Friday, September 21, 2007
Each government, early in its development, found it desirable to expand without resort to taxation. Often that's due to war, but not always.
What's more interesting is the evolution of central banks after they stop being useful for raising funds for government spending. What do they do then? Who are their supporters? The bankers? The bond markets?
There are lots of answers in Mankiw's comments that sniff around this answer. But we've had these answers for a long time.