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Money creation, or money issuance, is the process by which the money supply of a country, or an economic or monetary region, [note 1] is increased. In most modern economies, money is created by both central banks and commercial banks. Money issued by central banks is a liability, typically called reserve deposits, and is only available for use ...
In macroeconomics, chartalism is the theory of money that money originated historically with states' attempts to direct economic activity rather than as a spontaneous solution to the problems with barter or as a means with which to tokenize debt, [1] and that fiat currency has value in exchange because of sovereign power to levy taxes on ...
According to the proponents of the chartalist theory of money creation, taxes are not needed for government revenue, as long as the government in question is able to issue fiat money. According to this view, the purpose of taxation is to maintain the stability of the currency, express public policy regarding the distribution of wealth ...
As explained above, according to the monetary multiplier theory money creation in a fractional-reserve banking system occurs when a given reserve is lent out by a bank, then deposited at a bank (possibly different), which is then lent out again, the process repeating [2] and the ultimate result being a geometric series.
Monetary circuit theory is a heterodox theory of monetary economics, particularly money creation, often associated with the post-Keynesian school. [1] It holds that money is created endogenously by the banking sector, rather than exogenously by central bank lending; it is a theory of endogenous money .
Horizontalism is an approach to money creation theory pioneered by Basil Moore which states that private bank reserves are not managed by central banks.Instead reserves will be provided on demand at the bank rate set by the central bank.
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Optimal capital income taxation is a subarea of optimal tax theory which studies the design of taxes on capital income such that a given economic criterion like utility is optimized. [ 1 ] Some have theorized that the optimal capital income tax is zero.
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