Workings of A Public Money System of Open Macroeconomies - Modeling the American Monetary Act Completed

摘要

Being intensified by the recent financial crisis in 2008, debt crises seem to be looming ahead among many OECD countries due to the runaway accumulation of government debts. This paper first explores them as a systemic failure of the current debt money system. Secondly, with an introduction of open macroeconomies, it examines how the current system can cope with the liquidation of government debt, and obtains that the liquidation of debts triggers recessions, unemployment and foreign economic recessions contagiously. Thirdly, it explores the workings of a public money system proposed by the American Monetary Act and finds that the liquidation under this alternative system can be put into effect without causing recessions, unemployment and inflation as well as foreign recessions. Finally, public money policies that incorporate balancing feedback loops such as anti-recession and anti-inflation are introduced for curbing GDP gap and inflation. They are posed to be simpler and more effective than the complicated Keynesian policies.