Reshape spending, at the Centre and in states
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India, Jan. 26 -- Modern monetary theory, which has garnered some support among United States (US) politicians, brings a new perspective on the relation between money and the government. Its principal proposition is that governments that issue their own money can't go broke, for they have the power to issue more. Its adherents go on to argue that the role of taxation is not to enhance the spending power of governments, for they can always issue money, but to enforce acceptance of the government's paper as legal tender. This is because taxes must be paid in legal tender, and not in any other medium. While this is an interesting perspective, it does not have a view on why governments spend at all. Public spending is very large in the most s...
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