Macroeconomic Accounting Instead of CBO/Business Accounting


There are so many wonderful, pithy paragraphs in the article in New Economic Perspective that I have to repeat it here with emphasis on different sections of the article.

This is way down in the article, toward the end.

Macroeconomic Accounting Instead of CBO/Business Accounting

Macroeconomic accounting is required as a government and political discipline because the importation of business, i.e. “microeconomic”, accounting methods, leads to distortion and discontinuities in the execution of the mission of governments. The use of business accounting is based on a fallacy of composition: that the aggregate of all economic entities in an economy must behave like each of the individual parts. Keynes showed via the Paradox of Thrift that adhering consistently to such a microeconomic path by governments would inevitably lead to economic collapse, especially during a private credit crunch.

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