Abstract for: On the Liquidation of Government Debt under A Debt-Free Money System - Modeling the American Monetary Act
Runaway accumulation of government debt in Japan under the recent financial crises seems to deprive the government of its effective policy discretion due to the burdens of debt repayment. This paper first examines that the government debt is structurally built in the current macroeconomic system of money as debt which is founded by the Keynesian macroeconomic framework, and it is very costly to reduce it. Then, it demonstrates how the government debt could be liquidated without cost under an alternative macroeconomic system of debt-free money that is proposed by the American Monetary Act. Finally, it is posed that debt-free macroeconomic system is far superior to the debt-burden current macroeconomic system in a sense that it can not only liquidate government debt but also attain higher economic growth.