Tag Archives: sovereign spending

Sovereign Spending in a Market Economy


Even if we assume the principles of modern fiat money will be generally accepted at some point in the future, we must yet confront the problem that sovereign spending is a difficult issue for market economies. It could easily unfold that even with the new “modern” money perspective in place, a serious recession could still find federal stimulus spending unnecessarily constrained. This difficulty was on full display in the last recession when Obama’s stimulus package was finally passed by Congress—appropriating $800 billion for the federal government to spend—only to then confront the almost burlesque-show entertainment of watching Congress and the Obama administration trying to figure out how to actually do the spending.

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A Push-Pull Model for Cooperative Markets Financed by Sovereign Spending

By J.D. Alt

I recently outlined a sovereign spending structure for making “free” pre-school care and instruction available to every American child (Opportunities of a Millennium, Part 1). After further consideration, I realize the proposal glosses over a fundamental issue posed by sovereign spending itself: Should it “push” or should it “pull” at resources to achieve a given goal?

Here is what I mean: In the case of pre-school care and instruction, it would be possible to direct the sovereign spending in basically three ways. The first way is the classic “government program” model where the federal government establishes and staffs a public bureaucracy to provide the pre-school care. This model was ruled out in deference to the Boomer-GenX generation’s legitimate objections to “big government”—and especially big government programs which waste money and fail to accomplish their goals. This leaves two options for directing the sovereign spending.

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