The Deficit Myth
Taxation is used to create demand for the currency, not to fund the government. Fiat-based governments can and do fund themselves, but they need an incentive for citizens to use and hold the currency and a mechanism to manage inflation.
The Fed uses the concept of a natural unemployment rate as an insurance policy against inflation. They believe no unemployment leads to severe inflation so allowing a cushion of 5% or so gives them room to breathe if/when monetary tightening (increasing interest rates) is needed.
Quantitative easing commits to specified amounts of stimulus whereas yield curve control commits to achieving a specific interest rate, which can translate to any amount of money.
When a country fixes its exchange rate to either a scarce asset (like gold) or an uncontrolled fiat, they give up most of their control over their interest rates as they are dependent on other governments or natural market forces rather than a their own fiscal and monetary policy.
A country's deficit is someone else's surplus so deficit spending
can often mean a thriving private sector as it is frequently the beneficiary/creditor to the government's debts.
On its face, a trade deficit may seen bad because a country is buying (importing) more than it's selling (exporting), but if you frame it as trading less value to receive more value, it doesn't sound so bad. China gives the US way more than we give them and, in return, we give them treasuries denominated in a currency we control and can print.
For a country to maintain a surplus, its own deficit must exceed its trading deficit. If the trading deficit exceeds the country's deficit, more dollars are leaving than coming in and the government must either inject more money into the economy or cut taxes to avoid crippling the private sector.
If imports are benefits, tariffs are a tax on benefits to the country. Taxing imports leads to the public sector earning more, but it also forces the private sector to pay more, which can hamper the economy because the private sector doesn't have a money printer.
To offset the jobs lost through trade deficits from outsourcing business and goods, MMT suggests governments should guarantee jobs to all displaced workers. A federal job guarantee would attack the problem of unemployment directly rather than subsidize its effects, create more goods and services, and provide more money to the private sector at the expense of the public sector (the money printer).
When various currencies were fixed to gold, countries would often be driven to hold a surplus to ensure they could pay all their debts and avoid default. To maintain that surplus, those countries would be forced to increase interest rates to decrease the amount of gold leaving. If you raise interest rates, the economy slows down, imports less, and, consequently, exports less gold. But forcing country's to raise rates during economically challenging times to maintain the gold surplus can have negative effects on the economy and private sector via domestic recessions.
Other countries’ trading surpluses with the United States are partially rooted in their desire to hold USD. If a country is heavily reliant on imports and those imports are denominated in the reserve currency (USD), then they need to generate a surplus with the United States to afford all their imports as they can't print their debts away the way the United States can.