The Need for a Financial System?
This introductory chapter presents the scope of the book and summarises its main theme, in particular the need to develop a monetary model that goes beyond the traditional theory of a barter system, or one with one-commodity used as money to proxy the ‘workings’ of a modern-day economy, with credit. The assumption of money neutrality is dropped along with treating the medium of exchange as a ‘veil’.
KeywordsFinancial system Monetary model Credit Money neutrality
References and Further Reading
- Bywaters, D., & Mlodkowski, P. (2012). The Role of Transactions Cost in Economic Growth. The International Journal of Economic Policy Studies, 3(7), 54–66.Google Scholar
- Friedman, M. (1970). The Counter-Revolution in Monetary Theory. London: The Institute of Economics Affairs.Google Scholar
- Hahn, F. (1981). Money and Inflation. Oxford: Bail Blackwell Publisher.Google Scholar
- Keen, S. (2011). Debunking Economics: The Naked Emperor Dethroned? London: Zed Books Ltd. Chaps. 13 & 14.Google Scholar
- Keynes, J. M. (1936). The General Theory of Employment, Interest and Money. London: Macmillan (Reprint, 2007).Google Scholar
- Minsky, P. H. (2008). Stabilizing an Unstable Economy. New York: McGraw-Hill.Google Scholar
- Roubini, N., & Mihm, S. (2010). Crisis Economics: A Crash Course in the Future of Finance. London: Penguin Books.Google Scholar
- Schumpeter, J. A. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and Business Cycle. New Brunswick, NJ: Transaction Publishers (Reprint, 1996). Chap. III.Google Scholar
- Schumpeter, J. A. (1943). Capitalism, Socialism and Democracy. London: Routledge (Reprint, 1992). Chap. VII.Google Scholar
- Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London: Penguin Classics (Reprint, 1986).Google Scholar
- Tobin, J. (1963). Commercial Banks as Creators of ‘Money’, No. 159, Cowles Foundations Discussion Papers from Cowles Foundation for Research in Economics, Yale University in W. L. Smith, & R. L. Teign (Eds.). (1974). Readings in Money, National Income, and Stabilization Policy (3rd ed.), 224–229. Homewood, IL: Richard D. Irwin Inc.Google Scholar
- Click on the link (http://www.bbc.co.uk/programmes/p03plzdp) to download the BBC radio programme on the ‘Economic Rebellion’, which summaries the need for this framework to be included in mainstream economics.