@Gerard Borg It sounds like you believe we are having a discussion about two different philosophies, but I am trying to show you errors in accounting, not ideology. I am not against MMT, and in fact I highly value lower interest rates and full employment first, tax out excess. Capital from financial markets to reduce inflation second, which is the opposite of today’s paradigm and a foundation of MMT, and I have written about how to create a digital currency that follows issue to spend, tax back out if circulation, so I have demonstrated an advanced understanding if money mechanics. The paper makes some basic mistakes, then builds on that faulty foundation. I am showing you the accounting errors they make that lead to incorrect conclusions. You are sometimes just repeating their theoretical or philosophical arguments, or making your own separate errors, like “we don’t spend existing money and we don’t spend new money.” Huh? It has to be one or the other, agreed? What we are trying to figure out is if the money supply expands due to treasury spending. Simple question. You say yes, I say the accounting shows no. The paper says it does, that new fiat pays for Treasury spending and is retired through tax receipts and bond sales, and you agree with them, correct? I realize I am giving you too many topics at once, and you are verring all over the ecosystem with too many half baked ideas and mistakes to cover and correct, so let’s remove all other topics from discussion so you can at least fairly represent my view. I have covered it so many times you should be able to do that, but it seems it still eludes you. 1. Either we have a system where the Government ‘issues new money’ when the Treasury spends, retires it when receiving tax payments or bond sales, agreed? 2. OR, we do not have that system but have a different system, tax or borrow then spend , it’s one or the other, agreed? 3. The paper says Treasury spending is financed by new reserve and new fiat money creation, agreed?

@Gerard Borg “2. Much of your critique is not evidence based but rather a visceral and ideological reaction to MMT ideas.” Absurd, but it does feel like you have decided I am anti-MMT, and you are their defender even though to date you misrepresent them. There us antipathy in many of your arguments, but the reality is only determined through reason. “3. You only discuss your model without identifying the flaws in the actual UCL model.” No, I have explained their errors many times, but you seem unable to understand them due to your confusion about who/what/how/when new reserves are created. I explained in detail in previous post with the DEBK. “Given that you dont even cite your sources (and UCL is certainly not one of them)” Does the UCL say the UK creates new money when the Treasury spends? Doesn’t the UK Treasury spend $1.3T annually? Doesn’t that mean the authors are saying the BoE creates $1.3T in new money annually? “then I'll just have to dig this out. We have discussed this before - several times up to 6 months ago.” The road you are going down in looking at data cannot ‘prove’ my point because it’s a stock v flow argument. I am trying to get you to see the implications of your policy, that for the paper or MMT ir you to be correct, EVERY time treasury spends, it’s new money, agreed? So hypothetically if we say that’s incorrect, then logically thst would be a $1.3T error, agreed? And if it’s only Deficit Spending where the Government finances through new money creation, then that’s roughly only $300b and not $1.3T, which is also a $1T error (replace $ with pound sign everywhere). That data shows the magnitude, but cannot prove because under that model, then bonds would be issued to withdraw reserves, and taxes would retire reserves. That’s the UCL paper logic, and if you do not agree that’s the logic, you either haven’t read it or have not understood it. If the new reserves were created all at once, Reserves would jump $1.3T and you could easily see the error, but not only are they not all created at once, they are not created at all.

@Demetrios Gizelis spittin’ straight talk! NBT - Nothin’ But the Truth! You should publish this somewhere… Amen brother!

@Ellen Braddock Thx Ellen. Have you read the attached article? Were you aware ‘Banks create deposits when they lend.’

@Gerard Borg “We are going around in circles. When you asked me questions I gave answers. You need to address my responses.” I asked you follow up questions, which you ignore. That’s why you are not learning, you are not thinking it through all the way…and that’s because you are not answering my questions. If you did we’d be on to the next topic 6 months ago! “Bank reserves and NBNFS deposits both increase after deficit spending.” No. Reserves are Fed Liabilities, and are transferred from TGA to banks, no net change, no net increase. Banks had previously provided 100% of all reserves in the TGA through taxes or bond sales to the public, so 100% preexisting reserves transferred to TGA, received by TGA then spent, hence Liability Swap. No net new reserves. Deposits were reduced when customers via banks paid taxes or bought bonds, which is how the TGA was funded by receiving the underlying existing Reserves. When the TGA spends those reserves, they are returned to the banking sector, which is where they were created by the CB expanding their BS to accommodate banks swapping their assets for reserves. Simple. No new net reserves. No new net deposits from public taxes or bond purchases after TGA spends these funds. Literally “borrow then spend.” Only net new deposits or net increase in the money supply is from banks buying and holding bonds, which transfers reserves to the TGA, and then TGA spending those reserves. This results in banks expanding their liabilities and creating new deposits for customers, which expands the money supply.. I have been saying exactly this for 6 months, and provided you charts in the summer showing you, who buys the bond matters, as it determines the net effect on deposits. If you believe your model shows deficit spending creates new reserves, you have to know ‘why?’ And Who? When? What’s the DEBk for that creation? Providing a colored chart is not explaining why. Until that time it looks like a modelling error on your part, and I am not arguing with you about system dynamics, no new rabbit holes, only money mechanics.

@Gerard Borg “Show this using Ravel OR show how what you say happens in my Ravel.” You last ravel we discussed showed no new net Reserves after Treasury deficit spending, or after Gov spending. Remember? It was much simpler to show you the Truth. “This ignores causation (Ravel system dynamics) - should be "Deposits were reduced when customers via banks used bank deposits previously created by TGA spending to pay taxes or buy bonds." Atomic transactions. Banks create deposits when they lend, not the Treasury. The origin of the process is Treasury receiving tax revenue. It repeats annually. Every year, Tressury has no money, then receives tax payments. There was no Treasury spending prior to the public paying taxes, agreed? Same for next year, agreed? Same for bond sales, no deficit spending by Treasury until the TGA is pre-loaded, which only happens when they sell bonds. “>When the TGA spends those reserves, they are returned to the banking sector, which is where they were created by the CB expanding their BS to accommodate banks swapping their assets for reserves.<<“ “Inaccurate. If I try to translatre my Ravel into the language that we have been using then it would read,” “When the TGA "spends", the Fed transfers Transfer is a word you use to move something from one place to another, in this case Ressrves, so a ‘transfer’ of reserves.. “a portion of the TGA balances to banking sector reserve accounts of targetted banks belonging to the targetted recipients. “ Yes “These newly created Created implies ‘newly created’ Ressrves. This did not happen, and you can’t have a transfer and then creation, one or the other. “bank reserve assets are offset” No offset, that’s a specific term in accounting. “by newly created bank deposit liabilities corresponding to the deposit account assets of the targeted spending recipients." Bank BS expansion. “The bank reserves and deposits are new money.” Same mistake over and over and over. Deposits are new, but not Reserves.

@Gerard Borg “For the hundredth time, do you have the ability to explain where in your mind these reserves inside the TGA came from? “For the hundredth time, they come from Treasury bond sales” “So what you say - that the TGA must be replenished by the proceeds of bond sales before the government can spend is correct. “This is because the CB creates reserves through OMOs.” Looks like you debunked…yourself. Which is a good thing! CB creates reserves, even captain obvious has always agreed with this. Treasury must sell bonds to the public to BORROW existing reserves before Tressury can DEFICIT spend. Simple.

@Gerard Borg “Either way, treasury bond auctions follow to recharge the TGA prior to spending.” “After the TGA is charged, spending occurs and the NBNFS make a living.”