Thursday, 27 September 2018

horizontal transaction or gini coeffienct

Building on the central tenets of chartalism, the belief that legal tender was created out of a ruler’s or government’s desire to direct economic activity through currency manipulation and trade rather than as a solution to make barter and exchange more portable and imperishable, Planet Money introduces us to a school of thought styled Modern Monetary Theory, an macroeconomic idea that one’s pocket change is very different than fiat money and that a country that produces and controls its own currency can fully fund all the goods and services it wishes. Provided it is not indebted with loans in a foreign currency or is not able to create more money (like individual member states of the European Union), it cannot go bankrupt. Rather than to generate revenue for the government, taxation is an effective means to regulate inflation and unemployment. It’s a provocative argument surely and some would call it naïve to diminish the role of inflation but it seems that economies are doing this all the time. Do give he episode a listen and let us know what you make of the compelling question and answers.