The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.
Please REGISTER to post.
There is precisely one way to inject high-powered money into the economy: Sovereign deficits. So on average over the long run, the sovereign should run deficits.
The fact that you should sometimes run surpluses during the boom part of the business cycle does not change the fact that the sovereign has to be in the red on a cycle-averaged basis, any more than a cold summer disproves global warming.
If you're talking short-run, then attempting to run surpluses is counterindicated at the moment. If you're talking long-run, then surpluses are wrong-headed, full stop.
Friends come and go. Enemies accumulate.
What is high-powered money supposed to be?
High-powered money is created ex nihilo when the sovereign spends, and destroyed when the sovereign taxes.
Various sorts of low-powered money is created by various sorts of private lending.
(also base money, money base, high-powered money, reserve money, or, in the UK, narrow money) is a term relating to (but not being equivalent to) the money supply (or money stock), the amount of money in the economy. The monetary base is highly liquid money that consists of coins, paper money (both as bank vault cash and as currency circulating in the public), and commercial banks' reserves with the central bank.
by Frank Schnittger - May 23 25 comments
by gmoke - May 19 5 comments
by redstar - May 12 18 comments
by redstar - May 14 16 comments
by redstar - May 6 50 comments
by talos - Apr 29 49 comments
by Frank Schnittger - May 2325 comments
by gmoke - May 195 comments
by redstar - May 1416 comments
by redstar - May 1218 comments
by redstar - May 650 comments
by In Wales - May 31 comment
by Luis de Sousa - May 113 comments
by gmoke - Apr 292 comments
by talos - Apr 2949 comments
by ManfromMiddletown - Apr 245 comments