A number of readers have written to me asking me to explain why the US government (and any sovereign government) should not learn the lesson of the inflation that was caused by the spending policies of the Confederacy during the 1860s in the US. They have tied this query variously in with the rising budget deficits, the quantitative easing policies of the Bank of England and the US Federal Reserve Bank, and more recently the “injection of liquidity” by the Bank of Japan as a reaction to their devastating crisis. The proposition presented is simple – the Confederacy funded their War effort increasingly by printing paper notes (and ratifying counterfeit notes from the North) and saw runaway inflation as a result. This blog examines that point. What you will learn is that the experience of the Confederate states during the Civil War does not provide an case against the use of fiscal policy or the proposition that sovereign governments should run deficits without issuing debt. The fact is that “printing paper notes” does not cause inflation per se. It might under certain circumstances. Those circumstances were in evidence in the Civil Wars years in America.
It just happens that the topic was covered in a recent New York Times feature (March 14, 2011) – Money for Nothing by Ben Tarnoff.
The article focuses on the events that followed the establishment of the ephemeral “Southern nation”, which began with the secession of South Carolina in December 1860. Six other southern states had joined the rebellion by February 1861.
On February 8, 1861, the Provisional Constitution for the Confederate States of America was agreed unanimously. It was based on the existing US Constitution with some key differences not germane to our interest here.
On February 18, 1861, Jefferson Davis becomes the provisional president of the Confederate States of America.
Article I, Section 6 of the provisional Constitution gave the new “country” the rights of a sovereign government with currency issuing authority – with the relevant clauses being:
(1) The Congress shall have power to lay and collect taxes, duties, imposts, and excises for the revenue necessary to pay the debts and carry on the Government of the Confederacy, and all duties, imposts, and excises shall be uniform throughout the States of the Confederacy.
(2) To borrow money on the credit of the Confederacy …
(5) To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.
On April 12, 1861 the new “country” attacks Fort Sumter and the Civil War formally begins – it was all down hill from there for the South.
Earlier (March 9, 1861), as Tarnoff notes:
… the congressmen passed a bill that gave the Confederate treasury the power to print notes. The amount they authorized was relatively small: only $1 million. In the coming months, however, that number would increase dramatically. Over time, Confederate paper currency would outgrow its modest origins in Montgomery and become the South’s single most important source of revenue — the financial fuel without which the machinery of its government would cease to function. It would both help and hinder the Confederate war effort, sustaining the South in the short term at the cost of future disaster.
So the Confederacy in a few short months had established themselves as a sovereign government with monopoly powers to issue the currency and tax in that currency (thus generating a demand for it). The problem which emerged, however, was that unlike the Union states which could enforce its taxing powers, the Southern government had great trouble raising revenue from taxation.
Its public spending was more substantially matched by printing currency notes than in the Northern states. A definitive research work on the public finances of the era is the book by Donald R. Stabile and Jeffrey A. Cantor (1991) The Public Debt of the United States: An Historical Perspective 1775-1990, Praeger: New York.
While it established a currency-issuing monopoly the Confederacy had to immediately use that power to fight a war with its northern neighbours. Wars always challenge the inflation barrier because of the supply-side constraints that emerge as a nation gears for and then prosecutes the war effort. Rationing of real goods and services (that is, a non-market allocative system) is a typically used device to overcome the supply shortages.
A famous reference about this period is the work by Eugene M. Lerner (1954) ‘The Monetary and Fiscal Programs of the Confederate Government, 1861-65’, Journal of Political Economy, Vol. 62, No. 6, pp.506-522.
If you have access to JSTOR the article can be located HERE.
Lerner notes that Milton Friedman considered the Civil War to:
… provide precisely the kind of evidence that we would like to get by ‘critical’ experiments if we could conduct them …
Mainstream economists have used the Civil War period as a demonstration of their case against budget deficits.
The Southern government tried to exercise their tax authority by collecting in-kind taxes from farmers and businesses. They were easily avoided who as Lerner says:
… sold their goods (or hid them) before collection time …
There were other problems with the in-kind impost including rotting, damage and theft of the goods.
I liked Lerner’s account of the way the farmers would avoid the “impressments” who were lying in wait as the farmers went to market:
Frequently, impressment agents waited along well-traveled roads and seized the goods of unlucky farmers who happened along, instead of leaving the highways and impressing more equitably the goods of all producers. Farmers who anticipated impressment soon stopped bringing their goods to market and were discouraged from producing more than enough for their own immediate needs.
So not a very sensible revenue-raising strategy.
Lerner notes that:
Up to October, 1864, almost 60 per cent of all the money received by the Confederacy had come from the printing press. Less than 5 per cent of its revenue came from taxes. Approximately 30 per cent came from bonds sold to banks, institutions, and private persons and 5 per cent from miscellaneous sources.
Lerner reports on a struggle between the Southern nation’s first Treasury Secretary one Christopher Gustavus Memminger and the politicians. The New York Times article noted above has some nice narrative description of Memminger. He wanted to raise property taxes but the Congress declined to support the suggestion.
For those with access to the University of North Carolina you can read all of C.G. Memminger Papers at the library there.
The New York Times article says that:
Memminger wanted slave-owners to bear the brunt of the taxes … After much foot-dragging, the legislators finally complied in August. They didn’t tax one kind of property more than another, however. Instead, they adopted a uniform rate — of one-half of one percent.
The tax turned out to be a fiasco. Sentiment against it ran high, contributing to delays in collection and resistance among the states.
Lerner provided the answer to this impasse in his 1954 article. The Southern states were not only hostile to centralisation and that was one of the reasons for the secession, but more pragmatically they:
… believed that large tax payments were not necessary. Cotton was to be king; England would soon recognize the new nation and intervene actively; the Yankees would not fight; and military battles would go well for the South.
The early stages of the War reinforced these expectations.
Memminger is often held out by the mainstream as being aware that printing too much currency is inflationary. There is a famous quotation in Lerner’s article that is repeatedly used to make this case:
Secretary Memminger saw two immediate and indispensable benefits from levying taxes payable in government notes. First, taxes created a demand for the paper issued by the government and gave it value. Since all taxpayers needed the paper, they were willing to exchange goods for it, and the notes circulated as money. Second, to the extent that taxation raised revenue, it reduced the number of new notes that had to be issued. Memminger’s numerous public statements during the war show that he clearly realized that increasing a country’s stock of money much faster than its real income leads to runaway prices. They also show that he believed that a strong tax program lessens the possibility of inflation.
