This is a nice explanation of the claims made by MMT proponents. Some caveats though. If a government just issues new currency to fund all its spending, particularly if people come to expect that, it runs the risk of putting too much currency in circulation to match the goods available for purchase and has at the same time eliminated the mechanism for calling some of that currency back. A fiat currency, our fiat currency depends on perceptions, on the confidence in the market that the “full faith and credit” of the U.S. is a solid and bankable commodity, more solid than specie.

There are any number of “natural” circumstances that can limit the production of goods and services, from natural disasters or actual shortfalls of critical commodities to larger environmental/political considerations like global warming. The inflationary spike of the 70s was closely tied to temporary restrictions placed on oil supplies and the concurrent demand spike of the baby boom generation as they entered into their big earning/spending years. U.S. production had become complacent and moribund, there was a temporary mismatch between demand and supply that helped stimulate a dangerous inflationary spike even though employment was nowhere near 100%.

With as much wealth in the hands of the few that now exists, taxation seems to be a natural function to fund much of the socially beneficial and undone work. Doubtful that money supply can be open ended without destroying confidence in the chosen currency and I would expect much push back from wealth holders who saw “unfunded” govt spending as an erosion of their wealth holdings. It seems that we are now engaged in a stealth deployment of MMT principles, no real prospect of curbing current deficit spending, increasing public support for changing the balance of taxation in order to drain some of the vast pools of concentrated wealth back into the public sphere, to “recapitalize” Main St.

There are very real limits to production, if only the limits we will be facing as we continue our degradation of the natural systems that are our only real source of wealth. We should focus on finding our way out of an eternal economic growth model reliant on consumption that as Edward Abbey put it had “the logic of the cancer cell”.