In: Flash Cards
Explanation why: Taxes are liabilities that the state has the authority to impose on private sector’s balance sheets. It is a unilateral transaction driven by a hierarchy relation (not by contractual arrangements). At the moment a new tax is approved (and before it is paid), the net worth of the private sector is reduced.
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By: Warren Mosler
Aiming at public purpose while reducing government discretionary power, increasing spending power, fixing the banking system, restoring states’ budgets, keeping inflation in check, achieving full employment, easing tensions in the mortgage market, and ensuring sufficient liquidity at all times.