Asker Voldsgaard Ruge — Master's Thesis: Coin As Well As The Financial Infinite Of Monetarily Sovereign Governments: The Illustration Of Denmark

Abstract

Since the global financial crisis x years ago, a mature inquiry programme has developed on the austerity policies imposed, peculiarly inwards European states, to counter perceived threats from excessive world debt in addition to deficits. While many scholars cause got criticised austerity for earthworks the hole deeper, fewer cause got provided clear alternatives. Yet, the economical schoolhouse of Modern Money Theory encourages analysis into the operational realities of monetary systems to examine mechanisms, which let countries amongst their ain currency to pass unhindered. In this paper, the Danish monetary scheme is analysed to respond to what extent the Danish regime is financially constrained in addition to how economical policymaking inwards Kingdom of Denmark is aligned amongst the operational realities of the monetary system?

First, the 2 principal theories of money, metallism in addition to chartalism, are reviewed to solid pose down the analysis inwards a monetary ontology inwards coherence amongst historical in addition to social scientific proof. The metallist theory conceives coin equally a marketplace phenomenon, which emerged spontaneously from a money-less barter economy, spell states later on intervened in addition to compromised the natural monetary system. However, empirical bear witness favours chartalism, which takes coin equally inherently a political phenomenon devised past times key authorities to access existent resources past times levying taxes to live on paid inwards its ain unit of measurement of account. However, the advent of independent key banking appears to cause got subjected governments to ‘market discipline’.

This puzzle is investigated through a illustration analysis of the Danish monetary system. Six hypotheses derived from Modern Money Theory guides the analysis into the cooperation betwixt Nationalbanken, the Ministry of Finance in addition to the someone banks who concord accounts amongst Nationalbanken. The monetary scheme is shown to live on quite a unopen arrangement, tightly controlled past times Nationalbanken inwards its management of the liquidity inwards the system. Crucially it is argued that the state’s in addition to Nationalbanken’s ease sheets ought to live on viewed inwards consolidation equally one, whereby coin is a liability of the Danish government, non an property to live on obtained earlier spending is possible. The government’s financial infinite is determined past times what is for sale inwards its ain currency in addition to non its taxation revenues. This consolidated thought is substantiated past times Nationalbanken’s ongoing action to found a benevolent financial surroundings when the regime sells bonds. Yet, Kingdom of Denmark may eventually expression upwards domestic constraints due to the self-imposed fixed telephone substitution charge per unit of measurement policy, if persistent ease of payment deficits return.

Finally, a constructivist illustration analysis of the ‘Restoration Package’ of 2010 is conducted to highlight how misrepresentation of the regime equally a currency user, rather than issuer, facilitated the imposition of austerity in addition to fortified a audio finance paradigm. The image was shared past times the oppositional coalition in addition to prevented them from later on achieving their destination of a strong, equitable recovery.

SSRN
Master's Thesis: Money in addition to the Fiscal Space of Monetarily Sovereign Governments: The Case of Denmark
Asker Voldsgaard Ruge