Model supporting research of investment vs. austerity implications. Please refer to additional information on the SystemsWiki Focus Page and Modern Money & Public Purpose Video.

Model supporting research of investment vs. austerity implications. Please refer to additional information on the SystemsWiki Focus Page and Modern Money & Public Purpose Video.

Model in support of an article being written about the relationship between investment and austerity. See Version 2

No economy can function well without adequate funding and in the absence of finance will eventually fall into recession. Funds (financial assets in the model) are primarily injected through investments. This is certainly true for investments and payments undertaken by the government but also for private investments via bank loans. Net exports (i.e.trade surpluses) also represent an injecton of financial assets into the economy. By contrast financial assets are taken out of the economy through taxation, the repayment of bank loans and the running of a negative trade balance. Also, if the population in aggregate decides to save more this has the effect as if money were taken out of the economy. I have deliberately avoided specifying where the funds for treasury payments and public investments come from, as this is controversial. Modern Monetary Theory, for instance, says that these funds are not provided through tax revenue. Austerity can be seen as a process that deliberately diminishes or takes out financial assets from the economy through taxation, restrictions on bank loans or cutbacks in payments and public spending by the government. It is probably useful to look at insights 2740 and 2741 before examining this CLD because they provide the context and purpose for net public spending and investment.

Model supporting research of investment vs. austerity implications. Please refer to Modern Money & Public Purpose Video.

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Model supporting research of investment vs. austerity implications. Please refer to additional information on the SystemsWiki Focus Page and Modern Money & Public Purpose Video.

Model supporting research of investment vs. austerity implications. Please refer to additional information on the SystemsWiki Focus Page and Modern Money & Public Purpose Video.

Goodwin cycle IM-2010 with debt and taxes added, modified from Steve Keen's illustration of Hyman Minsky's Financial Instability Hypothesis "stability begets instability". This can be extended by adding the Ponzi effect of borrowing for speculative investment.

Model supporting research of investment vs. austerity implications. Please refer to Modern Money & Public Purpose Video.

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Model supporting research of investment vs. austerity implications. Please refer to Modern Money & Public Purpose Video.