billy blog Mon 2010-09-20 09:39 EDT

The consolidated government -- treasury and central bank

...The notion of a consolidated government sector is a basic Modern Monetary Theory starting point and allows us to demonstrate the essential relationship between the government and non-government sectors whereby net financial assets enter and exit the economy without complicating the analysis unduly. This simplicity leads to many insights all of which remain valid as operational options when we add more detail to the model...the mainstream macroeconomics obsession with central bank independence is nothing more than an ideological attack on the capacity of government to produce full employment which also undermines our democratic rights...The vertical transactions which add to or drain the monetary base that I have outlined here are transactions between the government and the non-government sector... These transactions are thus unique -- they change net financial assets in the economy. All the transactions between private sector entities have no effect on the net financial assets in the economy at any point in time...

Billy Blog; central bank; consolidated government; Treasury.