Tag Archives: state money

"Modern money" is state money. Abba Lerner explains the "trick" by which a state creates its money.Imposing taxes and accepting its own liabilities in payment creates demand for the currency. In this sense, state money is "monopoly money" in the truest sense, since modern have a monopoly on the issuance of currency, regardless of whether or how they choose to exercise it. Monopolists are prices setters rather than price takers. Hence, the value of the currency is established based on what...

What is the most appropriate entry point to the study of a monetary economy in which government is currency issuer? Is it “the market”? Is it the definition: total spending equals total income? Is it real exchange? Real production? Is it total output? Total employment? Total value? Distribution of income? The origin of profit? Price formation? Competition?I would answer “no” to all these suggestions. They are all important aspects of the subject, but they are all embedded in something else....