Advances in Endogenous Money Analysis
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Advances in Endogenous Money Analysis

Edited by Louis-Philippe Rochon and Sergio Rossi

The endogenous nature of money is a fact that has been recognized rather late in monetary economics. Today, it is explained most comprehensively by the theory of money in post-Keynesian monetary theory. The expert contributors to this enlightening book revisit long-standing debates on the endogeneity of money from the position of both horizontalists and structuralists, and prescribe new areas of research and debate for post-Keynesian scholars to explore.
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Chapter 10: Endogenous money and the tyranny of demand and supply

Malcolm Sawyer


The terminology of demand and supply is highly misleading in the context of money and both terms have been applied in quite inappropriate ways. The attention paid to the supply-of-money curve in the horizontalist and structuralist debates has distracted from the analysis of the key elements of endogenous money, including how money is created and destroyed. Furthermore, any observed relationship between interest rates and the volume of loans and of money does not represent a supply-of-loans relationship, and a search for some general relationship between the volume of loans and the rate of interest is misplaced.

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