49:. Fiscalists reject monetarism in a non-convertible floating rate system as inefficient if not also ineffective. There are two types of fiscalism: (1) contained fiscalism, which does not allow the economy to grow or decline as much as possible; and elevated fiscalism, which does not allow the economy to decline but allows for the economy to grow unrestrained.
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MMT economists do not recommend the adoption of a
Treasury-based monetary system. Rather, they are asserting that the present monetary system is already Treasury-based operationally, even when governments choose to impose political restraints that mimic obsolete practices and create the impression
89:. So fiscalists hold that Y needs to be controlled through fiscal policy, which affects effective demand. Effective demand draws forth investment to meet profit opportunity, and effective demand is income-dependent, since consumption cannot be funded by drawing down
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can draw on as needed. This reduces idle resources and presents the possibility of achieving actual full employment (allowing 2% for transitional) along with price stability, which monetarism presumes inflationary. The ELR program also establishes a
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but as a means to withdraw non-government net financial assets created government expenditure in order to control effective demand and thereby reduce inflationary pressure as needed iaw the sectoral balance approach and
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to expand to meet it, then inflation will result. If effective demand falls short of the capacity of the economy to produce at full employment, then the economy will contract (e.g. cause a
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of real resources, e.g. due to natural disaster, war, or climate. This is a separate issue and must be addressed differently according to MMT. In a non-convertible floating rate
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This view is based on a
Treasury-based monetary regime in which money is created through currency issuance mediated by government fiscal expenditure. Issuance of Treasury
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issuer is not constrained operationally. The only constraint is real resources. If effective demand outruns the capacity of the
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173:) at full employment by offsetting non-government saving desire with the currency issuer's fiscal balance. This stabilizes
267:-based monetary presumptions of monetarists, which MMT regards as appropriate to a convertible fixed-rate regime like the
149:, and how they interact. Secondly, MMT explains how to succeed in the quest for the holy grail through employment of the
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that these are operationally necessary. MMT also recommends an employer assurance program (ELR, JG) to create a
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functions as a reserve drain, which functions as a monetary operation that enables the central bank to hit its
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but not to the current non-convertible floating rate system that began when then United States president
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theories, which states that an active government intervention is necessary to ensure
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Kearl, J. R.; Pope, Clayne L.; Whiting, Gordon C.; Wimmer, Larry T. (1979).
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rather than being a fiscal operation involving financing. Similarly,
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use of resources while controlling price level. In the first place,
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policy. Fiscalism in this sense is contrasted with
133:(MMT) rejects the monetarist explanation virtually
196:This does not apply to price level rising due to
263:This latest view is quite the opposite of the
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396:. AHM Publishing Corporation. pp. 137–.
105:are stabilized at optimal resource use, then
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496:"Fiscalism – Who will pick up the gauntlet?"
97:, or financed by borrowing (e.g. monetary
251:are seen not as a funding operation for
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45:, which is associated with reliance on
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200:, such as an oil crisis provoked by a
22:is a term sometimes used to refer the
476:from the original on 2 September 2024
446:from the original on 2 September 2024
410:from the original on 2 September 2024
316:as price anchor for price stability.
275:shut the gold window (as part of the
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117:The holy grail of macroeconomics is
113:Fiscalism and Modern Monetary Theory
502:. 20 September 2016. Archived from
466:"Fiscalism definition and meaning"
388:"Monetarist-Fiscalist Controversy"
232:open, and unemployment will rise.
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386:Bronfenbrenner, Martín (1979).
434:Hickey, Tom (22 August 2011).
16:Economic philosophy and theory
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332:The American Economic Review
328:"A Confusion of Economists?"
57:Fiscalism relies heavily on
189:arising owing to excessive
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393:Macroeconomic Alternatives
363:: CS1 maint: url-status (
83:velocity/turnover of money
37:as the main instrument of
436:"Monetarism v. Fiscalism"
418:– via Google Books.
289:European Monetary Union
125:, which implies highly
470:InvestorDictionary.com
283:their currencies, ran
253:government expenditure
153:approach developed by
131:Modern Monetary Theory
440:Mike Norman Economics
307:of employed that the
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185:) without risking
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101:) sustainably. If
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121:along with
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373:References
314:wage floor
239:to offset
237:securities
230:output gap
167:production
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218:currency
210:shortage
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