My colleague Randy Wray in his “Understanding Modern Money” book provides his view on this quote. He says that “it is clear that Memminger’s understanding went far beyond” the simple quantity theory of money approach – too much money chasing too few goods.
Randy Wray says that Memminger understood that the nation needed “to impose sufficient tax liabilities to create a demand for the notes so that goods and services would be offered at relatively stable prices”.
I won’t try to interpret what Memminger understood at the time. There is an additional point however. There has to be the capacity as well as the willingness to supply real goods and services in return for government spending. I will come back to that point soon.
It is clear that a significant role of taxation – and a central proposition of Modern Monetary Theory (MMT) – is to create a demand for the currency. In a fiat currency system, taxation functions to promote offers from private individuals to government of goods and services in return for the necessary funds to extinguish the tax liabilities.
The orthodox conception is that taxation provides revenue to the government which it requires in order to spend. In fact, the reverse is the truth. Government spending provides revenue to the non-government sector which then allows them to extinguish their taxation liabilities. So the funds necessary to pay the tax liabilities are provided to the non-government sector by government spending.
It follows that the imposition of the taxation liability creates a demand for the government currency in the non-government sector which allows the government to pursue its economic and social policy program.
This insight allows us to see another dimension of taxation which is lost in orthodox analysis. Given that the non-government sector requires fiat currency to pay its taxation liabilities, in the first instance, the imposition of taxes (without a concomitant injection of spending) by design creates unemployment (people seeking paid work) in the non-government sector.
The unemployed or idle non-government resources can then be utilised through demand injections via government spending which amounts to a transfer of real goods and services from the non-government to the government sector.
In turn, this transfer facilitates the government’s socio-economics program. While real resources are transferred from the non-government sector in the form of goods and services that are purchased by government, the motivation to supply these resources is sourced back to the need to acquire fiat currency to extinguish the tax liabilities.
Further, while real resources are transferred, the taxation provides no additional financial capacity to the government of issue. Conceptualising the relationship between the government and non-government sectors in this way makes it clear that it is government spending that provides the paid work which eliminates the unemployment created by the taxes.
In my reading of Memmminger’s documents I have never found this level of understanding expressed. But he clearly did realise that “taxes created a demand for the paper issued by the government and gave it value” (as Lerner notes) so it is possible that he did think in the way that Randy Wray describes.
At any rate, the ability to collect the tax revenue was severely constrained by a myriad of factors.
The New York Times article said that:
Relatively little revenue came into Memminger’s coffers … The Confederacy had been founded on the principle of the sovereignty of the states; any attempt by the central government to assert itself, even to support a war fought for its survival, would be met with mistrust.
This antipathy to taxation and the inefficiency of the Southern tax collection system is very well described in Lerner’s article cited above. He reports that:
Sixty-one million dollars entered the Treasury in the first year of the war, and $1.2 billions by September 30, 1863. Absolutely nothing came from property taxes in the first year, and only $20.8 millions by September 30, 1863. The property tax accounted for only 1.7 per cent of the total revenue received.
The first point then is that the Confederacy is not an ideal example to use when challenging the basic precepts of MMT. Yes, it did form a government with a provisional constitution giving it taxing and currency-issuing powers as outlined above.
But, the essential characteristic of a modern monetary state (that is, a sovereign government) is that its tax borders are not porous. They must be able to effectively enforce the law which requires all tax liabilities to the state being extinguished in the currency of issue. It is one thing to invoke a law (based on a constitution) giving the state those rights but another thing to effectively enforce the rights.
Lerner says that for many reasons – poor design, recalcitrant member states, invasion from the North etc:
… it became impossible for the South to collect large amounts of revenue through taxation.
It would be wrong to think the problem was a lack of revenue. The problem was that the tax system could not be used as an effective vehicle to transfer private resources into the public domain in return for government spending.
Further, it seemed that the tax system undermined the supply of real goods and services.
Lerner recounts that Memminger’s:
The Secretary’s real alternatives for raising revenue were floating bonds or printing money. He, therefore, recommended that Congress authorize an 8 per cent bond issue of $50 million payable “in any resource which can be made available.” On May 16, 1861, Congress authorized bonds to be sold for “specie, military stores, or for the proceeds of sales of raw products and manufactured articles.
Which meant that the farmers would provide the loan funds upon sale of their produce (for example).
The problem was – as the NYT’s article notes – that as the war proceeded unexpected difficulties arose. Lerner wrote:
At harvest time, however, the market for exported goods was smaller than had been expected. Southern ports were blockaded. Trading with the enemy was discouraged. A grand design forcing Europe to recognize the Confederacy was afoot, and southerners themselves prevented the export of King Cotton. Consequently, the price of cotton was almost 25 per cent lower in September than it had been in June when the pledges were made. Since the general price index for all commodities rose 27 per cent during this period, the real income of the cotton planters fell sharply. Many who planned to buy bonds when they sold their crops became discontented and, instead of buying bonds, demanded immediate government aid.
The pledges were the bond commitments.
The NYT’s artile says that the “Southern economy was agricultural, illiquid … The South did have “white gold” — cotton. But the cotton trade fell sharply with the Union naval blockade, proclaimed by Lincoln in April 1861. A self-imposed embargo, devised by Southern leaders in an effort to force Britain to support the Confederacy, further curtailed cotton exports”.
The obvious fact that emerged (and there is a very interesting discussion of the to and fro with respect to the bond issuance in Lerner) was that the Confederacy had unpaid bills piling up.
Lerner says:
Unpaid bills began accumulating on Secretary Memminger’s desk before revenue could be raised through tax collections or bond sales. Printing notes was the most expedient way of meeting these obligations, and on March 9, 1861, Congress authorized the issue of treasury notes “for such sum or sums as the exigencies of the public service may require, but not to exceed at any one time one million of dollars.” During the next four years the Treasury printed over fifteen hundred times this amount.
The NYT’s article notes that “(p)aper money had several advantages. It didn’t infringe on the sovereignty of the states. It provided a way to avoid taxes and to compensate for the Confederacy’s lack of capital … And it spared the South the more painful task of building a sound financing structure — a task that might require difficult decisions about the Confederate system’s shortcomings”.
The NYTs article concludes that:
The value these notes generated couldn’t be sustained forever, though. As their quantity grew, so would inflation. As paper came to shoulder the bulk of the Confederacy’s costs, its inevitable depreciation greatly undermined the Southern effort. The war couldn’t be funded on faith alone. It required real revenue, something the deliberately decentralized Confederacy wasn’t designed to deliver.
