endogenous money

Money Stock Determination

14 March 2014

The recent Bank of England quarterly bulletin has interested blogosphere into what goes on to determine the stock of money. Money can mean various things and here I restrict to the the monetary aggregates as defined by central banks – as in the referred publication. But whoever is interested in “money creation” also becomes interested […]


Bank Of England On Money Creation

12 March 2014

In the natural sciences, controversies are settled in a few months, or at a time of crisis, in a year or two, but in the social so-called sciences, absurd misunderstandings can continue for sixty or a hundred years without being cleared up. – Joan Robinson, 1981 (1979), What Are The Questions And Other Essays – Further Contributions To […]


James Tobin Turns In His Grave

1 September 2013

When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around. But when I got to be 21, I was astonished at how much the old man had learned in seven years. – attributed to Mark Twain, Reader’s Digest, September 1939. Steve Keen has a […]


James Tobin, Banking And The Widow’s Cruse

26 August 2013

There is good discussion in the blogosphere on James Tobin’s 1963 paper Commerical Banks As Creators Of “Money” – also mentioned in my previous post Holier Than Tobin? This blog post is an attempt to present Tobin’s ideas from the paper in a more simplistic way. One of  Tobin’s points is a critique of the notion […]


Holier Than Tobin?

24 August 2013

It sometimes happens that important insights of great contributors to an academic field are missed. One of the most important things in Monetary Economics is Tobin’s asset allocation theory which although is well known is sometimes poorly understood. James Tobin (Source: Econometric Theory) But sometimes a holier-than-thou attitude can lead one to miss an important and […]


Money And Shoes

17 October 2012

… Now let me give you a ridiculous example to make the point. Don’t take it too seriously. Suppose that some statistician observes that over a long period of time there is a high association, a very good fit, between gross national product and the sales of, let us say, shoes. And then suppose someone […]


William Dudley On Bank Lending

19 June 2012

I came across this 2009 speech by William Dudley on banking where he rightly says: … A related concern is the question of whether the Federal Reserve will be able to act quickly enough once it determines that it is time to raise rates. This concern reflects the view that the excess reserves sitting on […]


Kaldor’s Reflux Mechanism

12 April 2012

The recent debates of Post Keynesians with Neoclassical/New Keynesians has highlighted that the latter group continues to hold Monetarists’ intuitions. Somehow the exogeneity of money is difficult for them to get rid of, in spite of their statements and rhetoric that money is endogenous in their models. So there is an excess of money in […]


Open Mouth Operations

5 April 2012

In the previous post Is Paul Krugman A Verticalist?, I discussed the confusions economists and market commentators have on open market operations. Even top economists such as Krugman suffer from confusions on central banking and monetary matters. I also mentioned the work of Alfred Eichner on bringing out more clarity on the defensive nature of […]


Is Paul Krugman A Verticalist?

31 March 2012

24 years back, Basil Moore wrote a book Horizontalists And Verticalists: The Macroeconomics Of Credit Money (Cambridge University Press, 1988) which begins like this: The central message of this book is that members of the economics profession, all the way from professors to students, are currently operating with a basically incorrect paradigm of the way modern […]