Economy Sentenced for Growing Budget Deficit versus the Balanced by Labour Self Financing

Abstract

A contemporary practise of creating the cash money by the Central Banks is in opposition to the first fundamental law of the Nature that capital and energy cannot arise by fiat; hence stems a conclusion that activities of these institutions are a source of the financial instability and crises. What is worse, economies do not benefit from a phenomenon of human labour self financing. At present the compensation paid in the public sector comes from the tax funds. It defectively influences economies changing them to scarcity engines. Consequently growing budget deficits disturbs all monetary economies. This is a question of incorrect theory of money. In the reshaped economic system the Central Bank directly transfers salaries to bank accounts of the public sector employees. The budgets can be balanced and the deficits no longer grow. The level of the public sector compensations is limited by ratio of the labour productivity.

Keywords: budget deficit, labour financing economy, public sector, private sector

JEL Classification: H60, H61