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Sustainability 2013, 5(6), 2802-2826; doi:10.3390/su5062802
Article

Monetary and Fiscal Policies for a Finite Planet

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1 Department of Community Development and Applied Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA 2 Gund Institute for Ecological Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA 3 Green Mountain College, One Brennan Circle, Poultney, VT 05764, USA
* Author to whom correspondence should be addressed.
Received: 15 April 2013 / Revised: 29 May 2013 / Accepted: 30 May 2013 / Published: 20 June 2013
(This article belongs to the Special Issue Degrowth: The Economic Alternative for the Anthropocene)
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Abstract

Current macroeconomic policy promotes continuous economic growth. Unemployment, poverty and debt are associated with insufficient growth. Economic activity depends upon the transformation of natural materials, ultimately returning to the environment as waste. Current levels of economic throughput exceed the planet’s carrying capacity. As a result of poorly constructed economic institutions, society faces the unacceptable choice between ecological catastrophe and human misery. A transition to a steady-state economy is required, characterized by a rate of throughput compatible with planetary boundaries. This paper contributes to the development of a steady-state economy by addressing US monetary and fiscal policies. A steady-state monetary policy would support counter-cyclical, debt-free vertical money creation through the public sector, in ways that contribute to sustainable well-being. The implication for a steady-state fiscal policy is that any lending or spending requires a careful balance of recovery of money, not as a means of revenue, but as an economic imperative to meet monetary policy goals. A steady-state fiscal policy would prioritize targeted public goods investments, taxation of ecological “bads” and economic rent and implementation of progressive tax structures. Institutional innovations are considered, including common asset trusts, to regulate throughput, and a public monetary trust, to strictly regulate money supply.
Keywords: monetary; fiscal; public; policy; steady-state; ecological; biophysical; macroeconomics; money; debt monetary; fiscal; public; policy; steady-state; ecological; biophysical; macroeconomics; money; debt
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Farley, J.; Burke, M.; Flomenhoft, G.; Kelly, B.; Murray, D.F.; Posner, S.; Putnam, M.; Scanlan, A.; Witham, A. Monetary and Fiscal Policies for a Finite Planet. Sustainability 2013, 5, 2802-2826.

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