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Louis-Philippe Rochon

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Louis-Philippe Rochon

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Louis-Philippe Rochon

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Louis-Philippe Rochon

This chapter focuses on money and banking in the history of economic thought, to show that the nature of money and the role of banks have been essentially misunderstood in a number of strands of thought. This has led to a variety of monetary policy interventions, both in economic history and at the time of writing, that were not (and could not be) up to the task. The conclusion asserts that it is essential that the properties of money and banking are understood by teachers and researchers, as well as policy makers in the economic domain.

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Louis- Philippe Rochon

Mainstream monetary theory rests on two arguments: inflation is determined by demand, and interest rates are used to return inflation to its target: central banks are the guardians of inflation. However, for post-Keynesians, inflation cannot be caused by demand, and there exists a poor and unreliable relationship between interest rates and aggregate demand. The whole theoretical edifice of the neoclassical approach collapses. Therefore, if monetary policy is based on a wrong interpretation of inflation and the link between aggregate demand and interest rates, the result can be and has been catastrophic. It leads to periods of crisis in aggregate demand.

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Louis-Philippe Rochon

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Interview with Edward J. Nell

‘A great deal of neoclassical theory is set in cloud-cuckoo-land’

Louis-Philippe Rochon

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Louis-Philippe Rochon

While Basil Moore is well known for his view on endogenous money, very little is known about how he got there, and how his views might have evolved through time. This paper examines Moore's early views, pre-Horizontalists and Verticalists, and explains how Moore's views are rooted in a traditional Keynesian Tobin approach. But Moore's sabbatical at the University of Cambridge in 1970, when he met Paul Davidson and Joan Robinson, changed all that. Yet it would take him a full decade to fully embrace endogenous money.

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Louis-Philippe Rochon

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Hassan Bougrine and Louis-Philippe Rochon

The 2007 economic and financial crisis is by many measures the most serious since the 1930s. It cannot, however, be analysed as an isolated event separate from the series of crises that has characterized the capitalist system. Indeed, even though the current crisis shows some specific characteristics, its main causes are similar to those that triggered previous crises. In this study, we argue that we are experiencing a generalized economic crisis, as opposed to a financial crisis whose impact is felt on the real side via the traditional Keynesian transmission mechanism. As such, we identify the development of a number of both real and financial factors, whose combination should be recognized by any astute observer as a recipe for financial turmoil and recessions. In particular, we consider two parallel and ongoing practices that have transformed the entrepreneurial capitalist system and rendered it much more fragile and prone to crisis: (i) the financial deregulations-cum-innovations since the late 1970s have fundamentally changed the basic role of banks and financial institutions and created the possibility for financiers to (artificially) increase their wealth independently of the real production sector – thus resulting in financial bubbles; and (ii) at the same time, prolonged austerity measures in most advanced capitalist economies have kept the productive capacity of these economies below full employment and therefore directly contributed to engineering recessions. We conclude that there is a need to rethink not only the type of economic policies in place but also the economic model.