The question is why? To answer, FS rely on a textbook-standard theory of interest rates, known as the “loanable funds” theory….
No surprise. Jason Furman and Larry Summers are New Keynesians. NK economist Paul Krugman holds a loanable funds theory, too.
INET
INET
James K. Galbraith | Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin
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Scott T. Fullwiler | Assistant Professor of Economics, University of Missouri - Kansas City
5 comments:
Forman and Summers responsibility is to dogmatically advocate for “loanable funds”...ie defend their Thesis... as is Galbraiths to defend his anti-thesis... this is how these people are trained to conduct themselves..
Not to make an adjustment in response to a failed testing... that methodology is trained in the other side of the academe...
Link to the INET article didn't work, though I found it by Googling.
"Loanable funds", false as it is, gives the current banking model a fig-leaf of fairness.
Taking away that fig-leaf exposes how incredibly unjust government privileges for banks are.
You cant refute your interlocutors thesis by just saying "it is false!"...
You may disagree with it but that doesnt make it "false" per se...
Thanks, Ralph. Fixed it.
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