Real-World Economics Review

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from Lars Syll The mainstream textbook concept of money multiplier assumes that banks automatically expand the credit money supply to a multiple of their aggregate reserves.  If the required currency-deposit reserve ratio is 5%, the money supply should be about twenty times larger than the aggregate reserves of banks.  In this way, the money multiplier concept assumes that the central bank controls the money supply by setting the required reserve ratio. In his Macroeconomics — just to...

from Duncan Austin A major first response to our sustainability challenges has been to try and turn profit to more sustainable ends. Alas, even ‘purposeful profit’ seems unable to overcome the deeper momentum of what might be termed ‘externality-denying capitalism’ – ‘externality-denying’ in that billions of daily investment and consumption decisions ignore certain of their social and environmental consequences. As just one example, the World Bank reports that less than 4 percent of...

A bit of rain kept me from running... so we go virtual...oculus! #creedrisetoglory #elvenassasin

from Blair Fix In my last post, I looked at the relation between economic growth and inflation. As per usual, the evidence didn’t sit well with mainstream economics. According to standard theory, there is a trade off between low inflation and high economic growth. The idea is that you can have one or the other, but not both. So if you want to keep inflation low, you have to ‘cool off’ the economy by slowing economic growth. (Like many things in economics, this idea comes from the totem of...

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from Lars Syll As Oskar Morgenstern noted in his 1928 classic Wirtschaftsprognose: Eine Untersuchung ihrer Voraussetzungen und Möglichkeiten, economic predictions and forecasts amount to little more than intelligent guessing. Making forecasts and predictions obviously isn’t a trivial or costless activity, so why then go on with it? The problems that economists encounter when trying to predict the future really underline how important it is for social sciences to incorporate Keynes’s...

from Gregory A. Daneke  Given the numerous disasters exhibited of late involving Mainstream Economics, various heterodox economists have called for much greater consideration of ecological processes (both natural and social, see Fullbrook & Morgan, 2001).  Such processes, in turn, have become increasingly illuminated through the burgeoning science of complex adaptive systems (e.g., Preiser, et al, 2018). What some of these earnest observers fail to fully appreciate, however, is that...