Green Modern Monetary Theory and Practice

The economy is not a general equilibrium system.

It is a set of inter-locking and shifting balance sheets.

For every lender, there is a borrower: for every deficit, there is a surplus.

In an economy without a trade surplus, a fiscal surplus implies a private sector deficit, and is likely to generate asset price bubbles and to imply growing financial fragility.

For financial stability in such an economy, the government must run deficits most of the time.

As has been the case in the great majority of countries.

As has been the case in Australia.

As will be the case in Australia.

Whether the current generation of politicians and their advisers realise this or not.

They can ignore reality, but they can’t refute national income accounting identities.
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