A Real Bonds Doctrine

Abstract

Two assumptions drive our policy construct. First, the task of implementing a Green New Deal will necessarily fall on the government. Second, artificial intelligence (AI) and robotics have meant a reduction in labour in the production process. The connection between the two is production by public firms, and the financial instrument is the government bond. The Real Bills doctrine meant the tracking of credit disbursed by commercial and central banks with the returns realized by borrowing firms. The horizon was finite. In the case of our bond, the issuer is the government, and the horizon is infinite. Balance sheet accounts with the central bank are maintained. We write down a model with no labour. Households lend to the government, which, in turn, lends to firms to purchase their capital inputs. Households earn returns from their holdings of the government bond. The central bank mediates the accounts.