It is clear that inflation accelerated in this period (in both the North and the South) – and was particulary robust in the South.
But this conclusion misses the essential point. It was not a lack of revenue that caused the inflation. It was the inability to control aggregate demand through spending and taxation that was the problem.
Confused? It is a subtle but important distinction.
As explained above, the levying of the taxes would normally generate a demand for the currency of issue which would manifest in the form of a supply of real goods and services to the state from the private sector in return for spending (to get the currency to pay the taxes). This has nothing to do with the Confederacy needing revenue to spend.
They constitutionally gave themselves the right to spend by establishing a fiat currency monetary system. But having an infinite capacity to spend is only part of the capacity to exercise appropriate fiscal policy interventions (which might include prosecuting a war effort).
However, to elicit that supply of real goods and services, the government must be able to effectively impose the tax obligations. It is clear that the Confederacy was unable to do that.
The problem was further compounded because even if they could have imposed the obligation effectively there was also the impact of the War on the capacity of the Southern states to produce real goods and services.
It wasn’t the printing of the currency notes that was the problem. It was the fact that there were not enough real goods and services available for sale in relation to the rate of growth of nominal spending (on the war effort) that was the problem.
There were additional issues – such as counterfeit notes pushed into the Southern economy by the North and ultimately accepted by the Confederacy as legitimate tender.
But the supply problems were endemic.
When we teach macroeconomics the development of understandings of both the demand-side (spending) and the supply-side (output) is important. The pre-Keynesian macroeconomics largely considered the demand-side to be reactive (Say’s Law) to supply. This was consistent with the denial that an economy could oversupply and thus experience a demand-deficient slump.
You will be familiar with the regular statements that “printing money” causes it to lose value – which is another way of saying causes inflation.
Once you understand the components of aggregate demand (spending) – household consumption, private investment, government spending, and net exports (exports minus imports) – the question to explore is how will the economy react to that nominal spending (that is, money value).
So statements like increased budget deficits or an expansion of money will cause inflation have to be analysed in terms of how the supply-side of the economy responds to the increased nominal demand.
Any nominal demand acceleration coming up against a supply constraint will be inflationary – it is not a unique characteristic of public spending.
To explore that question you need to know how the supply-side of the economy responds. There are only three options when the economy receives an increase in nominal aggregate demand (spending):
- Increase real output – that is, increase production of real goods and services.
- Increase prices – that is, push up the price level.
- A mixture of both real output increases and price increases.
If nominal demand expansion continues to be met by the second supply response then we get inflation occurring.
The point is that the Confederate states experienced a sharp decline in output during the Civil War – for various reasons.
There was a severe drought that damaged agricultural production in 1862. Large losses via waste also plagued farmers because there was not enough labour left behind to harvest the crops or bring them to market. Transportation was severely disrupted by the War (as the Southern railway system was attacked and left in ruin). So food shortages led to price rises.
The South also lost its textile manufacturing regions to the North early in the War.
