77. No Surprise, No Revenue

No Surprise, No Revenue
Bob Komives
::

Borrowing by a national government, like monetary recall, can have merit in limited circumstances. It can extract money from the private economy for public purpose. When a central bank surprisingly offers to raise the rate of interest it will pay to its lenders (citizens, banks, foreign interests), or when it raises the percentage of assets that banks must hold in reserve (not lend) the central bank temporarily extracts money from the private marketplace. Such a surprise can be useful in an emergency. Perhaps the real economy and monetary system are terribly out of whack, or wartime mobilization calls for reduced domestic demand. However, governments, especially in an open society, do not run on surprises. National government cannot sustain itself on revenue from surprise borrowing any more than from surprise taxes because it will run out of ways to surprise us. Even when it does surprise us, the money that surprise borrowing brings into the  national treasury is incidental by-product of a more important policy. This by-product is nothing to plan on, nothing to run a government on.

:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 77.  No Surprise, No Revenue  ::
With attribution these words may be freely shared, but permission
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