![]() So the constraint becomes not the budget deficit per se but the impact the fiscal stance may have on inflation. In extremis, it can simply print more money, or mark up the government account at the central bank with a stroke of a keyboard. Kelton correctly observes that, since this “Nixon shock”, a government that both prints and borrows in its own currency – that has monetary sovereignty – can never go bust. In 1971 Richard Nixon ended convertibility of the US dollar to gold, sounding the death knell for the Bretton Woods system and ushering in the age of free-floating fiat currencies. ![]() In advanced economies, cautionary tales from the Weimar Republic, Zimbabwe and, more recently, Venezuela have made monetary financing taboo but not technically impossible While written as polemic, The Deficit Myth is theoretically sound, though occasionally politically naive. ![]() She argues passionately for a more progressive economy, starting by flipping the script on how we conceive public finances and monetary policy. ![]()
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