My book has just been published by Routledge. Here is the teaser from Routledge’s website:This book provides a new methodological approach to money and macroeconomics. Realizing that the abstract equilibrium models lacked descriptions of fundamental issues of a modern monetary economy, the focus of this book lies on the (stylized) balance sheets of the main actors. Money, after all, is born on the balance sheets of the central bank or commercial bank. While households and firms hold accounts at banks with deposits, banks hold an account at the central bank where deposits are called reserves. The book aims to explain how the two monetary circuits – central bank deposits and bank deposits – are intertwined. It is also shown how government spending injects money into the economy.
Modern Monetary Theory and European Macroeconomics covers both the general case and then the Eurozone specifically. A very simple macroeconomic model follows which explains the major accounting identities of macroeconomics. Using this new methodology, the Eurozone crisis is examined from a fresh perspective. It turns out that not government debt but the stagnation of private sector debt was the major economic problem and that cuts in government spending worsened the economic situation. The concluding chapters discuss what a solution to the current problems of the Eurozone must look like, with scenarios that examine a future with and without a euro.
Congratulations!This book provides a detailed balance sheet view of monetary and fiscal operations, with a focus on the Eurozone economy. Students, policy-makers and financial market actors will learn to assess the institutional processes that underpin a modern monetary economy, in times of boom and in times of bust.
econoblog 101
Out now: Modern Monetary Theory and European Macroeconomics
Dirk Ehnts | Lecturer at Bard College Berlin
2 comments:
It is also shown how government spending injects money into the economy.
If, by "money", one means deposits at a member of what is, in essence, a government-privileged usury cartel consisting of depository institutions (a.k.a. banks) who alone in the private sector may have accounts at the central bank itself and thus who alone in the private sector may deal with fiat except for inconvenient, unsafe physical fiat.
One could almost hope for the abolition of physical fiat (central bank notes and coins) so the situation would be as stark as can be, to writ: Citizens may not use their Nation's money AT ALL but must instead use the money (private bank deposits) of a government-privileged usury cartel!
As for the purported natural interest rate of reserves being 0%, just what is "natural" about the citizens not being able to use their own Nation's fiat except for inconvenient, unsafe physical fiat?
To subsequent (or new) readers: Andrew Anderson is a fantasizer who has no clue about MMT or how the US federal government monetary system works.
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