Welcome to episode 104 of Activist #MMT. Today's part two of my two-part conversation with Warren Mosler, where he answers several patron questions. You'll find all them, with written responses from Warren (including data from FRED) below. In part one Warren talked about how his ideas for MMT came partially from a love of tinkering and, more broadly, a desire to understand complex systems. Those systems can be physical, such as controlling electricity with wires, batteries, light bulbs, and soup cans as a child, or race cars and large passenger ferry boats as an adult. These systems can also be conceptual, such as by playing chess and bridge as a teenager. Before we begin part two, a few notes: First, a country trading raw resources such as coal, for highly processed products such as televisions, is, as Warren says, not inherently a bad thing. What's bad, as illuminated by the work of Fadhel Kaboub and others, is when a country is coerced into making a trade they don't want to make. Second, Warren gives many examples of how government's interface with its citizens is poor, from anxious cops during routine traffic stops, to regulators making blatant mistakes that can only be undone through inordinate – and very expensive – red tape. I believe strongly, and as best as I understand, that these incidents are symptoms of the larger problem that the rich bribe our so-called elected representatives, and lock the poor out of their government in myriad ways. The poor have no avenues to stand up to these small injustices, so the rich have no incentive to stop this terrible behavior. And finally, Warren describes one of these incidents, when his company was extorted by the IRS for a million dollars, to resolve a blatant error by the IRS. Like student loans, of which ninety percent are owned by the US Department of Education, this is another example of a currency issuer demanding money that it clearly does not need in any practical sense. And now, back to my conversation with Warren Mosler. Enjoy. Patron questions, with written answers by Warren Mosler Nathan Becker While it is true that the federal government is a net interest payer and higher interest rates would lead to the government paying more in interest income; isn't it also true that the majority of Americans do not hold government debt as an asset that would earn them higher income but hold mortgages and other debt instead which have a negative impact with higher interest rates? So wouldn't higher interest rates be less inflationary given these circumstances in the US? What would be your recommendation for controlling inflation while also stimulating economic growth in such a situation? Warren's response: Households are net savers (For much more on Nathan's question, including more detailed responses by Warren, please see the bottom of next week's interview, episode 105, which is a written interview with Nathan [the link will be made available here on Sunday, January ninth]). Susan Eldridge, question one of two If we have to tax to give value to the USD, what is the best way to to ensure everyone shares this tax obligation fairly? Warren: Free healthcare, Free education, Job Guarantee, 0 rate policy, property tax, high quality low cost public transportation, etc. Susan: What about taxing corporations? Warren: Regressive- it's paid by the consumer Susan: Can we reduce wealth inequality by a wealth tax? Warren: Maybe some, but easier/more effective to eliminate the source as per my proposals Susan: Since we already have progressive taxation isn't the problem due to tax loopholes? Would enforcing tax laws already on the books reduce wealth inequality? Warren: Probably not. And more important, the real compliance costs are something like 15% of gdp and those real resources could otherwise be for the benefit of all. Ganesh Balamitran When the Govt spends (say to create infrastructure), doesn't it create new assets in exchange for the spending? Warren: Spending adds $ to bank rese