Additionally, the South was more backward in terms of industrial development at the onset of the War, partly because of its heavy reliance on slave labour which gave agriculture a bias when investment funds were being allocated. So the capacity to produce non-agricultural goods and services was very limited as the War began.
I could further document the supply-side problems of the South, which were particularly acute. The War destroyed capacity yet demanded ever-increasing supplies of real goods and services – an inconsistency that led to the inflation.
The point is that the economy was not capable of absorbing the rate of growth of nominal demand that was required to prosecute the War effort.
This is a common problem in war-torn nations. The problem is not the route that the nominal public demand (spending) enters the economy but the rate of growth of that demand in relation to the capacity of the economy to meet it in real terms (that is, via output increases).
Conclusion
The experiences of the Confederacy are not evidence that rising budget deficits (or quantitative easing) will be inflationary. They might be but when there are idle resources that want to work and are willing to pay taxes then public spending should always elicit a real response (increased output) rather than a nominal response (increased prices).
印刷お金はインフレを引き起こさない
2011年3月17日木曜日議案経済学64コメント
1860年代にアメリカで連邦政府の支出政策によって引き起こされたインフレの教訓をなぜ米国政府（および主権政府）が学ぶべきでないのかを説明するよう求めた読者が何人もいます。彼らは、財政赤字の増加、イングランド銀行と米連邦準備銀行の量的緩和政策、そして最近の彼らの壊滅的な危機への反応としての日銀による「流動性の注入」と様々にこの質問を結びつけてきました。 。提示された提案は単純である - 連合は紙のメモを印刷すること（そして北からの偽造のメモを批准すること）によって彼らの戦争の努力にますます資金を供給し、その結果暴走するインフレを見た。このブログはその点を検証しています。南北戦争中の南部諸国の経験は、財政政策の使用や、政府に債務を発行せずに赤字を実行させるべきであるという提案に反対する訴訟ではないことをあなたは知っています。事実は、「紙のメモを印刷する」こと自体がインフレを引き起こさないということです。特定の状況下ではそうかもしれません。これらの事情はアメリカの南北戦争時代に証明されました。
この話題が最近のNew York Timesの特集（2011年3月14日） - Ben TarnoffによるMoney for Nothingで取り上げられたのは偶然です。
この記事は、1860年12月のサウスカロライナ州の離脱から始まった「南部国家」という一時的な国の設立に続く出来事に焦点を当てています。1861年2月までに他の6つの南部州が反乱に加わった。
1861年2月8日、アメリカ連合国暫定憲法が全会一致で合意されました。これは既存の米国憲法に基づいており、ここでの私たちの興味には関係ないいくつかの重要な違いがあります。
1861年2月18日に、ジェファーソンデイビスはアメリカの南部州の暫定大統領になります。
暫定憲法第1条第6項は、新しい「国」に通貨発行権限を有する主権政府の権利を付与したもので、関連する条項は次のとおりです。
（1）総会は、借金の支払いおよび連邦政府の維持に必要な収入のために、税金、関税、詐称、および物品の払い出しおよび徴収を行う権限を有し、すべての職務、物品、および物品の払い出しは全域にわたって統一する。南軍の州。
（2）南部連合の信用でお金を借りるには…
（5）貨幣を硬貨にし、その価値を管理し、そして外国の硬貨を管理し、そして重量と尺度の基準を定める。
1861年4月12日、新しい「国」がサムター要塞を攻撃し、南北戦争が正式に開始されました。
Tarnoffが指摘したように、以前（1861年3月9日）：
…議員は南軍の財務省にメモを印刷する権限を与える法案を可決しました。彼らが承認した金額は比較的少なく、わずか100万ドルでした。しかし、今後数カ月で、その数は劇的に増加するでしょう。時間が経つにつれて、南部の紙幣はモンゴメリーでそのささやかな起源を追い越して、南の唯一の最も重要な収入源 - 政府の機械が機能しなくなるであろう財政燃料 - になるでしょう。それは南軍を短期間で維持し、将来の災害の犠牲を払って南軍の戦争努力を助けそして妨げるであろう。
そのため、数ヶ月で南部連合は通貨とその通貨で税金を発行する独占権を持つ主権政府としての地位を確立しました（したがって、それに対する需要を生み出しています）。しかし、浮上してきた問題は、その課税権限を執行することができる北朝鮮諸国とは異なり、南部政府は課税からの収入を上げるのに大きな問題を抱えていたということでした。
その公的支出は、北部の州よりも紙幣を印刷することによってより実質的に一致しました。当時の公的財政に関する決定的な研究成果は、Donald R. StabileとJeffrey A. Cantor（1991）による「アメリカの公債：歴史的展望1775-1990、Praeger：New York」の本です。
それが通貨発行独占を確立している間、南軍はすぐに北の隣人との戦争を戦うためにその力を使わなければなりませんでした。国家は戦争の努力を模索し、その後訴追する際に現れる供給サイドの制約のため、戦争は常にインフレ障壁に挑戦する。実際の商品やサービスの配給（つまり、非市場配賦システム）は、供給不足を克服するために一般的に使用されている装置です。
この時代についての有名な言及はEugene M. Lerner（1954）の「南部政府の貨幣と財政のプログラム、1861 - 65年」、Journal of Political Economy、Vol。 ６２、Ｎｏ．６、ｐｐ．５０６−５２２。
あなたがJSTORへのアクセスを持っているならば、記事はここで見つけることができます。
Lernerは、Milton Friedmanが南北戦争を次のように考えていると述べています。
…もしそれが可能であれば「批判的」実験によって得たいと思う種類の証拠を正確に提供してください…
主流の経済学者は持っています
eは、財政赤字に対する彼らの訴訟のデモンストレーションとして南北戦争時代を使った。
南部政府は、農民や企業から現物税を徴収することによって、彼らの税務当局を行使しようとしました。ラーナーが言うように、彼らは簡単に避けられました：
…収集時間前に商品を売った（または隠した）…
商品の腐敗、損傷、盗難など、現物詐欺には他にも問題がありました。
農家が市場に出たときに待ち構えていた「感動」を農家が回避する方法についてのLernerの説明が好きでした。
多くの場合、印象付け業者は、高速道路を離れてすべての生産者の商品をより公平に印象付ける代わりに、よく旅行された道路に沿って待って、一緒に起こった不運な農民の商品をつかみました。感動を期待していた農家はすぐに商品を市場に出すことをやめ、自分たちの当面のニーズに見合うだけのものを生産することを勧めなかった。
それほど賢明な収益向上戦略ではありません。
Lernerは次のように述べています。
1864年10月までに、南軍によって受け取られたすべてのお金のほぼ60パーセントは印刷機から来ました。その収入の5パーセント未満は税金から来ました。約30％が銀行、金融機関、個人に売られた債券から、そして5％が雑多な資金源から来ました。
Lernerは、南部初の財務長官であるChristopher Gustavus Memmingerと政治家の間の闘争について報告しています。上記のNew York Timesの記事には、Memmingerについての素晴らしい説明があります。彼は固定資産税を引き上げたいと思ったが、議会はその提案を支持することを断った。
ノースカロライナ大学にアクセスできる人のためにあなたはC.Gのすべてを読むことができます。そこの図書館でのMemminger Papers。
ニューヨークタイムズ紙の記事は言う：
