Three difficulties with neo-chartalism

Eladio Febrero

Journal of Post Keynesian Economics, 2009, vol. 31, issue 3, 523-541

Abstract: Neo-chartalists have made three assertions that deserve qualification: (1) money has value because the state accepts it for the payment of taxes, (2) the state has the ability to determine its value, and (3) private bank money can be understood as a "leverage" of fiat money. Conversely, we believe that money is accepted in the last instance because it is useful for cancelling bank debt; the power of the state to determine its purchasing power is limited, and bank deposits are not a leverage of fiat money. These criticisms do not challenge the validity of the whole approach but aim to make it clearer.

Keywords: credit-driven money; neo-chartalism; tax-driven money (search for similar items in EconPapers)
Date: 2009
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