Modern Monetary Theory

Scotland's Economy

"Simply understanding this straightforward fact (because that is what it is) about the Westminster government’s ability to spend makes it clear that the claim that there is no money, much beloved of most Westminster ministers, is complete nonsense. The UK Government can, as a matter of fact, spend any amount it wishes so long as it legally decides to do so. It can never be short of money and any claim to the contrary is, to be blunt, untrue. It is also a known fact that if a government was to spend without limit then there would be inflation. As a result, a government like the one in Westminster has no choice but to tax. But, I stress, it does so not to fund its expenditure, because that has already been paid for by money creation. Instead, it does so to reclaim the money that it is already spent into circulation in the economy. In that case, for a government like that in Westminster tax is first and foremost a mechanism to control inflation that also happens to tackle inequality, the repricing of goods and services if that is considered desirable, and that can be used to encourage or discourage certain types of economic activity."