Memmingerは、奴隷所有者に税金の過大負担を負うことを望んでいました…たくさんの足を引っ張った後、議員たちはついに8月に応じました。しかし、彼らはある種類の財産に別の財産よりも課税しませんでした。代わりに、彼らは1％の半分の均一な割合を採用しました。
その税金は大失敗に終わった。それに対する感情は高まり、州間の収集と抵抗の遅れに貢献した。
ラーナーは1954年の彼の記事でこの行き詰まりに対する答えを提供しました。南部諸州は、中央集権化に敵対していただけでなく、それが脱退の理由の1つでしたが、より実用的には次のとおりです。
…多額の納税は必要ないと考えていました。綿は王になることでした。イギリスはすぐに新しい国を認識し、積極的に介入するでしょう。ヤンキースは戦わないでしょう。そして軍事的戦いは南部にとってうまくいくだろう。
戦争の初期段階はこれらの期待を強化しました。
あまりにも多くの通貨を印刷することはインフレであることを認識しているので、Memmingerはしばしば主流によって支持されています。 Lernerの記事には、この主張を繰り返すために繰り返し使用される有名な引用があります。
事務局長のMemmingerは、政府の手形で未払税を課すことから2つの即時かつ不可欠な利点を見ました。第一に、税金は政府発行の紙に対する需要を生み出し、それに価値を与えた。すべての納税者は紙を必要としていたので、彼らはそれと商品を交換しても構わないと思っていて、そして紙幣はお金として回覧しました。第二に、課税により収入が増加した限り、発行されるべき新しい手形の数が減少しました。戦争中のMemmingerの多数の公的声明は、彼がその国の実質の収入よりもはるかに早くお金のストックを増やすことが暴走価格につながることを明らかに認識したことを示しています。彼らはまた、強い税制がインフレの可能性を減らすと彼が信じていたことを示しています。
私の同僚のRandy Wrayは、彼の“ Understanding Modern Money”の本の中でこの引用についての彼の見解を示しています。彼は、「Memmingerの理解が単純な数量論のお金のアプローチ - 多すぎるお金を少なすぎる商品を追いかけることをはるかに超えたことは明らかである」と言う。
Randy Wrayは、Memmingerは、「商品やサービスが比較的安定した価格で提供されるように、紙幣に対する需要を生み出すのに十分な税金負債を課す」ことが必要であるとMemmingerが理解したと述べています。
Memmingerがその時点で理解していたことを解釈しようとはしません。しかし追加のポイントがあります。政府支出の見返りに実際の商品やサービスを提供する能力と意欲がなければなりません。まもなくその点に戻ります。
課税の重要な役割、そして現代通貨理論（MMT）の中心的な命題は、通貨に対する需要を生み出すことであることは明らかです。フィアット通貨システムでは、課税は個人から個人の商品やサービスの政府への申し出を促進し、税金負債を消滅させるのに必要な資金と引き換えに機能します。
正統派の概念は、課税はそれが費やすためにそれが必要とする政府に収入を提供するということです。実際、その逆は真実です。政府支出は非政府部門に収入を提供し、それによって彼らは彼らの課税債務を消すことができます。それで税金負債を支払うのに必要な資金は提供されます
政府支出による非政府部門へのd。
その結果、課税責任の賦課は非政府部門における政府通貨の需要を生み出し、政府がその経済的および社会的政策プログラムを追求することを可能にする。
この洞察は、正統派分析では失われている課税の別の側面を見ることを可能にします。非政府部門がその課税債務を支払うために固定通貨を必要とすることを考えると、第一に、設計による税の課税（付随する支出の注入なしで）は、非政府部門における失業（有料労働を求める人々）を生み出す。
失業した、または使用されていない非政府資源は、政府支出による需要注入を通じて利用することができます。これは、非政府から政府部門への実質財およびサービスの移転に相当します。
言い換えると、この移転は政府の社会経済学プログラムを促進します。実際の資源は政府が購入する商品やサービスの形で非政府部門から移転されますが、これらの資源を供給しようとする動機は、租税債務を消滅させるために平等な通貨を獲得する必要性に由来します。
さらに、実質的な財源が移転される間、課税は問題の政府に追加の財政的能力を提供しない。このように政府部門と非政府部門の関係を概念化することで、税金による失業を排除するのが有給労働を提供するのが政府支出であることが明らかになります。
Memmmingerの文書を読んでいるうちに、このレベルの理解が表明されたことは一度もありません。しかし彼は、「税が政府発行の紙への需要を生み出し、それに価値を与えた」ことを明確に認識していたので（Lernerが述べているように）、Randy Wrayが述べている方法で考えたのかもしれません。
いずれにせよ、税収を徴収する能力は、無数の要因によって厳しく制限されていました。
ニューヨークタイムズ紙の記事は言った：
メミンガーの財源には比較的わずかな収入しかありませんでした…連邦は、国家の主権の原則に基づいて設立されました。存続のために戦った戦争を支持するためでさえも、それ自身を主張しようとする中央政府によるどんな試みも不信感をもって満たされるでしょう。
この課税に対する反感と南部の徴税制度の非効率性は、先に引用したLernerの記事に非常によく説明されています。彼は次のように報告しています。
戦争の初年度に611万ドル、1863年9月30日までに12億ドルが国庫に入りました。初年度の固定資産税からはまったく収入はなく、1863年9月30日までにはわずか2,080万ドルでした。受け取った総収入のわずか1.7パーセントのために。
最初のポイントは、南軍はMMTの基本的な指針に挑戦するときに使用する理想的な例ではないということです。はい、それは暫定的な憲法で政府を形成し、上記で概説したように課税および通貨発行の権限を与えました。
しかし、現代の通貨国家（すなわち、主権政府）の本質的な特徴は、その税の境界が多孔質ではないということです。彼らは、発行された通貨で消滅している州に対するすべての税金負債を義務付ける法律を効果的に執行できなければなりません。それは州にそれらの権利を与える法律を（憲法に基づいて）呼び出すことであるが、効果的に権利を強制することである。
Lerner氏によると、デザインの不備、加盟国の不満、北からの侵略など、さまざまな理由から。
…南部が課税によって大量の収入を集めることは不可能になりました。
問題が収益の不足であると考えるのは間違っているでしょう。問題は、政府の支出と引き換えに、税制を民間の財源を公共の場に移すための有効な手段として使用できないことです。
さらに、税制が実際の商品やサービスの供給を弱体化させているように見えた。
Lernerは、Memmingerは次のように述べています。
秘書の収入を増やすための本当の選択肢は、変動債券またはお金の印刷でした。それゆえ彼は、議会が「利用可能にすることができるあらゆる資源において」支払われる5000万ドルの8％債券発行を承認することを勧告した。生製品および製造品の販売による収入。
これは、農家が農産物の販売時に融資資金を提供することを意味します（たとえば）。
問題は、NYTの記事が指摘しているように、戦争が進むにつれて予想外の困難が生じたことでした。ラーナーは書いた：
しかし収穫時には、輸出品の市場は予想よりも小さかった。南部の港は封鎖されていた。敵との取引はお勧めできませんでした。ヨーロッパが南部連合を認識することを強いる壮大なデザインは、進行中であり、南部の人たち自身がキングコットンの輸出を阻止しました。その結果、9月の綿花の価格は、誓約が行われた6月の綿花の価格よりも約25％低くなりました。
製。すべての商品の一般的な物価指数がこの期間中に27％上昇したので、綿プランターの実質所得は急激に下がりました。彼らが彼らの作物を売るときに債券を買うことを計画した多くの人は不満になり、そして債券を買う代わりに、即時の政府援助を要求しました。
その約束は公債の約束でした。
「南部経済は農業、非流動的…南部は「ホワイトゴールド」 - 綿を持っていた」とNYTの巧妙な言葉は言う。しかし、1861年4月にリンカーンによって宣言された北軍の海上封鎖により、綿花貿易は急激に下落しました。
明らかになった（そしてLernerでの債券発行に関するあちこちについての非常に興味深い議論がある）というのは、南軍が未払いの請求書を積み上げていたことである。
ラーナーは言う：
未払いの請求書は、徴税や債券の売却を通じて収入を増やすことができる前に、Secretary Memmingerのデスクに蓄積され始めました。紙幣を印刷することがこれらの義務を果たす最も便利な方法であり、1861年3月9日に、議会は「公務の緊急性が要求するかもしれないが一度に超過しないような合計について次の4年間で財務省はこの金額の15倍以上を印刷しました。
NYTの記事は、「（p）1人当たりのお金にはいくつかの利点がある」と述べています。それは国家の主権を侵害しなかった。それは税金を回避し、南軍の資本不足を補う方法を提供しました…そして南部に健全な資金調達構造を構築するより苦痛な仕事 - 南軍のシステムの欠点に関して難しい決断を要求するかもしれない仕事”を免れました。
NYTの記事は次のように結論付けています。
