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An excellent article, one of the best critiques of neoclassical economics I've read for a while.David Graeber says how finance crashed the economy, while at the same time Britain had one of the finest education systems in the world. So what did the government do, rather than reform finance along the lines of Britain’s university system, it financialised the education system instead? Before long, the Bank of England (the British equivalent of the Federal Reserve, whose economists are most free to speak their minds since they are not formally part of the government) rolled out an elaborate official report called “Money Creation in the Modern Economy,” replete with videos and animations, making the same point: existing economics textbooks, and particularly the reigning monetarist orthodoxy,
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An excellent article, one of the best critiques of neoclassical economics I've read for a while.An excellent article, one of the best critiques of neoclassical economics I've read for a while.David Graeber says how finance crashed the economy, while at the same time Britain had one of the finest education systems in the world. So what did the government do, rather than reform finance along the lines of Britain’s university system, it financialised the education system instead? Before long, the Bank of England (the British equivalent of the Federal Reserve, whose economists are most free to speak their minds since they are not formally part of the government) rolled out an elaborate official report called “Money Creation in the Modern Economy,” replete with videos and animations, making the same point: existing economics textbooks, and particularly the reigning monetarist orthodoxy,
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
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David Graeber says how finance crashed the economy, while at the same time Britain had one of the finest education systems in the world. So what did the government do, rather than reform finance along the lines of Britain’s university system, it financialised the education system instead?
Before long, the Bank of England (the British equivalent of the Federal Reserve, whose economists are most free to speak their minds since they are not formally part of the government) rolled out an elaborate official report called “Money Creation in the Modern Economy,” replete with videos and animations, making the same point: existing economics textbooks, and particularly the reigning monetarist orthodoxy, are wrong. The heterodox economists are right. Private banks create money. Central banks like the Bank of England create money as well, but monetarists are entirely wrong to insist that their proper function is to control the money supply. In fact, central banks do not in any sense control the money supply; their main function is to set the interest rate—to determine how much private banks can charge for the money they create. Almost all public debate on these subjects is therefore based on false premises. For example, if what the Bank of England was saying were true, government borrowing didn’t divert funds from the private sector; it created entirely new money that had not existed before.
One might have imagined that such an admission would create something of a splash, and in certain restricted circles, it did. Central banks in Norway, Switzerland, and Germany quickly put out similar papers. Back in the UK, the immediate media response was simply silence. The Bank of England report has never, to my knowledge, been so much as mentioned on the BBC or any other TV news outlet. Newspaper columnists continued to write as if monetarism was self-evidently correct. Politicians continued to be grilled about where they would find the cash for social programs. It was as if a kind of entente cordiale had been established, in which the technocrats would be allowed to live in one theoretical universe, while politicians and news commentators would continue to exist in an entirely different one.
The New York Review