
So, what you are saying is that government deficits are inflationary because they add money to the economy, but, on the other hand, government surplus don't retire money from the economy?
>>"This is completely false. The Fed creates new reserves (base money) in order to buy assets."
Yes, but the assets the Fed buy (when practicing QE) are in the accounts of the commercial banks in the Fed. After buying them, those assets are not there anymore, and, instead there is money (1). And money is basically a government bond that pay 0% interest.
1 - http://bilbo.economicoutlook.net/blog/?p=661
I didn't know that idea was so polemic.
So, what you are saying is that government deficits are inflationary because they add money to the economy, but, on the other hand, government surplus don't retire money from the economy?
>>"This is completely false. The Fed creates new reserves (base money) in order to buy assets."
Yes, but the assets the Fed buy (when practicing QE) are in the accounts of the commercial banks in the Fed. After buying them, those assets are not there anymore, and, instead there is money (1). And money is basically a government bond that pay 0% interest.
1 - http://bilbo.economicoutlook.net/blog/?p=661