しかし、これらのノートが生み出した価値は永遠には持続できません。量が増えるにつれて、インフレも増します。紙が南軍のコストの大部分を占めるようになったので、その避けられない減価償却は南部の努力を大いに損なった。戦争は信仰だけでは資金を供給できませんでした。意図的に分散した南部連合が実現するようには設計されていなかったため、実際の収入が必要でした。
この期間（北と南の両方で）にインフレが加速したこと、そして南部で特に堅調だったことは明らかです。
しかし、この結論は本質的な点を見逃しています。インフレの原因は収入の不足ではありませんでした。問題となっていたのは、支出と課税によって総需要を制御できないことでした。
混乱した？微妙ですが重要な違いです。
上で説明したように、税金の徴収は通常、支出と引き換えに民間部門から国家への実物の財とサービスの供給という形で現れる発行通貨の需要を生み出すでしょう（通貨を税金を払う）。これは、連邦が支出に費やす必要があることとは関係ありません。
彼らは、憲法上、平等通貨通貨システムを確立することによって自分たちで過ごす権利を与えました。しかし、無限の支出能力を持つことは、適切な財政政策介入を実行する能力のほんの一部にすぎません（これには戦争努力の起訴が含まれる場合があります）。
しかし、実際の財やサービスの供給を引き出すためには、政府は事実上税義務を課すことができなければなりません。南軍がそうすることができなかったことは明らかです。
たとえ彼らが事実上義務を課すことができたとしても、南部諸国が実際の商品やサービスを生産する能力にも戦争の影響があったので、問題はさらに複雑になった。
問題だったのは紙幣の印刷ではありませんでした。問題となっているのは、（戦争での）名目支出の伸び率に関連して、販売可能な実物の商品やサービスが十分になかったことです。
北部によって南部経済に押しやられて、最終的に合法的な入札として南部連合によって受け入れられた偽造のノートなどの追加の問題がありました。
しかし、供給問題は流行していました。
私たちがマクロ経済学を教えるとき、需要側（支出）と供給側（産出）の両方の理解の発達は重要です。ケインズ以前のマクロ経済学は、需要側が供給に対して反応的であると言っていた（Sayの法則）。これは、経済が供給過剰になり需要が不足する不振を経験する可能性があるという否定と一致していました。
あなたは、「お金を印刷する」ことが価値を失う原因になるという通常の声明に精通しているでしょう - それは別の言い方ではインフレを引き起こすということです。
世帯消費、民間投資、政府支出、純輸出（輸出 - 輸入）の総需要（支出）の要素を理解したら、探求する問題は経済がその名目上の支出（つまり貨幣価値）にどのように反応するかということです。 ）
そのため、財政赤字の増加や資金の拡大などの記述は、インフレを分析する必要があります。
経済の供給サイドが増加する名目需要にどのように反応するかの実効値。
供給の制約に反して発生する名目需要の加速はインフレになるでしょう - それは公共支出のユニークな特徴ではありません。
その問題を探るためには、経済の供給側がどのように対応するのかを知る必要があります。経済が名目上の総需要（支出）の増加を受ける場合、3つの選択肢しかありません。
実質生産量を増やす - つまり、実際の商品やサービスの生産量を増やす。
価格を上げる - つまり、価格レベルを上げる。
実質生産高と価格上昇の両方が混在する。
名目需要拡大が2番目の供給反応によって満たされ続けているならば、インフレが起きる。
重要なのは南北アメリカ諸国が南北戦争の間に生産高の急激な減少を経験したということです - さまざまな理由で。
1862年に農業生産を損なう深刻な干ばつがありました。作物を収穫したり市場に投入するのに十分な労働力が残されていなかったため、廃棄物による大きな損失も農家を悩ませました。南部の鉄道システムが攻撃され破滅に陥ったため、輸送は戦争によってひどく混乱した。だから食料不足は価格上昇につながった。
南部はまた戦争の初期に北部にその織物製造地域を失いました。
さらに南部は、投資資金が配分されているときに農業に偏りを与えた奴隷労働に大きく依存していたこともあって、戦争の開始時の産業発展の観点からはもっと遅れていました。それで、戦争が始まったとき、非農産物とサービスを生産する能力は非常に限られていました。
私は南部の供給サイドの問題をさらに文書化することができ、それは特に深刻でした。戦争は容量を破壊しましたが、現実の商品とサービスの供給の増加を要求しました - それはインフレにつながった矛盾です。
ポイントは、経済が戦争の努力を起訴するために必要とされた名目需要の成長率を吸収することができなかったということです。
これは戦争で荒廃した国々でよく見られる問題です。問題は、名目公的需要（支出）が経済に参入する経路ではなく、実質的にそれを満たすための経済の能力に関連したその需要の成長率です（つまり、生産量の増加を通じて）。
結論
南軍の経験は、財政赤字（または量的緩和）の上昇がインフレになるという証拠ではありません。それらはあるかもしれませんが、働きたくて税金を払っても構わないアイドルリソースがあるとき、公的支出は常に名目上の反応（増加した価格）ではなく本当の反応（増加した生産）を引き出すべきです。
供給サイドがインフレ経験において果たす役割についてのさらなる議論については私のブログ - 過換気者101のためのジンバブエ - を読んでください。
I am currently working on an introductory chapter to a collection I have prepared for my publisher (Edward Elgar) which describes the evolution of Modern Monetary Theory (MMT). The task might appear to be straightforward but in fact is rather vexed. There is considerable dispute as to where the roots lie. A specific debate is the importance of the work of John Maynard Keynes. Many Post Keynesians, almost by definition, believe that Keynes was a central figure in the development of what we now call Post Keynesian economics, although that ‘school of thought’ evades precise identification and is certainly anything but homogenous. There are MMT proponents, who while sympathetic with much of Post Keynesian theory, disagree on key propositions – specifically relating to debt and deficits (as an example). But then they also point to Keynes’ work as seminal in the development of MMT. My own view is that many of the important insights in Keynes were already sketched out in some detail in Marx. Further, the work of the Polish economist Michał Kalecki was much deeper in insight than the work of his contemporary, Keynes. But for me the real sticking point against Keynes was his view that fiscal deficits should be balanced over the business cycle and that would allow governments to pay back debt incurred in the deficit years. That view has crippled progressive thought ever since and is antithetical to MMT. The debate also has resonance with the current leadership struggle within the British Labour Party about fiscal deficits and the claims by the ‘socialist’ candidate, Jeremy Corbyn that he will “balance the budget” when unemployment is low so as to avoid inflation. This view derives from the adoption by progressives of Keynes’ views, whether they know that or not. It is a mistaken view and retards progressive policy development.
