We have been increasingly bemused by the controversy about whether a
government can "finance" a deficit by
"printing money" rather than by borrowing. Surely any one who has passed a
first year Macroeconomics course
which included money and banking knows, as Trond and Bill have said that "a
deficit simply means that more high
powered money is created in the period than destroyed." The reason the
controversy has lasted this long and not
produced as much light as it should is that participants seem to us to
skate between what a government can do and
what is desirable for it to do. The topic of discussion should be: under
what circumstances is it desirable for a
government to borrow, not whether it needs to.
John Nevile and Peter Kriesler
PS. I have put in carriage returns, and hope they are hard ones - are
there any other kind? The difference seems to be
in the archives rather than in the e-mail text. Trond, could you make the
archives a table with width=100% to get over the
problem of the never-ending line, or is this an occupational hazard from
dealing with economists?
Received on Sat Feb 1 12:21:17 2003
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