Thank you Demetrios. I found this an interesting read connecting MMT to some history. Have you heard these... The Truth about MMT https://www.taxresearch.org.uk/Blog/2025/08/19/the-truth-about-modern-monetary-theory/ What is modern monetary theory https://www.youtube.com/watch?v=1_vNAY2Nrm0

It is interesting that the same arguments you provide also work if the government also starts with the (self-imposed) full funding fules. The FFRs are (i) The treasury cannot spend unless there is a positive balance in its (TGA) account and (ii) The central bank cannot buy bonds from the treasury. The argument I originally presented here shows how to create $1T exponentially from $1 by government money creation subject to the FFRs. https://www.skool.com/stevekeen-free/mmt-responds-to-their-critics?p=c992b501 The argument goes as follows, Let us say we start with a $1 deposit at the (non-bank financial sector's (NBFS') bank account. From this, new money is created. Let's create an economy... 1. T sells $1 bond to NBFS. Net result: TGA=$1 and the NBFS have a $1 bond asset 2. CB buys the bond and credits the NBFS with one new $1. 3. The treasury spends its $1 which moves thru the economy from the NBNFS to the NBFS. The NBFS now has $2 4. The Treasury sells a $2 bond to the NBFS. 5. CB buys the bonds and credits the NBFS with a new $2. 6. The Treasury spend its $2 which moves thru the economy from the NBNFS to the NBFS. The NBFS now has $4. ... ... ... 115.The Treasury sells a $1T bond to the NBFS. 116.CB buys the bonds and credits the NBFS with a new $1T. 117.The Treasury spend its $1T which moves thru the economy from the NBNFS to the NBFS. The NBFS now has $2T. The 117 steps are in effect 39 groups of the same three steps. Thus the government is capable of spending any target amount provided it first operates a sequence of three steps in succession. The above process could be facilitated in your case if the government also creates a nationalised commercial bank to play the role of the NBFS.

@Jon Underwood >>Attached is a Draft of my critique of the UCL article. Let me know if you see any errors or have any questions.<< This article has been published https://www.tandfonline.com/doi/full/10.1080/00213624.2025.2533726?__cf_chl_tk=Zacv_Tf8BqVtTZi2XCgrZSrQXWttg62MI2TLlYl8XUM-1773915518-1.0.1.1-mRcwJQ5Cv7uKQ_TivPtl42d5sZTfm3BtJjDW1Qwf_WA#d1e317 Your arguments are the same old same old stuff you have been saying on skool and have nothing to do with the UCL paper. You dont even cite the UCL claims you are refuting. For example: you say <<The paper asserts that the BoE crediting reserve accounts of the banks of Government payees creates new net reserves and is new net reserve creation that expands the total supply of reserves, increasing the supply of fiat money. Unfortunately, this belief fails the simple macro-accounting test of BoE balance sheet expansion.>> UCL does not say this. Only you say this. What they do say are the following >>The Bank of England then debits the Consolidated Fund's account at the Bank and credits other government accounts held at the Bank; a practice mandated in law. This creates new public deposits which are used to settle spending by government departments into the economy via the commercial banking sector.<< and <<When the government spends or central banks buy bonds by issuing reserves, commercial banks experience a rise in their reserve balances which lowers the interest rate in the interbank market; selling bonds has the opposite effect, draining such liquidity.>> which is what I have been saying all along. But it is entirely different to what you are saying. You then repeat this error here <<5. The Fallacy Of "Money Creation" Or New DEPOSIT Creation Via Treasury Spending>> You say >>The authors explain that the HM Treasury credit line is called the Ways & Means Facility,.<<

