This book has flashes of brilliance mixed with disastrous error.
Let's start with what is right. Most people would say something along the lines of "The federal government is supported by income taxes in various forms and other taxes." Mosler shows this is absolutely false, a counter-intuitive and essential insight needed to think clearly about how America's ongoing and historic economic disintegration could be arrested and prosperity rebuilt.
That "taxes fund federal government spending" is thinking that was true under the gold standard but, since 1971, has not actually been true. For thousands of years, when money was bullion, governments had to tax to get it. But according to Mosler in his Modern Monetary Theory, in post-Bretton Woods USA and in other monetarily sovereign states, that is no longer what is happening. A monetarily sovereign government issues its own money like an author issues words, like a stadium issues points. A check from the US government will never bounce. Taxes now exist to remove aggregate purchasing power from the economy so as to prevent inflation, but taxes are not actually funding the government, nor is there any federal debt crisis, since all federal debts are payable in dollars. A secondary role of taxes in a monetarily sovereign economy, according to MMT, is to give the currency value in the sense that taxes must be paid in that currency and therefore the currency must be obtained by taxpayers, preventing some other currency from replacing it.
That much of MMT makes sense to me, not even as theory but as real description of what is happening. There are other parts of MMT, however, that strike me as fatal error with disastrous real-world effects, such as Mosler's contention that trade deficits are to our advantage because they bring us real goods in exchange for currency issued out of thin air. The fatal error here is that trade deficits are the quantitative measures of a key qualitative problem Americans face: the offshoring and outsourcing of our manufacturing and other high value-added industries. Manufacturing is the heart of real wealth creation in modern economies, and therefore should be developed within our country to make sustainable prosperity. The problems with trade deficits --and the offshoring and outsourcing they measure-- are not just the loss of manufacturing jobs, but also all the supply chain and multiplier-effect jobs that support and are supported by manufacturing. This offshoring has become so huge that it is dismantling our economic ecosystem, as design and R&D and a multitude of high value-added industries follow manufacturing offshore. We as a nation are losing our long-term capacity to create wealth, to create careers and be the leader in innovation we once were. This is not just a blindness in MMT but across the spectrum of economics schools, a discipline that seems to shun national interests and treat everything as universal math populated by atomized individuals, as if there is no such thing as a larger society requiring stability and solidarity.
Mosler and MMT theorists generally also wrongly posit that full employment could be had simply by creating government jobs. Perhaps temporarily, but this is another disastrous idea, because government agency jobs have only a limited constructive function in society, beyond which they become make-work without contribution to wealth creation. The real engines of wealth-creation are private sector manufacturing and the larger supply chains that grow out of it. Locating these real engines of wealth creation in our own country is the most important thing we can do for the long-term prosperity of our children and our communities.
In sum, Mosler and MMT have some valid points to make about the real function of taxes and the possibilities that monetary sovereignty open up for much better public spending priorities than we now have (ie, infrastructure, tech development and full employment). But these insights must be applied in smart ways that recognize the centrality of ending our trade deficits and reshoring our industries. Thus Mosler's ideas about how the federal government actually is free to spend on infrastructure and technology development (say, along the lines of Germany's model of state-industry cooperation in supporting basic research all the way to the factory floor) can turn around our economic disintegration only if applied in conjunction with a Balanced Trade policy that diverts our trade deficits into demand for US-made goods and services. This means we must replace "Free Trade" policies with a BALANCED TRADE POLICY.
The best way to achieve balanced trade would be a system of Import Certificates issued in the same value as exports. This would effectively require globalized corporations to invest and employ in the USA if they want to sell their products here. By legislating an Import Certificate (IC) system to license all imports, and issuing IC's in the same value as exports, we would divert our chronic $600 Billion annual trade deficit into a $600 Billion annual stimulation of American manufacturing, creating millions of manufacturing jobs directly and many millions more jobs through manufacturing's multiplier-effect. Only in that context would Mosler's insights into monetary sovereignty and the public spending it affords (on infrastructure and technological development and full employment) make our real economy once again competitive and sustainable in a way that brings that prosperity to all our people.