Sunday, June 30, 2013

Simon Wren-Lewis — Money as Credit

Some of this will be familiar, although what was new for me (but perhaps not to followers of Minsky or MMT) - and quite challenging - was the idea that this could all be traced back historically to a misconceived view of money itself. (According to Martin, the 17th century philosopher John Locke has a lot to answer for.) The threads developed from the historical account of the origins of money are numerous. For example money as credit is inevitably social, and so its value is bound to be politically determined. In a financial crisis, when the size of debts begin to encumber the economy, it is therefore quite logical and natural to adjust the value of money to redistribute between creditors and debtors.
mainly macro
Money as Credit
Simon Wren-Lewis | Professor of Economics, Oxford University

This is really quite fascinating. According to his CV, Professor Wren-Lewis "began his career as an economist in H.M.Treasury.... His current research focuses on the analysis of monetary and fiscal policy in small calibrated macromodels, and on equilibrium exchange rates....  In 2002 he wrote one of the background papers for the Treasury's 2003 assessment of its five economic tests for joining EMU. He was also the principal external advisor to the Bank of England on the development of its current and previous core macroeconomic models. A long time advocate of Fiscal Councils, his 2007 proposal was influential in the formation of the UK‘s Office of Budget Responsibility."

And he did not really understand the basics of money and credit? I don't fault him for this. This entire institutional system, from education to government to finance and economics is blindsided.

A crash course in MMT for economists is sorely needed.

1 comment:

Senexx said...

Thinking my breakdown of mostly Bill Mitchell's work must be too vague for such a purpose?