Eric Tymoigne — Public Debt, Debt Ceiling and Monetary Sovereignty: Some Accounting Realities

The accounting.

New Economic Perspectives
Public Debt, Debt Ceiling and Monetary Sovereignty: Some Accounting Realities
Eric Tymoigne | Assistant Professor of Economics at Lewis and Clark College, Portland, Oregon; and Research Associate at the Levy Economics Institute of Bard


For a currency sovereign, the monetary issue is a liquidity management issue only since government has the power to create state money and the only limitation on this power is debasement but never insolvency.

When Treasury credits bank accounts based on expenditure iaw the legalities of appropriation process and the regulation governing the agencies that contract for govt, the govt’s fiscal agent, typically the cb under the current arrangement, simply needs to supply liquidity to clear.

The Treasury can credit accounts iaw the appropriations and expenditure processes, if the fiscal agent clears in the payments system, Or the Treasury can issue equity, coins and notes being booked as equity.

There is no operational need under a non-convertible floating rate regime for the government as currency sovereign to have “money in the bank,” to finance itself with borrowing, or to obtain its own currency through taxation.

Especially in the digital age, the creation of state money is through entires on spreadsheets iaw institutional rules, like keeping score in a game on an electronic scoreboard. 

Politically independent central banks are regularly delegated this power instead of the Treasury where Treasury must obtain currency for settlement from the central bank. This is not an operational requirement of the monetary system but rather a voluntary political restraint designed to separate government from its constitutional power, supposedly "for its own good."

Anything that is imposed over the operational necessity is just the introduction of inefficiency, or likely, an attempt to baffle with BS for a purpose. It is one cog in the wheels of elites maintaining control when they are a minority in a democratic republic. The monetary authority is put behind a veil designed to baffle and then used to further the objectives of the elite, which is maintenance of power on one hand and redistribution upward economically.

It is time for the people to take back the monetary authority, as President Lincoln did in issuing greenbacks.

"If Congress has the right under the Constitution to issue paper money, it was given to be used by themselves, not to be delegated to individuals or corporations." — Andrew Jackson