“Those tax credits are only “money” in the private sector, private sector reserves. People accept them because they carry the full faith and credit of the US government and its Treasury.”
Gold is replaced with government debt. The value backing the currency is a government obligation that was spent into the economy.
“Dual entry spreadsheet accounting requires that every entry has an opposing entry in another sector, but money is not created until it is spent in the private sector as money can’t exist in the same sector as the debt or it would be canceled out by that debt.”
So someone’s asset is another’s debt. Like mortgages, or credit card debt is repackaged as an investment. MBS.
“Without a gold reserve to defend, there is no reason to extract reserves from the economy and they, as you pointed out, mostly only benefit the wealthy who have a vested interest in preserving the gold standard thinking. Simply changing that thinking, disconnecting spending from revenue, takes away much of their power.”
Yet they fully retain that power, when those reserves are borrowed out, rather than taxed out, making public debt the backing for private wealth.
“ MMT simply says that managing the economy as if we were still restrained by the gold standard leaves a lot of un/underutilized resources and labor on the table.”
The real problem is that those reserves are being spent on unproductive and outright destructive services. What resources and benefits could be utilized and worked through, if the rather enormous amounts spent on the military, or providing for people who never developed useful skills, was spent productively, such as on schools that were more than warehouses?
The assumption is that the economy is becoming more efficient, so these people are unnecessary, but efficiency is to do more with less, so the ideal of efficiency would be to do everything with nothing. We live in a cyclical, feedback oriented reality, but we have an ideals based culture. There are a lot of kids out there who would benefit from some basic shop and wood working classes, rather than simply drowned in information from their iPhones, with no effective framework to tie it together.
An essay I wrote a bit ago;
