Abstract
The impacts of ‘trickle-down’ economics and monetary policy on wealth and income inequality have been well traversed in International Political Economy (IPE) literature. However, the notion of ‘responsible’ fiscal management and the resulting impact on wealth and income inequality remain less explored. This thesis challenges neoliberal conceptions of fiscal and monetary policy and reframes them to more accurately depict the operational capacity of currency issuing governments during the fiat currency era. Above all, this thesis aims to demonstrate how conventional neoliberal conceptions of fiscal and monetary policy have exacerbated wealth and income inequality during the post-Bretton Woods neoliberal era. Through analysis of the macroeconomic context of the post-World War II era and reframing the economic capabilities of a state that demonstrates ‘currency sovereignty’, conventional neoliberal conceptions of fiscal and monetary policy are deemed to have exacerbated wealth and income inequality during the neoliberal era. Primarily, the attainment of a fiscal surplus is detailed to force the non-governmental sector to ‘dissave’ or take on debt to fill the spending gap created by a fiscal surplus. Government bonds are an important source of income for the financial sector while also serving as a vector for politicians to pursue austerity, which is also detailed to be logically incoherent for a currency issuing government. This logical incoherence is owed to the nature of government bonds being an asset created by government rather than being an income stream, and the role of central banks in obtaining these assets to achieve monetary policy objectives. The role of monetary policy in both enforcing a structural rate of unemployment and solidifying the role of credit(debt) as a determinant of macroeconomic activity is also demonstrated to have exacerbated wealth and income inequality. A two-class dichotomy is demonstrated to have emerged as a result of these factors.