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A balanced budget rule for a non-sovereign state within a sovereign nation is perfectly sensible, since the non-sovereign state does not have the power to create its own sovereign currency.

This is, of course, a balanced budget under capital budgeting, not a balanced budget under cashflow budgeting ~ but when actually borrowing funds, as opposed to borrowing back money that you yourself created when you purchased something, you need to be able to cover the finance cost of the debt out of revenues.

What is not sensible is being a non-sovereign state within a non-sovereign state ~ being inside a political confederacy where the level with the technical ability to run budget deficits is not politically empowered to do so.


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 Mon Aug 22nd, 2011 at 11:34:24 AM EST

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