In this country we Tax and Spend.

Everything that is purchased by government, is 'Paid For' by taxation, and borrowing!! However....and this is the crucial part. Unlike you or I who has to earn the money or borrow it first, in this country, the Spending happens FIRST! (1/x)

So the implications of this are that when the government spend, they instantly get tax returned from that spending. They spend a billion, they might get £200,000 returned instantly as VAT. Did VAT rates have to increase to get that £200k? of course not.

So the remaining £800,000 ends up with companies, maybe private contractors....who pay wages....and then another approx 30%, that is £240,000 is returned to the government. Boom. Did income tax rates need to go up ? of course not.

Then when those employees spend their wages on shopping, or going down the pub, or filling their cars of fuel, another big chunk of tax gets returned to the government...... And so on, and so on, until almost all of it gets returned. Were tax rises needed? Nope.

Where is the remaining money that isn't taxed?

Well, it sits in peoples bank accounts. Banks have a legal obligation to hold enough capital to back peoples credit balances....and they can hold this in the form of gilts.

So, as people save more, the banks buy more gov bonds.

So that entire £1million spent by the government has now been costed. To the penny.

And no more increase in tax was needed.
And no more increase in interest rates were needed.

Every penny the government spends, ALWAYS comes back either in tax or gilt sales.

MMT is not new!

MMT is not something that is to be adopted. It is not printing money. It's not QE. It is just the logical conclusion arrived at, once it is realised that the government must have spent the money first, for there to be any money at all in the first place.

This is step 1 in the journey to understanding MMT. A realisation that the 'Tax and Spend' that they tell us, is, kind of true. Except, they always miss out the 'Spending comes first' part. They never tell us that. But, this changes *Everything*.

Step 2 in the journey to understanding MMT is then working out the implications of this. Does tax fund spending, if the government must have already spent that money without tax? Is it really borrowing, if the government doesn't use the borrowed money to finance anything?

And, your mind gets taken down a huge rabbit hole of questions / answers, which many economic scholars have researched this for decades. But they didn't invent it. It was just observations, and logically thinking though the implications of what what was observed.