Austerity Models

These models and simulations have been tagged “Austerity”.

 Model supporting research of investment vs. austerity implications. Please refer to  Modern Money & Public Purpose Video .  @ LinkedIn ,  Twitter ,  YouTube

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

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 Model in support of an article being written about Investment vs Austerity.  @ LinkedIn ,  Twitter ,  YouTube

Model in support of an article being written about Investment vs Austerity.

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  This model
shows the basic functioning and dynamics of a 'modern monetary system'.  The non-government
sectors, consisting of the private and foreign sectors initial y starts with
zero currency units. It is important to realize that  after creating a new currency the government
must first spend cu

This model shows the basic functioning and dynamics of a 'modern monetary system'.

The non-government sectors, consisting of the private and foreign sectors initial y starts with zero currency units. It is important to realize that  after creating a new currency the government must first spend currency units into the economy before they can be used: without currency units the private sector could not even pay taxes! A government that has its own freely floating currency can create a much money as it wants. It does not need tax receipts to finance its spending, and any money it spends into the economy above that collected in taxes represents income for the private sector. The model show that the government initially created 9 trillion money units, but spent only six trillion into the economy. The six trillion showed up as a government deficit, but also as wealth in the non-government sector.

Since the government can create as many money units as it wishes and transfer  them  to the private sector  to ensure an adequate level of demand in the in the economy,  austerity is unnecessary: money is available, though real resource may be scarce. This also shows that the government can contribute actively towards the creation of prosperity. 

Please note that this model was originally created by Gene Bellinger, IM 3206, from which this version was  cloned.


This is a simplification of the Austerity vs Prosperity model in the hope that it will be easier to understand. @ LinkedIn ,  Twitter ,  YouTube
This is a simplification of the Austerity vs Prosperity model in the hope that it will be easier to understand.
 I propose we grow this sim model (or similar) over time to help ourselves better understand the opposing investment and austerity strategies now being advocated for the U.S. government. The hope is to build as simple a model as possible that subsumes the major underlying feedback loops that probabl

I propose we grow this sim model (or similar) over time to help ourselves better understand the opposing investment and austerity strategies now being advocated for the U.S. government. The hope is to build as simple a model as possible that subsumes the major underlying feedback loops that probably exist in the mental models of proponents of each of these positions. Starting this model was inspired by this Investment vs. Austerity discussion http://www.linkedin.com/groups/Investment-vs-Austerity-How-can-4582801.S.157876413

Eurozone members have given up their national
currencies and adopted the Euro. In doing so they have forfeited  their fiscal spending capacity to manage
their economies and respond effectively to external shocks. Austerity in the
face of economic downturns is not a choices for Eurozone members, but
Eurozone members have given up their national currencies and adopted the Euro. In doing so they have forfeited  their fiscal spending capacity to manage their economies and respond effectively to external shocks. Austerity in the face of economic downturns is not a choices for Eurozone members, but a necessity. The Euro as a 'stateless' currency does not make any sense, because it cannot be employed to pursue countercyclical  policies, a primary and necessary policy instrument of modern  democratic governments. The CLD shows how the  pernicious dynamic that arises from these misguided policies leads social discontent and instability. The faulty design of the Euro will prevent the EU from fulfilling its promise to improve the lives of EU citizens and in this sense the Euro has already failed as a common currency.  

 Model in support of an article being written about the relationship between investment and austerity. See  Version 2  See also: *  Inv vs Aust Sim [IM-2736]  *  Inv & Output 1 [IM-2740]  *  Inv & Output 2 [IM-2741]   @ LinkedIn ,  Twitter ,  YouTube

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

See also:
Inv vs Aust Sim [IM-2736]
Inv & Output 1 [IM-2740]
Inv & Output 2 [IM-2741]
 Cutbacks can have a counterintuitive effect. The government knows precisely how much it custs in spending. However, it cannot know the extent to which tax revenues shrink in a non-linear complex economic system as the economy contracts. In addition, the treasury has to spend more as automatic stabi

Cutbacks can have a counterintuitive effect. The government knows precisely how much it custs in spending. However, it cannot know the extent to which tax revenues shrink in a non-linear complex economic system as the economy contracts. In addition, the treasury has to spend more as automatic stabilizers activate and payments are made to an increasing number of unemployed workers. The effect of this is that initially the deficit shrinks, but later it rises as tax revenues fall short of expectations and more spending takes place. The ironic part is that often the very indicator that promted austerity measurs, the defcit to GDP ratio, becomes worse than it was at the outset. We could observe this in Spain and Portugal where planned deficits have been repeatedly missed, as austerity measures  (fiscal cutbacks) were introduced to deal with the effects of  the 2008 financial crisis.

  This model
shows the basic functioning and dynamics of a 'modern monetary system'.  The non-government
sectors, consisting of the private and foreign sectors initial y starts with
zero currency units. It is important to realize that  after creating a new currency the government
must first spend cu

This model shows the basic functioning and dynamics of a 'modern monetary system'.

The non-government sectors, consisting of the private and foreign sectors initial y starts with zero currency units. It is important to realize that  after creating a new currency the government must first spend currency units into the economy before they can be used: without currency units the private sector could not even pay taxes! A government that has its own freely floating currency can create a much money as it wants. It does not need tax receipts to finance its spending, and any money it spends into the economy above that collected in taxes represents income for the private sector. The model show that the government initially created 9 trillion money units, but spent only six trillion into the economy. The six trillion showed up as a government deficit but as wealth in the non-government sector.

Since the government can create as many money units as it wishes and transfer  them  to the private sector  to ensure an adequate level of demand in the in the economy,  austerity is unnecessary: money is available, though real resource may be scarce. This also shows that the government can contribute actively towards the creation of prosperity. 

Please note that this model was originally created by Gene Bellinger, IM 3206, from which this version was  cloned.


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

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

 Model supporting research of investment vs. austerity implications. Please refer to  Modern Money & Public Purpose Video .  Follow us on  YouTube ,  Twitter ,  LinkedIn  and please support  Systems Thinking World .

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

Follow us on YouTube, Twitter, LinkedIn and please support Systems Thinking World.

This is a simplification of the Austerity vs Prosperity model in the hope that it will be easier to understand.
This is a simplification of the Austerity vs Prosperity model in the hope that it will be easier to understand.
 Model in support of an article being written about the relationship between investment and austerity. See  Version 2  See also: *  Inv vs Aust Sim [IM-2736]  *  Inv & Output 1 [IM-2740]  *  Inv & Output 2 [IM-2741]

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

See also:
Inv vs Aust Sim [IM-2736]
Inv & Output 1 [IM-2740]
Inv & Output 2 [IM-2741]