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... if it is an automatic ratio based on an automatic amount of purchasing power created, no, its not an overdraft.

The "need" to "borrow" at the level of the monetary authority is, of course, purely a decision made by the monetary authority, provided that there are unemployed resources to be mobilized.

That is, the role of the sale of bonds is the same as the role of taxes, to drain purchasing power from the private sector to essential government spending to take place without a demand-pull inflationary outbreak. Under current conditions, there's no danger of demand-pull inflation, so there's no need to sell bonds to drain purchasing power.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu May 6th, 2010 at 08:24:37 PM EST
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