Consolidating entries elimination

Posted by / 03-Mar-2020 13:15

Elimination would constrain investment unnecessarily by encouraging its deferral so a low and moderate interest rate is required, which is achieved by taxing sufficient government created money out of existence in a period to secure this goal. Broadly speaking experience in recent years has suggested that total tax revenues should be less than total government spending or additional money supplies required to ensure the liquidity to permit growth is not present in the economy.

Since the goal is to maximise use of available labour at the highest level of productivity possible this is a policy that inevitably, and unavoidably, seeks to increase median pay. That goal is achieved by balancing the mix of government deficit funding covered by bonds (which are issued as a favour to financial markets and depositors) and money creation, currently mainly through QE.

Indeed it is not just illogical but completely economically perverse to seek to do.

A government with a balanced budget necessarily denies an economy the funds it needs to function.

MMT suggests that full employment is the alternative goal.

As a result it is seen that MMT is located firmly within the constraints of the real economy, and not those of the finance sector.

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