Living Beyond Your Means
We are often told that people should not ‘live beyond their means’, that is, that no individual person, nor any corporate entity like a business or a government, should spend more money during a given period than they take in as income or as revenue. Doing so is judged to be profligate, irresponsible, and only setting oneself up for pain in the long run. For countless centuries, if not millennia, the balanced ‘budget’ has been regarded as the sine qua non of fiscal prudence and ‘sound’ finance. And yet, if we look at our economies over any given period of time, it is quite normal for individual consumers, considered in the aggregate, to spend more than they receive in income, for governments at all levels to spend more than they take in viataxes, and even for businesses, considered again as a whole, to spend more money (thanks to long-term capital…
Written on Monday, 15 July 2019 13:21
Why Overt Monetary Financing of a UBI Need Not Result in Demand Inflation
When one explains to the common person the proposal of a National Dividend as a state created and distributed monetary gift given to all as a credit for the nation’s total production, there is one very common objection or concern that people often raise. They think that there is a danger that this will result in inflation or a devaluing of the nation’s currency, a devaluation that may even been as bad as the hyperinflation that has recently taken place in Zimbabwe or Venezuela as a result of severe political corruption, incompetence, or foreign interference. But before one can understand why a 'debt-free' 'basic income' is not inflationary, or need not be inflationary, one must first understand something of the economic and monetary theory upon which this suggestion is based, namely Douglas Social Credit.
Written on Monday, 08 July 2019 14:09
Financing a Basic Income Through the Money Creation Powers of the Bank of Canada
"The money creation process employed by the Bank of Canada is quite simple and mirrors the money creation process which, through the private banking system, is responsible for the greater majority of our money supply.Contrary to what many people assume, banks are not borrowers and lenders of pre-existing money, but are rather creators and destroyers of the money that they issue in the form of bank credit. The same holds true for the Central Bank. Whenever an auction of new government securities is held, the Bank of Canada buys a certain percentage of these securities by creating digital accounting entries in the Federal Government’s deposit account with the bank. This deposit is recorded as a liability of the bank, while the newly purchased security is recorded as an asset on the Bank of Canada’s balance sheet."
Written on Sunday, 07 July 2019 18:28