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How Much Money Can We Print? - Warren Mosler, Modern Monetary Theory - DSPod #251

The DemystifySci Podcast

NOTE

Spending before borrowing in government financing

Government spending precedes borrowing in financing, with Treasury securities sold after money is spent to provide an interest-bearing place for funds. This practice stems from historical norms rather than current necessity. Understanding this sequence is crucial, debunking the notion that borrowing precedes spending. This insight challenges traditional economic models by emphasizing that taxes do not fund the government directly; rather, tax liabilities drive economic activity, enabling the government to circulate its currency and collect taxes. This unconventional approach contradicts mainstream economic theories and historical practices, indicating a shift in the understanding of government financing.

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