Tuesday, May 30, 2017

Eric Tymoigne — Money and Banking—Part 18 (A) & (B)

The M&B series is back! The goal is to finish the first complete draft of the book by the time I need to teach my Money and Banking course. Over the coming months, the following topics will be covered.
  • Overview of the financial system
  • Federal Reserve System institutional analysis
  • Interest rate and interest rate structure
  • Pricing of securities
  • Off balance sheet: Securitization
  • Off balance sheet: Derivatives
  • Monetary policy in action (issues surrounding interest-rate rules, transmission channels, etc.)
  • International monetary arrangements and exchange rates
  • Modeling (theory of the circuit, including the money supply in models, stock-flow coherency, portfolio constraints, capital gains, using models, etc.)
With these new sections and the seventeen other chapters of the book (which I have already rewritten in part to take into account feedbacks from my students), one should have a solid alternative preliminary text (let me know if I should cover more topics). The incomplete draft was well received by my students and has been downloaded over 8000 times as of May 2017.
Remember that this series (and book) emphasizes the importance of balance sheet mechanics and the upcoming posts will continue to do so whenever balance sheets, and more generally double-entry accounting rules, help to explain the issues at hand.
Like last year, the upcoming posts will be raw with limited editing. The point is to get the ball rolling and to get as many feedbacks as possible from the readers. As previous readers may have noticed, the book that contains previous posts was significantly edited (but still contained many typos). So here we go!
Access the first 17 sections at NEP in the nave bar or click here.

MMT must read.

New Economic Perspectives
Money and Banking—Part 18 (A): Overview of the Financial System: A World of Promises

Money and Banking—Part 18 (B): Overview of the Financial System: A World of Promises
Eric Tymoigne | Associate Professor of Economics at Lewis and Clark College, Portland, Oregon; and Research Associate at the Levy Economics Institute of Bard College


Andrew Anderson said...

In doing so, an emphasis is put on the fact that a balance sheet must balance and that double-entry accounting rules cannot be denied. Eric Tymoigne

But they ARE denied in that the liabilities of the banks toward the non-bank private sector are largely a sham in that the non-bank private sector (i.e. the rest of us) may not even use their Nation’s fiat except for grubby, insecure, inconvenient physical fiat, a.k.a. “cash.”

So how can we have honest accounting with sham liabilities? And how can we be so foolish as to expect a dishonest system to be stable?

The solution? Allow all citizens to have accounts at their respective central banks and abolish all other privileges for depository institutions, e.g. why should government insure private liabilities, including privately CREATED (“Bank loans create bank deposits”) liabilities?

Matt Franko said...

It's cheaper for the govts to avoid the 200B banks spend on just tech annually, avoid hiring millions of employees, etc...


The govt farms it out...

Matt Franko said...

What accounting course did you ever take where they went over "sham liabilities"?