Shifting Sands and Policy Failures
9. Buﬀer stocks and price stability What motivates people and leads them to high endeavor is not fear but hope. (Arthur Altmeyer, 1968) 9.1 INTRODUCTION In Chapter 8 we developed a broad theoretical macroeconomic framework based on the recognition that ﬁat-currency systems are in fact public monopolies per se, and introduce imperfect competition to the monetary system itself, and that the imposition of taxes coupled with insuﬃcient government spending generates unemployment in the private sector. An understanding of this widespread monetary framework allows us, once we have appreciated how unemployment occurs, to detail the role that government can play in maintaining its near universal dual mandates of price stability and full employment (see Mosler, 1997–98; Mitchell, 1998; Wray, 1998; Mitchell and Mosler, 2002, 2006; Mitchell and Juniper, 2007). In this chapter, we compare inﬂation control under a NAIRU regime with an economy that exploits the ﬁscal power embodied in a ﬁat-currency issuing national government to introduce full employment based on an employment buﬀer stock approach. In the context of such a policy approach we speciﬁcally consider the job guarantee (JG) model developed by Mitchell (1996, 1998, 2000a, 2000b) (see also Mosler, 1997–98; Wray, 1998).1 Under a NAIRU regime, inﬂation is controlled using tight monetary and ﬁscal policy, which leads to a buﬀer stock of unemployment. In Section 9.2 we show that the NAIRU is a costly and unreliable target for policy makers to pursue as a means of inﬂation...
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