@Jon Underwood >>My arguments identify the bookkeeping errors made by the authors, specifically confusing a CB Liability Swap, which moves Reserves but does not result in net new reserve creation, with their idea the the BoE is creating net new money when Treasury spends.<< Where did you do this? There are detailed accounting tables in the UCL paper. Where did you analyse them in your doc? Have you read the UCL paper? >>These two anbove are the same.<< Please read again. The two statements are quite different. Note the missing "new net" from UCL. UCL says >>When the government spends or central banks buy bonds by issuing reserves, commercial banks experience a rise in their reserve balances<< which is NOT what you are saying. In fact you always replace "bank reserves" with "new net reserves". Why? >>They are saying Treasury spending creates new net reserves, agreed?<< No one says this. You say that others say it. This is the whole problem. >>I am saying in order for new net Reserves to be created, under DEBK BOTH the BoE BS and Treasury BS MUST increase, b/c the BoE must LEND Treasury new reserves, correct? And lending and borrowing expand their BSs.<< Again but why? This is a straw man argument. Who says net reserves have to have created when the government spends? Not me. Not MMT. When the government spends it creates new bank reserves not net reserves. MMT does not say this. MMT does not say that the CB creates new money for spending. This is what you say MMT says. But it does not. MMT says that governments create money by spending it into existence. This is not the same thing. Figure 7 of KK shows this MMT101 in Ravel. Where are the so called "new net reserves" during Treasury spending. I can see the new deposits that still exist without taxes. You even appear to admit this here... >>Gov spending creates new deposits. But if we track the source of funds as tax payments, does Gov spending create new net deposits that increase the money supply?<<

I have already seen a couple of stories about the reverse centaurs: one at the Australian National University and one a friend who owns a tech company using AI to replace software developers. The Doctorow's radiology example explains what happens.

The reverse centaur is a mode of alienation as this old message reminds us https://www.instagram.com/reel/DTTQfumgRvV/?igsh=bHRrbHBxcWxhNWQ1

@Jon Underwood We are going around in circles. When you asked me questions I gave answers. You need to address my responses. 1. You asked: >>As long as you do not allow treasury deficit spending with a treasury zero balance, so no overdraft allowed, ravel will show you the treasury deficit spending does not create new reserves. I have showed you this. Why do you disagree with ravel?<< Ravel does not show this. See the attachments Initial TGA > 0 balance. Bank reserves and NBNFS deposits both increase after deficit spending. I also attach the Ravel file. New bank reserves and deposits have been created that never exited before by deficit spending. If you believe that bank loans create deposits then tell me why treasury spending did not create deposits here? 2. My debunk of your substack post is still awaiting response. >>Repost the content here, as O keep saying I cannot access links, and I will show you all your mistakes, again!<< I had already reposted it on free here https://www.skool.com/debunking-economics-7964/mmt-responds-to-their-critics?p=39bb2011 Here it is again..... Let us repeat your proof from your substack ------------------------------------------------------------------------------------------------------------------- I repeat what you say: >>If we track the money supply, we have the following buying the bond: -Deposits (bond buyer) -Reserves (buyer’s bank) +Reserves (TGA) +Bond (bond buyer) = -D -R +R +Bond = -D + Bond The Public buying bonds redeuces deposits and decreases the money supply. The Deficit Spending looks like this: -Reserves (TGA) +Reserves (Payee’s bank) +Deposits (Gov Payee) = -R +R +D = +D GOV spending causes banks to create new deposits. Taken both together, which tracks the money supply from before the bond was sold until after the bond proceeds were spent: -D -R +R +Bond -R +R +D = +Bond.

@Jon Underwood >>“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.<< Show this using Ravel OR show how what you say happens in my Ravel. >>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<< 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." >>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 a portion of the TGA balances to banking sector reserve accounts of targetted banks belonging to the targetted recipients. These newly created bank reserve assets are offset by newly created bank deposit liabilities corresponding to the deposit account assets of the targetted spending recipients." The bank reserves and deposits are new money. Why? Because following our previous discussions about how bank loans create new deposits and hence create new M1, so too has government spending created new M1. You also stated that when a bank customer pays another customer, deposits are first destroyed when spent and created when received. The result in all cases is the same. Under the FFR other deposits owned by the NBFS are at some point destroyed through bond sales so that the TGA account at the Fed never goes into overdraft. >>No new net reserves. No new net deposits from public taxes or bond purchases after TGA spends these funds. Literally “borrow then spend.”<< When you say "net" you are welding bond sales to spending as if they are a single combined atomic process. Ravel does not do this because it takes into account the system dynamics in which these transactionas are separate. Hence your >>“borrow then spend.”<< ignores causation by design.