“But look,” the Rabbi’s wife remonstrated, “When one party to the dispute presented their case to you, you said ‘you are quite right’ and then when the other party presented their case you again said ‘you are quite right’, surely they cannot both be right?” To which the Rabbi answered, “My dear, you are quite right!”
It was in reference to economists who were critical of the US government using debt to match spending on public projects. Lerner said the mainstream economists who were mounting such criticisms were “right” but only if they “redefine” key concepts in convenient (but perverse) ways.
Keynes did not discuss fiscal policy in great length in his most famous work – The General Theory of Employment, Interest, and Money (1936).
But in two articles which appeared in the The Times (November 14 and 15, 1939) under the title “Paying for the War”, Keynes provided detailed analysis of the conduct of fiscal policy. These articles came out in his short 1940s book “How to Pay for the War”.
The context was the fear that if governments use debt to ‘fund’ fiscal deficits to prosecute the War effort it was likely that inflation would result from a shortage of productive resources.
The inflation would most likely come from stronger consumption on the back of higher incomes and a limited availability of consumption goods.
He disliked the distributional effects of inflation – and considered it to be a tax on workers and the debt issued by governments would be a source of wealth for the capitalist class.
So he thought fiscal deficits pushed resources towards the rich and as a result of their low propensity to consume (high savings rate) would endanger the viability of the capitalist system – bias it towards depression.
He also didn’t want the workers to be taxed more to ‘pay’ for the deficits.
His solution, outlined in those articles, was to introduce a ‘compulsory saving scheme’ with progressive income tax rates, which would reduce consumption (divert income into financial wealth accumulation) but ensure that the low income workers benefited from the deficits.
He wrote that this system would be beneficial because:
… it would be the wage earners, and not the profit takers, who would emerge from the war as the main holders (in the form of deferred pay claims) of the newly created National Debt.
Suffice to say the trade unions and labour activists were horrified by the proposal. They wanted heavy taxes to be levied on the rich capitalists to pay for the War.
Keynes’ fear of inflation also meant that he was not enamoured with fiscal deficits. He saw them as being necessary in times of recession but should not be a general tendency for governments.
Deficits were a means of resolving a “deficiency of effective demand”, which Keynes demonstrated was the principle cause of mass unemployment.
Keynes actually moved somewhat away from this position by 1943 when he supported the proposals by the British Treasury (from James Meade) to introduce a social security system to attenuate periods of deficient demand.
In other words, put the burden of adjustment onto the automatic stabiliser component of the fiscal balance rather than the discretionary component.
So when private spending fell and unemployment rose, workers would attenuate the loss of earned income by the receipt of income support payments through the social security system, which would provide some floor in the recession.
He also divided the fiscal balance into what he called the ‘current budget’ (we now use the term recurrent to describe revenue and spending flows exhausted within a year) and the ‘capital budget’, which relates to public infrastructure expenditure.
In correspondence to Sir Richard Hopkins (July 20, 1942) – which is recorded in his Collected Works, Volume 27, Keynes wrote:
… the ordinary Budget should be balances at all times. It is the capital Budget which should fluctuate with the demand for employment.
This is the precursor to the modern concept of the ‘golden rule’. which limits fiscal deficits to the rate of public investment in productive capital.
The ‘golden rule’ essentially means that over some defined economic cycle (from the peak of activity to the next peak) the government deficit should match its capital (infrastructure) spending.
All ‘recurrent’ spending (that is, spending which exhausts its benefits within the current year) should be ‘funded’ through current revenue (taxes and fines, etc.).
The ‘golden rule’ is considered equitable across generations because the current taxpayers ‘pay’ for the public benefits they receive now, while the future generations have to pay for the benefits that the infrastructure delivers to them in the years to come.
Thus, day to day spending that benefits the current taxpaying public should be covered by taxation revenue and capital infrastructure should be funded through debt.
The fiscal balance would thus always be zero net of public investment spending.
The ‘golden rule’ reflects the mainstream economics view that governments have to ‘fund’ their spending just like a household.
But Keynes went one step further and driven by his fear of inflation concluded in the General Theory (Chapter 13, Section III) that:
If, however, we are tempted to assert that money is the drink which stimulates the system to activity, we must remind ourselves that there may be several slips between the cup and the lip
Monetary policy (adjusting interest rates) was uncertain and Keynes didn’t have confidence that it could constrain and inflationary boom.
So fiscal policy was the principle policy tool for constraining inflationary episodes, just as it was the most effective means of overcoming a recession.
So in Victorian times, the ‘golden rule’ was that in good times, the current ‘budget’ should deliver a surplus, which would then allow the government to repay the debt incurred in bad times, when it was running deficits.
This reasoning then lef to the conclusion that balanced ‘budgets’ as a principle was dangerous and that ‘budgets’ should, rather, be balanced over an economic cycle.
Run deficits in bad times and surpluses in good times to avoid inflation and build up the funds to run down the debt accumulated during the deficit years.
Most of this analysis was conducted under closed economy assumptions. Keynes was focused on fluctuations in private investment and national income and certainly didn’t consider what an on-going external deficit would mean for the conduct of fiscal policy if the private domestic sector desired to net save.
The point is that I depart from the view espoused by many Modern Monetary Theory (MMT) proponents who suggest that Keynes is one of the important precursor economists to the development of MMT.
Keynes’ views in this context were relatively conservative and mistaken.
1. Issuing debt to match fiscal deficits does not reduce the inflation risk of the initial spending, whether that spending be government or non-government.
It just swaps one financial asset – a saving balance (deposit) for a government bond. Moreover, the latter carries an income flow which is likely to be larger than the former.
2. There is no reason to believe that continuous fiscal deficits will be inflationary. Extending Keynes’ own logic, deficits are required when non-government spending is insufficient to generate sales that would justify firms fully employing all available labour.
As long as firms can continue to respond to nominal demand growth through increased output growth, there is no major likelihood of an inflation breakout.
In other words, a deficit could easily be a ‘steady-state’ policy position to support full employment when the other sectoral balances (external and private domestic) were in particular states.
For a nation such as Britain, we note the following:
1. A fairly sizeable external deficit which drains domestic spending in net terms (more cash flows out via imports than flows in via exports) and is not going to go away anytime soon and is not a problem anyway, given it means the British people enjoy advantageous real terms of trade (foreigners are willing to send them real goods and services in exchange for bits of paper – financial assets).
2. The private domestic sector is already highly indebted and cannot be expected to sustain even higher debt levels.
3. There is considerable idle capacity – unemployment, underemployment etc.
In this context, a continuous fiscal deficit is indicated.
