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Natasha's avatar

" [...] American tax authorities collected 4.9 trillion dollars [to] fund the United States government [...] "

But taxes don't "fund" anything. All money is created via double entry bookkeeping. Put simply, tax payments simply cancel out government tax demands.

https://profstevekeen.substack.com/p/its-not-a-deficit-its-a-fiat?utm_source=substack&utm_medium=email

In 2014, the Bank of England published a landmark paper explicitly rejecting the textbook model of money creation, stating that:

Money creation in practice differs from some popular misconceptions—banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they 'multiply up' central bank money to create new loans and deposits…

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. In normal times, the central bank does not fix the amount of money in circulation, nor is central bank 'multiplied up' into more loans and deposits. (McLeay, Radia, and Thomas 2014, p. 14)

https://profstevekeen.substack.com/p/the-schizophrenic-understanding-of?sd=pf

A sovereign, currency-issuing government is NOTHING like a currency-using household or firm. The sovereign government cannot become insolvent in its own currency; it can always make all payments as they come due in its own currency.

Government spends currency into existence and taxpayers use that currency to pay their obligations to the state - it clearly does not need tax revenue before it can spend - and taxpayers pay their taxes using currency, then government must first spend before taxes can be paid.

http://neweconomicperspectives.org/2014/06/modern-money-theory-basics.html

https://www.vox.com/future-perfect/2019/4/16/18251646/modern-monetary-theory-new-moment-explained

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Lsee's avatar

In all the panic and frantic hubbub about failing banks and supposed American "tax cheats" in Switzerland, no one ever asked or talked about what's (really) going on, but you certainly made it clear. The US wants to disintegrate Swiss neutrality - it's so obvious - and thank you for this concise analysis. But like anything US-related, the insidious plan is a day late and a dollar short.

P.S. I love it when you say, "And so..." :-)

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