Very interesting, I've never understood it this way, but it makes some
sense.  Though it raises more questions I need to think about and fully
digest.

Promissory notes existed when the US was on the gold standard, right?
A "note" was a promise for a quantity of gold, held by the federal reserve,
if you wanted to trade back to gold?
So, I guess the question you are asking is a good one.  What is the
difference from the above?

On Tue, Sep 15, 2020 at 2:57 PM Deepak Loomba <[log in to unmask]> wrote:

> How are dollars different from undated promissory notes - say issued by
> the same govt.?
>
> On Wed, 16 Sep 2020 02:16 nysa71, <
> [log in to unmask]> wrote:
>
>> Hello ToK Community,
>>
>> So far, I've mentioned a few key points about MMT:
>>
>> One, to make a distinction between currency issuers and currency users...
>>
>> For a currency issuer, the spending must logically precede taxation. That
>> is, the currency must be spent into existence first before that currency
>> can be taken back in taxes. The taxation (clearly) has nothing to do with
>> "funding" the spending of such a currency issuing government. The function
>> of taxes is to create aggregate demand for the intrinsically worthless
>> currency. After that, they function as a fiscal management tool, (e.g., to
>> keep inflation under control).
>>
>> I've also mentioned Sectoral Balances. Simply put, in regards to a
>> currency issuing government:
>>
>> Government deficit = (Domestic Sector surplus) + (Foreign Sector surplus)
>>
>> That is, a deficit is when the government spends more than it taxes. But
>> on the other side of the equation, this necessarily means that the combined
>> domestic and foreign sectors are the recipients of a surplus exactly equal
>> to that government deficit...right down to the penny. It's just basic
>> accounting.
>>
>> So how does (for example) the U.S. government create dollars? By the act
>> of spending.
>>
>> Simply put,
>>
>> Dollars are *created* every time the U.S. government *spends*, simply by
>> *crediting* accounts.
>>
>> Dollars a *destroyed* every time the U.S. government *taxes*, simply by
>> *debiting* accounts
>>
>> Here's a short 6 and a 1/2 video with economics professor, Randall Wray,
>> explaining the basics, (with a cool anecdote about how Colonial governments
>> issued currency.
>>
>> Have a good one,
>> Jason Bessey
>>
>> https://urldefense.proofpoint.com/v2/url?u=https-3A__www.youtube.com_watch-3Fv-3DZzw8AO4vTqc&d=DwIFaQ&c=eLbWYnpnzycBCgmb7vCI4uqNEB9RSjOdn_5nBEmmeq0&r=HPo1IXYDhKClogP-UOpybo6Cfxxz-jIYBgjO2gOz4-A&m=0UZvG1jfW-dT8TSZUNfub78K0YwmRe2xXd1xn7dH0u8&s=SZaWzPp458f4w7PsFtQSP8pba8eu1La5an4m6Prw1lI&e= 
>> <https://urldefense.proofpoint.com/v2/url?u=https-3A__www.youtube.com_watch-3Fv-3DZzw8AO4vTqc&d=DwMFaQ&c=eLbWYnpnzycBCgmb7vCI4uqNEB9RSjOdn_5nBEmmeq0&r=HPo1IXYDhKClogP-UOpybo6Cfxxz-jIYBgjO2gOz4-A&m=G028qyZbUuiM5XRZRLsmqCPvcnnJ4Io8LAqICVrd8cY&s=BkHb8vd6GTiDINAJc2wTiC08goEMeACRWUjECM5h-Rg&e=>
>>
>>
>>
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