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Modelling Graziani’s insights on money & proving that banks can’t lend Reserves

Summary:
I am a huge fan of Augusto Graziani, because I could never have developed my own monetary technology without his logical insights into the true nature of money. But he and the Circuitist School in general went wrong when they tried to move from philosophy to the mathematics of endogenous money, because they made numerous ...

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I am a huge fan of Augusto Graziani, because I could never have developed my own monetary technology without his logical insights into the true nature of money. But he and the Circuitist School in general went wrong when they tried to move from philosophy to the mathematics of endogenous money, because they made numerous stock-flow confusions because (a) having been taught by Neoclassical economists, they fell back into inappropriate equilibrium thinking; (b) with only basic training in quantitative methods by economists, they lacked knowledge of the necessary tools for dynamic analysis.



In this lecture I show that Graziani’s insights lead to a coherent dynamic monetary analysis of capitalism, including the creation of money by banks and the generation of aggregate profits, wages and interest income for all classes in society. I make extensive use of Minsky (*.MKY) models , which I’ll put up on my blog for downloading later.



Steve Keen
Steve Keen (born 28 March 1953) is an Australian-born, British-based economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen's thinking about economics include John Maynard Keynes, Karl Marx, Hyman Minsky, Piero Sraffa, Augusto Graziani, Joseph Alois Schumpeter, Thorstein Veblen, and François Quesnay.

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