When it spends that money into existence it would seem there is some presumption of it being an obligation, or debt, or why would anyone willingly accept it?
The obligation of the government is the guarantee to accept its “tax credits” as payment for federal tax obligations, and nothing more. Those tax credits are only “money” in the private sector, private sector reserves. People accept them because they carry the full faith and credit of the US government and its Treasury.
Dual entry spreadsheet accounting requires that every entry has an opposing entry in another sector, but money is not created until it is spent in the private sector as money can’t exist in the same sector as the debt or it would be canceled out by that debt. Otherwise, the government would simply create the money in its sector and move it to the private sector as most people believe it does, and taxes could be used to fund spending. In such a system the word debt would be more appropriate, but our system was designed around defending the gold reserve, which was best accomplished with the system we have.
It will be all but impossible to fully utilize our monetary system as long as the people retain all of the myths surrounding it. A big part of that is the mistaken concept that the government uses bond proceeds to pay for its deficit spending when it is that spending which funds bond purchases. Bonds were related to debt because they matched the amount of currency spent into the economy in excess of the gold reserve, and served to draw down that amount by making it not convertible to gold.
Without a gold reserve to defend, there is no reason to extract reserves from the economy and they, as you pointed out, mostly only benefit the wealthy who have a vested interest in preserving the gold standard thinking. Simply changing that thinking, disconnecting spending from revenue, takes away much of their power.
Think vouchers, instead of money. People will get it that this is a form of receipt for services they gave the community and can be traded for other’s services, not as an object of value in itself. Yet if those vouchers are just thrown out like confetti, the system breaks down.
Vouchers are an extreme form of micromanagement that Americans would never accept from their government. Money is universal as a medium of exchange and store of value. What would plumbers do with vouchers for plumbing services that they would accumulate? They would have to exchange them for vouchers for other services they need, which takes us back to barter.
The “thrown out like confetti” remark tells me you assume MMT means unlimited spending because the currency supply is unlimited. That is far from the truth. Inflation is always a concern and the government must defend the value of the currency, or it does all fall apart. MMT simply says that managing the economy as if we were still restrained by the gold standard leaves a lot of un/underutilized resources and labor on the table.
All we did by leaving the gold standard was to replace it with deficits/debt as a faux limitation. This means utilizing the economic productivity of the nation to service a meaningless number instead of maximizing economic benefits for “all” the people. Misery in our economy simply shouldn’t exist on the scale that it does, and it is this reversal of purposes that is responsible for most of it, making it a political decision, not economics. Eliminating bonds would go a long way toward changing people’s minds about their currency and they would begin demanding many of the benefits other countries take for granted.
