I have been thinking about this book – The Deficit Myth in all the ways in which we have been told, mostly through politicians; and all the ways in which we have been told falsely.

Taught falsely, believed falsely.

I am not going to be able to extrapolate every marked point in this book. But I want to highlight some great moments.

An aside: if you ever are curious what your mind may actually be saying, write it out. It will tell you.

We are taught that unless they take more of our money, the government can’t afford to spend what we already have, let alone embrace what future programs, thoughts, ambitions we may have.

What happens, we get twisted in knots trying thinking of our homes’ budget and what needs to be done, and then off in the far outer-sphere, wee hear that big federal deficit number and how we are never going to abolish it.

According to conventional thinking, the government relies on two sources of funding: it can raise your taxes, or it can borrow your savings.

Taxes allow the government to collect money from people who have it, which means taxes are looked upon as a way to transfer money to the feds. If the government wants to spend more than it collects it by taxing, it can raise additional funds by borrowing from savers.

In either case, the government must come up with the money before it can spend.

To reiterate, Taxing and borrowing come first. Spending last. (TAB)S.

We believe, that the government needs our money to help pay the bills.

Here comes the good stuff.

Warren Mosler wrote Soft Currency Economics after his years of working as an investor in financial markets and says the government spends first and then taxes and borrows: S(TAB).

The government doesn’t go around looking for money, for someone else to pick up the tab, “it spends currency into existence.”

I keep thinking about this and it seems almost science fiction or the power of the mind, spend into existence.

Mosler started thinking where does the money come from – with the idea of credits and debits, and how the money got there in the first place. We kind of makeup money. We do this digitally. We move numbers around a lot.

Mosler says, “Since the US government is the sole source of dollars, it was silly to think of Uncle Sam as needing to get dollars from the rest of us. Obviously, the issuer of the dollar can have all the dollars it can possibly want.” The government doesn’t want dollars, it wants something else.”

It wants to provision itself. Let’s take out my handy OED just to make sure: Provision – the action of providing or supplying something for use; financial or other arrangements for future eventualities or requirements.

“The tax isn’t there to raise money. It’s there to get people working and producing things for the government.”

To illustrate his point he writes, and I am going to quote a large block because it is brilliant.

Molser wanted his kids to do their part to help keep the place clean and habitable. He wanted the yard mowed, beds made, dishes done, cars washed, and so on. To compensate for their time, he offered to pay them for their labor. Three of his business cards if they made their beds. Five for doing the dishes. Ten for washing a car and twenty-five for tending the yard work.

Guess what, nothing got done because the kids said, “Why would we work for your business cards?”

The kids didn’t need his business cards. So Mosler told his kids “he wasn’t requiring them to do any of the work at all. All he wanted was a payment of thirty of his business cards, each month. Failure to pay would result in a loss of privileges.” No TV, games, pool, etc.

“Within hours, the kids were scurrying around, tidying up their bedrooms, the kitchen, and the yard.”

The worthless business cards turned into value, a token. Mosler created a situation where his kids needed to earn his “currency,”

They got a receipt each time they did the work and by the end of the month, he in return got his thirty business cards.

He said, “What would I want with my own tokens?” He already got his tidy house. “So why did he bother taxing the cards away from the kids?”

Mosler collected the card so the kids would need to earn them again next month. He had invented a virtuous provisioning system! Virtuous in this case means that it keeps repeating.

Taxes are there to create a demand for government currency. The government can define the currency in terms of its own unique unit of account – a dollar, a yen, a pound, a peso – and then give value to its own otherwise worthless paper by requiring it in payment of taxes or other obligations.

At the end of the day, a currency-issuing government wants something real, not something monetary. It’s not our tax money the government wants.

It’s our time.

“The government then spends its currency into existence, giving people access to thee tokens they need to settle their obligations. No one can pay the tax until the government first supplies the tokens.” Just like Monopoly.

The taxpayers don’t fund the government; the government funds the taxpayers.

But you have to earn it, just like the kids giving back their dad’s business cards; a tax, fee, a fine doing their chores.

The government wants to have a military, a court system, public parks, hospitals, roads, bridges, dams, onward. Someone has to build them and create them. The government has to make the time worth the money.

“It’s not our tax money the government wants. It’s our time.”

This flipped my mind and makes me look at the world completely upside down and inside out in some ways.

I am not going to understand everything in this book – but the more I read the more I understand. I guess to me – it narrows in on where to spend my energy. It’s knowing and understanding the recipe.

Much love. Stay the course and never give up. Ever. On anything.

Work Cited:

Stephanie Kelton, The Deficit Myth 
Warren Mosler, Soft Currency Economics