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Rebranding Monetarism as Keynesianism


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Money and Economic Theory session at 12th International Conference

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Rebranding Monetarism as Keynesianism

  1. 1. The 12th International Post Keynesian Conference September 25-27, 2014 Rebranding Monetarism as Keynesianism Wesley C. Marshall UAM - Iztapalapa
  2. 2. The neoliberal thought collective • Moral philosophy • Methodology • Public Policy
  3. 3. Moral Philosopy • Abundance vs. Austerity • Planning vs Free Market • Science vs Oscurantism • Banks vs People • Monetary vs Fiscal policy
  4. 4. Obscurantism and money pt. I Monetarism has come under increasingly sharp attack over the past few years. Recent critics have detailed 'the trouble with monetarism', argued that the choice is between Monetarism or Prosperity and even recoiled in horror from the Scourge of Monetarism. Various accounts of the failure of monetarism in Argentina, Canada, Chile and Great Britain have received widespread attention – St Louis Fed, 1983 Few traits of totalitarian regimes are at the same time so confusing to the superficial observer and yet so characteristic of the whole intellectual climate as the complete perversion of language, the change of meaning of the words by which the ideals of the new regimes are expressed – Von Hayek, TRTS
  5. 5. Obscurantism and money, pt. II • Civilization advances by extending the number of important operations which we can perform without thinking about them.' This is of profound significance in the social field. We make constant use of formulas, symbols, and rules whose meaning we do not understand and through the use of which we avail ourselves of the assistance of knowledge which individually we do not possess. • Money is such a routine part of everyday living that its existence and acceptance ordinarily are taken for granted. A user may sense that money must come into being either automatically as a result of economic activity or as an outgrowth of some government operation. But just how this happens all too often remains a mystery- Chicago Fed
  6. 6. Obscurantism and money, pt. III • Because our knowledge is dispersed, particular and limited, our ability to enact effective public policy is severley circumscribed – Von Hayek, TRTS • The moral of the story is that there is knowledge which is intrinsically forbidden fruit; there are things which are better left unknown - Mirowski
  7. 7. Banks vs. People • The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks – Lord Acton • any individual bank does, in fact, have to lend out the money it receives in deposits. Bank loan officers can’t just issue checks out of thin air; like employees of any financial intermediary, they must buy assets with funds they have on hand. I hope this isn’t controversial, although given what usually happens when we discuss banks, I assume that even this proposition will spur outrage - Krugman
  8. 8. Banks vs. People, pt. II • the United States was supposed to control the amount of money issued by the Federal Reserve. In turn, the amount the Federal Reserve issued controlled the amount of money issued by the commercial banks which in turn controlled the amount of money that individuals, businesses and industry could get from the banks • 'this statement is simply mindboggling. It’s so wrong I don’t know where to begin. The Fed NEVER limits the supply of currency. Never. Ever. To do otherwise would be to violate its mandate in the Federal Reserve Act to provide for an elastic currency and maintain stability of the payments system'.
  9. 9. Lying pays off – QE; or, monetary vs. fiscal policy • QE the word • QE the bank bailout • QE as public policy
  10. 10. Conclusion • Euthenasia of the rentier – ‘Keynes at his most irresponsible’ • New Keynesians gatopardism. • Monetarism is dead! Long live monetarism!