The supply-side effect of a restrictive monetary policy, moreover, is likely to be perverse. High interest rates enter into costs and thus exert inflationary pressure, as well as inhibiting the expansion of capacity or the introduction of cost -reducing capital improvements.

Firms would be given initial entitlements to gross markup on the basis of past performance, adjusted by changes in labor and capital inputs. This is somewhat similar to the definition of normal profits under some versions of the wartime excess -profits tax. Entitlements would be transferable and a competitive market established.

The insane pursuit of the holy grail of a balanced budget in the end is going to drive the economy into a depression.

Deficits do not in themselves produce inflation, nor does a balanced budget assure a stable price level.

Larger deficits are necessary and proper means to mitigate unemployment as the far greater evil in terms of human welfare.

Balancing a nominal budget will solve nothing, and attempting to achieve such a spurious balance will produce much mischief.

The supply-side effect of a restrictive monetary policy, moreover, is likely to be perverse. High interest rates enter into costs and thus exert inflationary pressure, as well as inhibiting the expansion of capacity or the introduction of cost -reducing capital improvements.