by From Merijn Knibbe “Everyone can create money; the problem is to get it accepted.“ Hyman Minsky Summary. Central banks the world over publish sophisticated Flow of Funds data which shows who and how and, to an extent, why all kinds of money are created and used and if stocks and flows of debt and money are becoming a threat to stability. Institutional analysis of these data, which looks at different kinds of credit as well as at different kinds of money and using a grid which enables the economist to distinguish between different kinds of economic sectors shows that they can be used to gauge the (in)stability of an economy. Macro-economists have too often however only looked at crude aggregates of total money or even purged money from their models while analysis of credit is, in 2017,
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from Merijn Knibbe
“Everyone can create money; the problem is to get it accepted.“ Hyman Minsky
Summary. Central banks the world over publish sophisticated Flow of Funds data which shows who and how and, to an extent, why all kinds of money are created and used and if stocks and flows of debt and money are becoming a threat to stability. Institutional analysis of these data, which looks at different kinds of credit as well as at different kinds of money and using a grid which enables the economist to distinguish between different kinds of economic sectors shows that they can be used to gauge the (in)stability of an economy. Macro-economists have too often however only looked at crude aggregates of total money or even purged money from their models while analysis of credit is, in 2017, still wanting as the connection between all kinds of money and all kinds of credit is still absent from the models, even if a monetary sector is increasingly added to these models.
This piece benefitted from helpful remarks by Josh Mason and Diane Coyle.
- Introduction: the measurement of monies
Money is measured by statisticians working at central banks. Or rather, some kinds of money are recorded by these statisticians. Others aren’t. Stamps can be a work of art (picture 1, super model Doutzen Kroes photographed by super photographer Anton ‘Joshua tree’ Corbijn).1
But stamps are not only tokens of art. They are money, too. Even when we use the restricted functional definition of money which can be found in most textbooks, which defines money as a store of value, a means of exchange and a unit of account, it is clear that stamps are money – including, nowadays, their own unit of account. But the question why it’s a means of exchange etc. is of course more interesting: we trust ‘the post’ to deliver our letters (dwindling market) and packages (increasing market). And to honor this implicit contract. And rightly so. Dutch stamps have for some years been their own unit of account but I can still use my Euro dominated ones which occasionally surface from the occasional drawer. read more