If we can reclassify banknotes as assets rather than liabilities, then imagine what else we can do. Yes, the magic money tree is inexhaustible. The lesson here, however, is that you can mess with money’s fundamental structures & values in radical & even pro-social ways.
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I believe a Domino's pizza voucher is an asset to whoever holds it and a liability to Domino's.
Not sure that different framing is necessarily better framing.
You can’t buy a car by giving the dealer your liabilities. 🙄
How would this 'reclassification' help?
funny tho the academic article this FT claims to be responding to isn't about banknotes at all, but about general Central Bank Money (reserves). Seems to be trying to reclassify them as "social equity" to reduce perception of the size of debt
Arguing that money is not a liability implies that dropping money from helicopters has no negative economic effect - which is not true.
If the private gains are not matched by private losses, then aggregate accounting identities are broken.
Everything is settled via the payments system.
Assets = Liabilities + Owner’s (shareholder’s) Equity.
OE is different than other types of equity, like preferred shares.
National accounts might lump them together for convenience, but nobody doing corporate accounting would.
Somewhat OT, but I think deciding on the right accounting treatment for stock buybacks is quite tricky.
Just when ppl talk in the context of debt etc it is a salient point
There is no economic law preventing CB’s from handing out 1000% of GDP as money. Knowing that money is a liability easily explains why such a policy step would be disastrous.
But destroying the meaning of capital to remove a negative capital state is incoherent - it implies that you care about the negative capital state, and want to use creative accounting to remove it.
The definitions might not be useful, but that’s just real world uncertainty hitting accounting conventions.