> I think the MMT argument is that one can reduce the money supply through taxation.

The MMT argument is stronger: taxes only exist in a fiat money system to reduce the money supply (and, to create behavioral incentives with specific targeting.) Viewing them as “paying for” government spending in a balanced sense where you need $1 in revenue (or debt financing which you pay back with interest to a lender) to pay for $1 in spending is, through an MMT lens, wrong, and the result of applying commodity money thinking in a fiat-money world.

> MMT also (AFAICT) seems to make the central bank subservient to the finance/treasury people, instead of independent (which is the modern way of doing things). This control of interest rates is important for technical reasons:

It need not: a system which deeply incorporates MMT might retain a central monetary authority separate from the authority that makes spending and tax-targeting decisions (calling this a “fiscal” authority is perhaps no longer apt), exercising interest rate levers to manage inflation and employment levels as the Fed does today; it might even give it more tools by assigning it then ability to set the rates of broad, non-behaviorally-targeted taxes (like to control a parameter that is a factor in the rates of all income tax brackets), as MMT recognizes that general tax level is an important money supply lever and nothing else. The importance of public confidence in the money supply remains in MMT, and having technocrats insulated somewhat from the pressures of legislative politics primarily responsible for administering such policy under broad policy goals remains, as well.

It probably wouldn't be constituted the way the Fed is, which is driven by the desire of the government to give bankers confidence in the currency because the government will be going to the bankers to borrow debt in the currency to fund deficits.

Because what it would do is eliminate the practice of acquiring debt to finance “deficit” spending in the first place, which changes the constituency at which monetary policy is aimed.

> The MMT argument is stronger: taxes only exist in a fiat money system to reduce the money supply (and, to create behavioral incentives with specific targeting.)

I think this is like the image of the snake eating its own tail, and what you see may depend on whether you see start at the end-end of things or the tail-end. Or the optical illusions that change if between duck/rabiit, etc.

:)

Increase spending by printing, and then increase spending by taxes, sounds like a big-gov wet-dream.

I think that you're correct using common terminology. The government takes in money as taxes, and creates money through printing:

spending = taxes + printed money new money supply = old money supply + printed money

But, I believe that MMT is saying that taxes and spending could be logically separated by assuming that all taxes go to the shredder and all spending comes from newly printed money:

spending = printed money new money supply = old money supply + (spending - taxes)

So it wouldn't be 'increasing spending by taxes', it would be 'reduce inflation by taxes'. The size of 'big-gov' should be measured as spending/GDP regardless of the actual tax rate. The tax rate would float depending on the current inflation target instead of on the current federal spending.