The link between money creation and inflation has been theoretically demonstrated, but different inflation responses to Federal Reserve activity after the Great Recession and COVID recession showed the incomplete nature of the theory. We model a ``fiscal transmission mechanism'' whereby Federal...

The link between money creation and inflation has been theoretically demonstrated, but different inflation responses to Federal Reserve activity after the Great Recession and COVID recession showed the incomplete nature of the theory. We model a ``fiscal transmission mechanism'' whereby Federal...

Since the War on Poverty began in 1964, the American welfare state has undergone a drastic expansion. That year, national defense spending accounted for 46 percent of all federal outlays, while entitlements consumed 29 percent. In 2020, the entitlement share is predicted to be 66 percent while...

Unlike the narrative in Walrasian economic theory, the real world is not one of perfect foresight. This paper replaces this axiom with fundamental uncertainty, as established in original Keynesian theory. Drawing on contributions from Shackle, Okun, Alchian and Davidson, this paper explores how...

As the federal debt increases, the inevitable point comes closer when Congress will be forced to act against the deficit. They can then choose an orderly reduction or disorderly cuts as applied in, e.g., Greece. An orderly reduction involves structural reforms to permanently reduce federal...

Economic activity is kept stable by means of explicit and implicit contracts. These contracts, in turn, carry the confidence of economic decision makers as far into the future as the free market will trust them. A change in the trust of an implicit contract leads to a decline in economic...

Recent macroeconomic trends primarily but not exclusively in Europe suggest that the welfare state is not conducive to growth and prosperity. European welfare-state economies have experienced a long-term decline in GDP growth, private consumption and domestic absorption; and a long-term increase...

The prevailing narrative about the Great Recession is that it was caused by a financial crisis. This paper refutes that explanation and offers an alternative, namely that issuance of bad government debt played a key role in escalating a regular recession to an economic crisis

The European Union's constitutional balanced-budget amendment, the Stability and Growth Pact (SGP), dictates that EU member states keep their budget deficits within three percent of GDP and that government debt be kept at or below 60 percent of GDP. After 20 years, unintended consequences of the...