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Lars P. Syll — The weird absence of money and finance in economic theory

Summary:
It is indeed strange since "money" as a unit of account is basic for quantitative measurement in economics and finance. Moreover, economic activity involving production, distribution and consumption of real good is dependent of finance in the creation of "money" in a monetary production economy. "Money" and finance are hidden assumptions in economics that constitute foundations of the framework for economic activity and therefore economics. They are for the most part unexamined, and where they are examined much of the investigation is either wrong or confused.  The conventional excuse of ignoring "money and finance is that "money" is neutral in the long run and measurement using the money scale is just a convenience that allows for expressing on one scale the range of real goods

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It is indeed strange since "money" as a unit of account is basic for quantitative measurement in economics and finance. Moreover, economic activity involving production, distribution and consumption of real good is dependent of finance in the creation of "money" in a monetary production economy.

"Money" and finance are hidden assumptions in economics that constitute foundations of the framework for economic activity and therefore economics. They are for the most part unexamined, and where they are examined much of the investigation is either wrong or confused. 

The conventional excuse of ignoring "money and finance is that "money" is neutral in the long run and measurement using the money scale is just a convenience that allows for expressing on one scale the range of real goods using prices denominated in a currency unit. End of story.

Economists treat economics and finance is givens, like the metric scale, for example. However, there is little in common between "money" and other quantitive measurement scales. Money is not a measurement convenience. It drives the system so that economics and finance are joined at the hip.

This failure to consider presumptions is one of the major flaws in the conventional approach to economics, in addition to presuming that economic factors are "natural" rather than largely based on institutional arrangements.

MMT corrects that inadequate and careless approach.

Lars P. Syll’s Blog
The weird absence of money and finance in economic theory
Lars P. Syll | Professor, Malmo University
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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