I don't find it confusing, I find that the man is confused about economics. I already listed the main points in my post above, although admittedly this stuff is clearer when spelled out over 100 pages of a textbook with a bunch of examples, clear formulae, and discussion of competing theories versus a post on Hacker News[1]

MMT agrees with most of the points Wilson and Riley make (ie. that exporting is a cost and importing is a benefit, referred to in the article as "Seignorage", and lower transaction costs) but they're incorrect on the notion that one of the advantages of being the reserve currency is the ability to "run up huge amounts of debt at low interest rates" -- the US doesn't need to borrow US dollars, it creates US dollars. If they're referring to the advantage in being that the US private sector has been able to borrow US dollars from foreigners cheaply, then maybe that's a benefit I'm not really sure but they could just as easily have gotten that money from other banks with accounts at the Fed anyway (so long as there was sufficient cash reserves to satisfy the demand for dollars!)

[1]http://www.amazon.com/Modern-Money-Theory-Macroeconomics-Sov...

Point 6 in his appendix is in counterpoint to his own article in that it states the benefits to the US of the USD being the international reserve currency. Wilson and Riley's article is accurate! However they fail to mention that US denominated debt is simply an instrument for controlling the overnight interest rate target, rather than a borrowing operation used to fund government spending (ie. it's not really "debt" at all) and that the US government has the capacity to pursue full employment because it runs a sovereign, floating exchange rate currency which gives it maximum domestic policy space. Wilson and Riley correctly state that running a trade surplus is a disadvantage to the local population in that exporting everything increases costs to local consumers -- exporting is a net cost, importing is a net benefit.

For more on this see:

Introductory video: https://www.youtube.com/watch?v=i35uBVeNp6c

Book that describes everything in detail: http://www.amazon.com/Modern-Money-Theory-Macroeconomics-Sov...

Everyone has to consume. Consumption is a necessity, and is unavoidable (and therefore unevadable). Some level of taxation is required since it determines the level to which government can spend without devaluing the currency, and it's also a tool that can be used to drain money out of the economy. But it's not required to "fund" anything -- what you want out of a tax is one that allows you to apply policy effectively. Putting tax legislation in place and enforcing it are two very different beasts. Having a consumption tax with sufficient offsets for low income earners is far less likely to result in evasion because everyone must consume, and no-one will refuse being GIVEN money (income tax is sort of the opposite: we don't tax consumption, but we tax income and try to tax high income earners more, which they do their best to evade; low income earners would never "evade" their transfer payments).

Prices and spending habits will adjust accordingly -- you're giving people a huge tax break in one area and adding a burden in another. There wouldn't be any impact on aggregate demand, but fiscal policy would be much easier to implement.

Video on how this works: https://www.youtube.com/watch?v=i35uBVeNp6c

Book on how this works: http://www.amazon.com/Modern-Money-Theory-Macroeconomics-Sov...

It doesn't need to be "funded". Government spending creates money and taxes destroy it. The role of taxation is to drive demand for currency, and drain money out of the economy. It can also be used to disincentivise behaviour. But tax cuts don't need to be "funded", because governments have no issue with affordability -- they issue the currency.

Video on how this works: https://www.youtube.com/watch?v=i35uBVeNp6c

Book on how this works: http://www.amazon.com/Modern-Money-Theory-Macroeconomics-Sov...