functional finance

["Colander, David" <colander@xxxxxxxxxxxxxxxxxxxxx>]

In reference to some of the discussions of functional finance that have
appeared on the net.

The rules of functional finance were not designed for an economy with
inflation and unemployment.  Where there was both inflation and
unemployment, the initial rules did not specify what policy should be
followed.  Lerner worked on what to do about inflation starting from the
1950s and saw it as a serious problem that needed to be solved. He
emphasized seller's inflation and incomes policies as the way to deal with
it.    Where there is an accelerating inflation, it would definitely pose a
limit to spending is limiting that spending were the only way to stop
inflation.



> I have no morbid fear of inflation. I am using
> 	Keynesian/Lerner functional finance theory. It allows
> 	spending to match production, as the latter rises radically
> 	from automation. It does see the limit to such spending
> 	to be an accelerating rate of inflation. In  its original
> 	form (Keynes and Lerner), it would meet such
>          inflation with taxes OR saving.  Under IEA we meet
> 	it with savings first -- and taxes only if savings do
> 	NOT work as an effective control on inflation.
>