Bonniey Money Program Case Study

The Minsky Money Program demonstrated the concept of how money can be created by a state and through a tax obligation imposed by said state gives money its value. In the case of the Minsky Money Program, Minsky money was our imposed tax obligation that we needed to repay as our tax obligation. Minsky money’s value was attained by the fact that a grade for the class would be based on the repayment of the tax obligation. In addition, there would be no other form of money that would be accepted for the payment, only the Minsky money. Thus, by making the Minsky money that only acceptable payment obligation it drove the demand for the money even though it would not be acceptable to anyone or anywhere else outside the class. Through the criteria …show more content…
In the case of the program, in-order for us to fulfill our tax obligations there needed to be Minsky money spent by Professor Fisher. The role of the state in both case scenarios is to create the money into existence for the public so that the tax obligation may be paid. If the state does not spend the money there is no way for the public to pay back their tax obligations. In the Minsky Money program had the money not been spent there would be no possible way to get and/or earn the money except through the state since no Minsky money is in circulation. If the state decides not to spend the money then there will no way for the students to pay the tax …show more content…
In theory if everyone in the class earned the necessary amount than there would be no deficit nor surplus, meaning no one owes any Minsky money or has any Minsky money saved. However, even though we were only imposed a tax of five Minsky dollars we could collect as many as we wanted. If some students earned more than necessary and everybody else just earned enough to be meet the tax obligation, there would be a deficit. Meaning that the spending exceeded tax payments, which allowed there to be savings of the Minsky dollars. Relating back to the state and private sector, when the state spends more than they receive in tax dollars they too are running a deficit. This deficit allows the private sector to have money to save. If some students decide not to pay the tax obligation or not all of the tax obligation and the rest collect just enough to pay their tax obligation, then there will be a state surplus. Now, in theory if we were granted credit, instead there will be students that owe money/in debt. The same applies to the state and the private sector, in that when the state spending is less than the tax payments resulting in a government surplus. Which results in the private sector being in debt/owing