For those that don't want to read this entire post, let's not bury the lead: MMT is wrong: - The U.S. does not have a spend and then tax system, we have a tax then spend system - The U.S. Treasury does not issue the U.S Dollar - The Fed does not issue reserves for the Treasury to spend - The Fed does not issue new reserves to pay the Gov's bills directly - The Gov cannot spend before receiving tax receipts or revenue from bond sales Below I explain in detail exactly why. Please let me know if you think I made any mistakes. After many, many hours of discussions with friends here and elsewhere, I think it’s finally becoming clear, I have finally gotten to the bottom of the MMT debate, so please let me know if you agree. We can have a tax and spend system, which many people believe we have today, and under a tax and spend system in 2024, the USG would have taxed roughly $5T and spent roughly $7T, showing a roughly $2T deficit, and the Gov would have had to borrow roughly $2T to cover the deficit spending. Or we can have a spend then tax system, which MMT believes we have today, and in 2024 the USG would have issued and spent $7T and taxed back $5T, showing a $2T deficit, as the USG spent $2T more than they received back in tax revenue. Two different systems that in practice don’t matter much until you have a deficit. Under a tax and spend model, to cover deficit spending the Gov has to borrow, because desired spending exceeds tax receipts. Under a spend first then tax back model, the Gov already spent the $, so the deficit is covered by issuing money, no borrowing or debt, the deficit is created because tax receipts are lower than currency issued and already spent, so all the money issued is not all taxed back. Which model we have is the heart of the MMT debate. A currency issuer always has a liability for the currency they issue, which means when they issue their currency they increase their Liabilities on their Balance Sheet, and when they receive their currency back as payment, they reduce their Liabilities. If they receive 100% of the currency they issued back as payment, their Liabilities go to zero and all currency is removed form circulation.

Preliminary simulations using MESSSI (Macro Economic System State Simulator) developed by Tyron Keynes reveals that whereas the FJG is superior to UBI in targeting this dual objective, nevertheless a combination of the two when applied to lower income earners contributes significantly in reducing overall income and wealth inequalities. https://www.relearningeconomics.com/what-the-messsi-model-says-about-a-ubi-and-fjg

This follows up a discussion, in Challenge Lecture 7(1) of 16July26, about the energy demands of AI in comparison to that of the brain. A recent IEEE Spectrum article happens to address the same point - that brains are super efficient, by at least 3 orders of magnitude compared with the most optimistic interpretation of AI capabilities, and by many more orders of magnitude compared with pessimistic interpretations. See - https://spectrum.ieee.org/artificial-neurons-on-silicon-chips So brains are astonishing, in what they achieve with so little energy. The article is techie, about how a future AI might become more like brains in energy efficiency, delving into the semiconductor-physics of MOSFET transistors. It hinges on the presence of a fourth connection in those transistors, compared with three connections in bipolar transistors. I encountered that fourth connection many years ago and, like everybody else, I wired it up in the recognised way that neutralised any actions the connection might cause - actions which were considered spurious and uncontrolled in manufacture. The article talks of how these ‘spurious’ actions can make the single MOSFET like a brain neuron, consuming far less energy than neuron-simulation in either conventional hardware or software. Very early days, because no-one has yet interconnected these four-terminal MOSFET ‘neurons’ to do anything brain-like, or be able to process language. So mega-power consumption remains likely for AI in the foreseeable future - a problem Steve highlighted. The energy inefficiency of AI is a basic reason why I doubt that what it does it copies what our brains do.

I think it was the economist Romer who said that orthodox economics is methodologically unself-aware. Steve’s lectures on methodology are therefore particularly relevant. I knew that Karl Popper, as Steve explained, didn’t properly describe the methods of science. But I didn’t know some things that I subsequently saw in Wikipedia’s page on Popper - that he was a firm opponent of those alternative routes to knowledge (variants of epistemology, the theory of knowledge) that were not based on empirical testing. He argued for falsification-through-test rather than confirmation-by-selective-observation that characterised the inductivist method of classical science. I therefore also read Wikipedia’s voluminous page on epistemology, which says - “Epistemology explores how people should acquire beliefs.”. I was surprised by how many different variants of that ‘how’ the page goes on to describe, such as ‘justification’, ‘rationality’, ‘contextualism’, ’skepticism’, ‘internalism, ‘externalism’ and ‘empiricism’ among others. Later it says - According to the correspondence theory of truth, to be true means to stand in the right relation to the world by accurately describing what it is like. This means that truth is objective: a belief is true if it corresponds to a fact.” and then “The coherence theory of truth says that a belief is true if it belongs to a coherent system of beliefs. A result of this view is that truth is relative since it depends on other beliefs.”. So ideas that are coherent can - in the ‘coherence’ definition- be seen as true even if they don’t correspond to reality.. I confess to shock at just how much of a ‘loose-fit’ to reality some of these methodologies about knowledge allow themselves to be. I guess science may have made me naive, in the sense that C P Snow was on about …

Big oil and gas may still be doubting human-induced climate change in public, but it seems now they’re accepting it when in a court of law. See - https://www.theguardian.com/environment/2026/mar/26/fossil-fuel-companies-accept-climate-crisis-just-not-their-role-in-it However, an end to the denial of climate change doesn't mean the start of taking responsibility for it. The article describes ingenious legal arguments that are being employed to evade responsibility. Some are subtle, others seem meritless. For example, the blame is said to lie with - a) the government, for lax regulation that failed to enforce moves away from fossil fuel. That’s a strange claim - implying the government was at fault by being swayed by the lobbying of the fossil-fuel fuel sector. “It’s their fault because they let us do it”. b) the customers, for burning the petroleum liquids rather than using them in other ways. “Our customers make the decision to release the carbon into the atmosphere, so it’s their fault”. The article concludes - “In courtrooms across the world, the same pattern holds: fossil fuel companies now accept the science but refuse responsibility. The central battleground in climate litigation will no longer be whether climate change is happening, but who, legally and financially, bears responsibility for it.”.