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

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

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 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.

If unemployment could be brought down to say 2 percent at the cost of an assured steady rate of inflation of 10 percent per year, or even 20 percent, this would be a good bargain.

Nearly all educational expenditure should be considered a capital outlay. Education provides a future return in the form of enhanced taxable income and an enhanced quality of life.

There is no real justification for a requirement that a budget of any sort should be balanced, except as a rallying point for those who seek to hamstring government.