Topic Directory

Buffer Stock

A buffer stock is a commodity held by a government to stabilize prices in a market.

Chartalism

The theory that modern money originated via sovereigns' direction of economic activity. States created demand for the currency they issue primarily by levying taxes payable only in that currency.

Cost-push inflation

A decrease in supply increases the cost of some goods or services, causing a general rise in prices. Example: In the 1970s, OPEC spiked oil prices, exacerbating speculation and causing wages and prices to spiral in other parts of the U.S. economy.

Demand-pull inflation

An increase in demand outstrips the production of real goods and services in the economy, causing a general rise in prices.

Financial Instability Hypothesis

Hypothesis developed by American economist Hyman Minsky. The cyclical accumulation of debt within the PRIVATE sector pushes economies toward financial crisis.

Functional Finance

An economic policy approach developed by British economist Abba Lerner. Governments should maintain a reasonable level of demand at all times. If there is too little spending the government should cut taxes or increase its own spending. If there is too much spending, the government should raise taxes or decrease its own spending. Full employment and price stability are the goals, regardless of the size of 'national debt'.

Inflation

A continuous rise in the average price of goods and services across the economy. During a period of inflation, the value of money falls compared to the value of goods and services ("money is worth less"). Inflation does not affect everyone equally.

Job Guarantee

A government job guarantee is a proposed program where the government would provide a job with a basic wage and benefits package to anyone willing and ready to work.

Legal Realism

A school of legal philsophy most popular in the United States during the first half of the 20th century. Legal realism holds that legal reasoning and legal institutions are inescapably political, rather than natural or autonomous. Laws inherently cannot be purely netural or objective rules.

Sectoral Balances

A framework for macroeconomic analysis of national economies developed by British economist Wynne Godley, used by Modern Money economists, Post-Keynesians, Institutionalists, and others. The balances represent how the result of the flow of funds between the private sector, government sector and foreign sector.