Abstract for: The Endogenous Money-Interest ASD Model of the Debt Money System (Part IV) - Built-In Unfair Income Distribution and Inflation

Income distribution has long been a central subject in economics. Yet we have so far omitted it from our analyses. In part IV we have further refined the long-run endogenous money ASD model developed in Part III to incorporate five additional types of interest rate and show that the present debt money system has a built-in income distribution mechanism in favor of bankers, while systematizing inflation of income beyond GDP and causing wage share to diminish. Our findings indicate that the revised definition of wage share based on inflated income measures interclass and intergenerational inequality more precisely and describes the economic reality of the debt money system accurately. These built-in unfair features of the debt money system have been largely ignored in textbooks and literature. As with Part III model, Part IV model is able to reproduce behaviors consistent with the Great Depression and the case of Japan’s lost 30 years qualitatively. The model expansion now allows us to analyze functional income distribution more explicitly in relation to neoclassical long-run growth dynamics and Keynesian income determination. Accordingly, the long-run endogenous money-interest ASD model developed in Part IV could serve as a standard model that fully embodies the paradigm shift in economics discussed so far.