Re: fiscal deficit - Mosler addendum

[Bill Mitchell <ecwfm@xxxxxxxxxxxxxxxxxxxxxxx>]

Dear Per
You have disregarded exchange transactions of the central bank which can also
add or drain. These are part of the vertical component (of the very useful
vertical-horizontal taxonomy).

> I am still at loss as to how you define money (or 'currency' or 'net nominal
> wealth' if you prefer that).
>
> I see two definitions, both of which are based on how that stuff (which I
> will keep calling 'money') enters the system: by spending alone or by
> lending and spending. Clearly for the sake of symmetry, if money is injected
> only by spending then it must be withdrawn only by taxation (including fees,
> etc.). Similarly, if money is injected by spending or lending, then it
> should be withdrawn by taxation or borrowing.
>
> Let's for the sake of the argument call the 'spending only' concept MA, and
> the 'spending and lending' concept MB. The change by transaction in the
> amount of money will be given by
>
> \delta MA = Govt Spending - Taxation
>
> \delta MB = (Govt Spending + Govt Lending) - (Taxation + Govt Borrowing)

best wishes
bill


------

William F. Mitchell
Professor of Economics and Head of Department
Director, Centre of Full Employment and Equity
University of Newcastle
New South Wales, Australia
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