For those that don't want to read this entire post, let's not bury the lead: MMT is wrong: - The U.S. does not have a spend and then tax system, we have a tax then spend system - The U.S. Treasury does not issue the U.S Dollar - The Fed does not issue reserves for the Treasury to spend - The Fed does not issue new reserves to pay the Gov's bills directly - The Gov cannot spend before receiving tax receipts or revenue from bond sales Below I explain in detail exactly why. Please let me know if you think I made any mistakes. After many, many hours of discussions with friends here and elsewhere, I think it’s finally becoming clear, I have finally gotten to the bottom of the MMT debate, so please let me know if you agree. We can have a tax and spend system, which many people believe we have today, and under a tax and spend system in 2024, the USG would have taxed roughly $5T and spent roughly $7T, showing a roughly $2T deficit, and the Gov would have had to borrow roughly $2T to cover the deficit spending. Or we can have a spend then tax system, which MMT believes we have today, and in 2024 the USG would have issued and spent $7T and taxed back $5T, showing a $2T deficit, as the USG spent $2T more than they received back in tax revenue. Two different systems that in practice don’t matter much until you have a deficit. Under a tax and spend model, to cover deficit spending the Gov has to borrow, because desired spending exceeds tax receipts. Under a spend first then tax back model, the Gov already spent the $, so the deficit is covered by issuing money, no borrowing or debt, the deficit is created because tax receipts are lower than currency issued and already spent, so all the money issued is not all taxed back. Which model we have is the heart of the MMT debate. A currency issuer always has a liability for the currency they issue, which means when they issue their currency they increase their Liabilities on their Balance Sheet, and when they receive their currency back as payment, they reduce their Liabilities. If they receive 100% of the currency they issued back as payment, their Liabilities go to zero and all currency is removed form circulation.

By nature I’m an optimist, yet I’m writing now about a nightmare and I hardly know how to title this Post. It’s an appaling nightmare, triggered by a ‘Long Read’ article from the Guardian. See https://www.theguardian.com/news/2026/aug/18/the-long-read-democracy-v-the-machine-digital-age-warnings-computer-history-technology I’ve always been interested in ‘What If?’ questions, in a positive or improving sense. But this ‘What If?’ goes the other way. What if humanity’s future is a new Slave Age, where say 10 million of the very wealthy are supported in opulent lifestyle by an host of AI-machines and robots - a host with capabilities that are fully the equal of 10 billion people, who are now superfluous. Of course I don’t believe this nightmare, yet I feel fear. Do the very rich TechBros, and their associates, think there could be a future in which they don’t need the rest of us? If fire and flood should consume most cities and towns, wouldn’t that just be an efficient way to reduce the surplus population? I never thought I’d see that phrase Charles Dickens gave to a fictional character in quite such a new light. The real nightmare is that this scanario doesn’t have to be true in order to happen. It only needs enough of the very rich to believe that it’s likely. A false dawn of machine slaves would, after an attempted dawning, be no comfort. And I’ve not been smoking or swallowing anything ‘interesting’.