Talk with Positive Money in Hackney

Now there’s a classic mainstream economics paper claiming that there’s no difference between the model they prefer, where banks are just intermediaries between savers and borrowers, and the real world, where banks originate money and debt, so long as you assume, and I quote, “no uncertainty and thus no bank default”.

This a mere decade after a crisis that mainstream economists defend their failure to anticipate it by claiming that “no one could have seen it coming” (so it was uncertain), and where numerous bank defaults did happen!

This is the nonsense they defend by claiming that “assumptions don’t matter”. When pressed they’ll give, as an instance of a “simplifying assumption”, something sensible about leaving out the actual shape of the London Underground when producing a map of how to use it to get around London. But what they will do in their papers is more akin to making the “simplifying assumption” that gravity doesn’t exist to encourage you to step out the window from the 50th floor of a skyscraper.