Lars P. Syll — How money is created

David Graeber and the Bank of England.

Lars P. Syll’s Blog
How money is created
Lars P. Syll | Professor, Malmo University

Lars P. Syll — The non-existence of Paul Krugman’s ‘Keynes/Hicks macroeconomic theory’

Paul Krugman = Not Keynes and Not Hicks.

Lars P. Syll’s Blog
The non-existence of Paul Krugman’s ‘Keynes/Hicks macroeconomic theory’
Lars P. Syll | Professor, Malmo University

Bill Mitchell — Bank of England finally catches on – mainstream monetary theory is erroneous

The Bank of England released a new working paper on Friday (May 29, 2015) – Banks are not intermediaries of loanable funds – and why this matters – which further brings the Bank’s public research evidence base into line with Modern Monetary Theory (MMT) and, thus, further distances itself from the myths that are taught by mainstream economists in university courses on money and banking. The paper tells us that the information that students glean from monetary economics courses with respect to the operations of banks and their role in the economy is not knowledge at all but fantasy. They emphatically state that the real world doesn’t operate in the way the textbooks construe it to operate and, that as a consequence, economists have been ill-prepared to make meaningful contributions to the debates about macroeconomic policy....

Bill Mitchell – billy blog
Bank of England finally catches on – mainstream monetary theory is erroneous
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Austral

Zoltan Jakab and Michael Kumhof — Banks are not intermediaries of loanable funds - and why this matters

In the intermediation of loanable funds model of banking, banks accept deposits of pre-existing real resources from savers and then lend them to borrowers. In the real world, banks provide financing through money creation. That is they create deposits of new money through lending, and in doing so are mainly constrained by profitability and solvency considerations. This paper contrasts simple intermediation and financing models of banking. Compared to otherwise identical intermediation models, and following identical shocks, financing models predict changes in bank lending that are far larger, happen much faster, and have much greater effects on the real economy.

Putting another myth to rest.

Bank of England
Working Paper No. 529: Banks are not intermediaries of loanable funds - and why this matters

Zoltan Jakab and Michael Kumhof

ht Stephanie Kelton