Despite years and years of partisan rancor and rhetoric, Congress was able to suddenly find $3 trillion dollars over the past few months. Clearly much more is still needed to avoid economic catastrophe, and this look at how money actually works (compared with how we think and are taught it works) is eye-opening:
In the early 1990s, [Modern Monetary Theory] sprang partially formed from the mind of the hedge fund investor Warren Mosler. Mosler noticed that while politicians were concerned over deficit spending and raising tax dollars to pay for their initiatives, when you observed how the Treasury, Federal Reserve, and Congress actually worked, this was inaccurate. Taxes were useful for many things: They constrain spending to keep inflation in check, they guide citizens toward economic activities that the government wants to promote, they make the currency valuable by creating demand for it, and they create norms for encouraging or discouraging certain behavior. But they don’t raise money. When you pay your taxes, the Treasury just goes into your bank account and deletes the numbers from your digital balance.