Can Taxes and Bonds Finance Government Spending
By S. Bell. 2000
141 citations recorded by the source corpus.
This paper investigates the commonly held belief that government spending is normally financed through a combination of taxes and bond sales. The argument is a technical one and requires a detailed analysis of reserve accounting at the central bank. After carefully considering the complexities of reserve accounting, it is argued that the proceeds from taxation and bond sales are technically incapable of financing government spending and that modern governments actually finance all of their spending through the direct creation of high-powered money. The analysis carries significant implications for fiscal as well as monetary policy.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/49e748e3632b02487b31c668ca216ee034951246
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Citations in the corpus
- How is Bitcoin Money? (2016, background): “More recent formulations of the fiat theory of money are found in Mosler (1997), Wray (1998), and Bell (2000).”
- Energy, Economic Growth and Environmental Sustainability: Five Propositions (2010, background): “Instead, central banks adjust the supply of reserves in order to control the interest rate at which banks borrow reserves from each other which in turn influences interest rates throughout the economy [104].”
- The Role of the State and the Hierarchy of Money (2001, background): “For more on this, see Bell (2000).”