Comments on ‘The Evolution of the Banking System and the Theory of Monetary Policy’ by Victoria Chick

Abstract

From Victoria Chick’s interesting paper I tend to infer that in monetary economics the 1990s might well stand under the motto ‘Whatever the banking system consists of — it is very innovative’. This certainly would be quite a change over the past decades which repeatedly seem to have stood under the motto ‘Whatever money is — it should grow at the appropriate rate’. But with additional monetary innovations having to be investigated almost every week, it may be small wonder that the theory of monetary policy now has less to offer in the way of ‘iron rules’ than seemed to be the case in times of a widespread belief in the long-term constancy of the income velocity of money.