Taxes are the basis of money: since the government requires citizens to pay taxes in the money it produces, money has value and is adopted by citizens. The obligation to pay taxes on money produced by the government creates the demand for this money.
There is no connection between taxes and government expenditures: the government must impose taxes in order to adopt its money, but its expenses are not related to the taxes it collects. On the contrary, first and separated by the expenditure letter. Another role of taxes is to absorb money from the public if inflationary pressures are created, and to reduce the social gaps between the rich and the poor. In addition, the role of taxes is to achieve various social goals, such as reducing smoking, the use of sugars, etc.
– If the expenses exceed the amounts collected as taxes, the government will simply print out the missing money. Because under this system the government can print any money it needs, it can never go bankrupt. As such, interest rates will never rise. Without a lack of money, there will be no shortage of it, and in any case, there will not be an increase in its price, ie interest.
– The correct interest rate is zero or very close to it. So the money needed for use and growth will never be available. In other words, not only the government has unlimited means, but also the interest rate will never rise, unless the government decides to raise it by borrowing money and thus creating a shortage of it.
Functional finance: It is the government that is responsible for full employment and the moderation of inflation by playing between increasing its expenditure and increasing taxes. The increase in expenditure will lead to full employment and the taxes will absorb the surplus money, and thus inflation will always be eliminated.
According to proponents of the theory, the proof is that today there is no inflation despite the massive printing of trillions of dollars by the central banks.
No budget, no resources limit