Remember, a fiscal deficit is a flow of net spending that disappears each period and if not sustained will lose its impact.
As long as that flow is supporting a flow of production in each period then there is no inflation risk. That is the desirable policy position – to ensure all real resources are in productive use.
If from a position of full employment, the external deficit narrows (via export expansion), or private domestic investment increases, then depending on what the society sees as a desirable mix between private and public resource usage, the fiscal deficit will have to decline to avoid inflation.
But that is not the same thing as invoking a ‘balanced budget rule over the cycle’. Even when private domestic spending is stronger, public deficits will normally be required to maintain full employment.
Governments should not follow fiscal rules like a ‘balanced budget rule over the cycle’. Rather, they should be guided by evaluations which show the impact of different fiscal policy parameters on the well-being of the population.
If there is a need for the private domestic sector to have less purchasing power, then a tax increase is indicated. Not to generate revenue for the government but to reduce purchasing capacity of households and firms.
The tax increase is serving a specific function – to deprive the private domestic sector of purchasing power, presumably, because the government wants extra real resource space available to pursue its own socio-economic mandate and/or exports are booming.
It needs to create the extra resource space because if the taxes weren’t increased there would be incompatible claims on those real resources from all the claimants (households, firms, government, foreigners) which would result in inflation.
But no rule can be devised to automatically ensure that these functional decisions will be made effectively. It is the art of the policy maker that rules rather than a rule driving the policy.
Keynes did not take into account the sectoral balances. MMT makes them a central part of the macroeconomic evaluation and policy development framework. Understanding them in an accounting sense is only the first step. The art is to understand what drives these balances and how they interact.
So a ‘balanced budget over the cycle’ rule would mean the private domestic sector has a deficit equivalent to the external deficit on average over the same cycle.
Why is that desirable? It implies that the private domestic sector will be accumulating ever-increasing debt levels, which eventually will become unsustainable.
MMT focuses on the private debt dynamics and considers the public debt dynamics to be passe. It goes further and recommends that governments break the nexus between debt-issuance and fiscal deficits.
In this sense, governments should use Overt Monetary Financing rather than going through the pretence that they are being funded by private bond holders. The bond sales are made possible by past deficits, which generate net financial assets for the non-government sector.
Further, they are just an example of corporate welfare, which is totally unnecessary.
There is some progressive argument that the debt helps pension/superannuation funds provide safe returns to workers in retirement. My solution would be to nationalise superannuation funds, eliminating the managerial fee grab of workers’ savings, and using the government’s currency-issuing capacity to fund workers’ retirements.
That is pure MMT but very non-Keynes.
I have run out of time today but you might also like to reflect on David Colander’s article in the Journal of Economic Literature (December 1984) – Was Keynes a Keynesian or a Lernerian? – which mounts the argument that Keynes shifted ground in the 1940s and considered Lerner’s Functional Finance to be a sound framework.
[Full Reference: Colander, D. (1984) ‘Was Keynes a Keynesian or a Lernerian?’, Journal of Economic Literature, 22(4), December, 1572-1575].
Conclusion
Progressives should abandon the notion that they attribute to Keynes that the fiscal balance should be zero on average over the course of the economic cycle.
In this regard, the work of Abba Lerner in the 1940s on Functional Finance is much more seminal to the development of MMT than was Keynes’ offerings, which I believe are antithetical to the foundational blocks of MMT.
Progressive narratives should aim to educate the public as to the need in normal times for continuous fiscal deficits. Then we would start getting somewhere.
Off to catch a big airplane!
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.
Go Bill!
But in economics old masters is scrutinized in minute as it was religious scholars interpreting holy books to see if the “religion” is valid.
One of the problems with economics I feel is that people do not seem to want to recognise that theories evolve and develop, and that descendants of theories are like Einsteins quote that he “stood on the shoulders of giants.” He proved Newton wrong, who is still obviously considered a giant of physics. Darwin’s insights were ingenious, but he knew nothing about genes.
I see Keynes as laying some good ground work, but it would not be a good thing if people did not improve on it with even better insights, we would not make progress.
It makes me worry a little that at the moment we have an enormous amount of bank debt caused by inflated house prices, student debt and even wonga loans.
Deficit spending and OMF would help people to pay this off given the chance to earn government money, but is there a danger if productivity cannot rise to the level to pay it off? Many peoples mortgages are now eating into half or more of their income. Is there a case for debt jubilees as well. Elizabeth Warren has called for a student loan jubilee in the US. It seems like a good parallel policy to MMT.
Though you could probably mention that “tax increases” as a means to make room for more govt spending – in a time when the deficit needs to shrinks – depends where the taxation is placed/targeted (for reducing inflation) and how cutting spending may or may not work as a substitute policy based on where that spending is cut. E.g. Obviously cutting healthcare funding is unlikely to reduce inflation in asset markets, whereas a tax targeted towards those markets is far more likely to be successful. The size of government is not just a matter of politics when you examine the allocation of taxes and spending from what I can gather…
On the more general topic of Keynes in relation to MMT, very interesting insights.
It may not be relevant to the context of the article but it was a time when managing the exchange rate was paramount. From what I’ve read of him he was still way ahead of his time. Clearly though so was Lerner.
I’d be interested in hearing whether you think the “golden rule” should apply to currency using governments like our state governments. Shouldn’t they be attempting to balance current expenditures with revenues, while using “debt financing” (or possibly interest free credit financing from a state owned bank) to pay for public capital expenditures (e.g. infrastructure); while doing so in a counter-cyclical implementation (during downturns) for maximum benefit? What are your general recommendations for the fiscal policy of currency using governments? Or do you charge for that advice?
I’m surprised you didn’t go further to demolish the idea that this is a “progressive” argument. We all know the superannuation system inherently favours men over women (women have half the superannuation of men), as well as the wealthy. Women end up with less super than men due to their tendency produce children etc. and thus bonds are fueling an industry which promotes gender inequality. Whereas the pension makes no such descrimination against women or the poor; who didn’t earn as much in their life time of lower paid or less frequent work.
A pension financed using “Overt Monetary Financing” is a far fairer method to ensure the elderly are taken care of than this idea that we should create a whole compulsory superannuation industry, which we should then subsidise with interesting paying bonds; when those interest payments could be going directly into pensions.
any long term cycle.Yet still there has been periodic recessions and
unemployment.Structural deficits are the norm and they have not
been large enough.
Reality trumps theory every time.Must agree with all the contributions
which show the fundamental non scientific nature of economics in general
whether classical or Keynesian.