The fiscal balance is not a ‘living entity’

October 16th, 2018, Alberto Veronese

…when prosperity itself is understood – not as money but as solutions to human problems – every economic act is an explicitly moral choice.

the assets that are held in the public sector should be utilised to advance the well-being of the citizens and a currency-issuing government can always service any liabilities that are denominated in its own currency.

the notion that the government is like a privately-owned corporation should be discouraged because a currency-issuing government’s ‘balance sheet’
provides no help in our understanding of why taxes and fiscal surpluses would have to be increased to bring the government’s balance sheet back into balance.

yes, apparently a government, which issues its own currency (like the British, American, Canadien, Japanese government… ) has ‘shareholders’ who care about its ‘profit’ and ‘loss’ statement.

a currency-issuing government is nothing like a profit-seeking corporation. It cannot go broke for a start. And its purpose is to advance well-being for all not to enrich its shareholder elite.

if public sector assets are an important component of our wealth, then we should be very concerned with policies that liquidate that wealth – that is, ‘privatization’.

the IMF clearly wants to construct the concept of a ‘national balance sheet’ in such a way that it can be used to serve an anti-government neoliberal agenda.

— the IMF has been at the forefront of advocating privatisation and cuts to infrastructure maintenance.

— the IMF is forcing Greece to sell off its valuable public assets and to cut maintenance on its public infrastructure undermining future wealth.

— the IMF has been pushing privatisation heavily since the 1980s in the developed and less developed world; now it’s Europe turn.

— if the IMF really thought that ‘net wealth’ was something that was likely to ‘lower taxes’ and constrain ‘public spending’ then why is

— the IMF providing sharp policy instructions and ‘financing’ to member governments (189 countries) ‘to help’ them to privatise any remaining public ‘assets’ that are not already sold off.

the fiscal balance is not a ‘living entity’. It makes no sense to say that the ‘balance sheet’ is sick or in ill health.

rather, it is the ‘real economy’ that is failing or strongly growing – a rising or decreasing fiscal deficit just signals that.

it is pure hysteria comparing a currency-issuing government (such as Britain) and a currency-using nation (such as Portugal) as if there is no difference.

a private bank can go broke. A sovereign, currency-issuing government cannot.

the government does not spend tax revenues. It spends currency into existence and the tax revenues come afterwards.

… … …

Extrapolated from

last week IMF release called – “Fiscal Monitor October 2018”
https://www.imf.org/~/media/Files/Publications/fiscal-monitor/2018/October/pdf/fm1802.ashx?la=en

“IMF continues to tread the ridiculous path”
Oct 16, 2018, Oct 16 2018 by Bill Mirchell
http://bilbo.economicoutlook.net/blog/?p=40553

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