The Creators of Inside Money (eBook)

A New Monetary Theory

D. Gareth Thomas (Autor)

eBook Download: PDF

2018 | 1st ed. 2018
XXIII, 167 Seiten
Springer International Publishing (Verlag)
978-3-319-90257-9 (ISBN)

Infos

The book explores the endogenous creators of inside money, the commercial banks, and their key role in igniting the 2007-8 monetary crisis and the aftermath of the Great Recession. This is an area of study overlooked by the traditional approach in the form of neo-classical analysis, a body of theory based on a barter system of exchange. Money has evolved from a construct of barter to become a medium of exchange based on fiat money and loan creation by the banking system, underpinned by legal tender, and therefore, a creature of law. It is not a phenomenon exogenously controlled by the monetary authorities and simply assumed to be a 'veil' over the real economy, which just determines the absolute price level.

This monograph, in the eyes of the student, represents critical thinking and the realization of a more precise formulation of the endogenous money supply with various features systematically added in an attempt to derive a fully dynamic model of the monetary system, which will be straightforward to visualize and contrast with the benchmark approach.

D. Gareth Thomas is a Senior Lecturer in Economics at the University of Hertfordshire where he has been since 1990. He received a BA (Hons.) degree in Social Sciences from the Central London Polytechnic (now the University of Westminster), and a MSc degree in Economics from Birkbeck College, University of London, alongside a Postgraduate Certificate in Education from St. Mary's College, Institute of Education, University of London. Finally, he received a PhD in the econometric modelling of real investment from the University of Hertfordshire. Prior to joining the Hertfordshire Business School, he was a schoolteacher and the Head of Economics at Longdean School, Hemel Hempstead. His research interests include econometrics and monetary and health economics. He is the author of a number of research articles and has presented at numerous conferences. In 2010, he was highly commended for teaching excellence as Tutor of the Year by the University of Hertfordshire.

Inhalt

The Creators of Inside Money 2
Preface 6
Contents 18
List of Figures 20
List of Tables 22
Chapter 1 The Need for a Financial System? 23
1.1 Introduction 23
1.2 Saving and Lending 25
1.3 Borrowing 26
1.4 Lending, Borrowing and Wealth 26
1.5 Financial Institutions 27
1.6 Financial Markets 27
1.7 The Real Economy and the Financial System 29
1.7.1 All Money is a Matter of Belief 33
References and Further Reading 35
Chapter 2 The Money Supply 37
2.1 Introduction 37
2.2 The Beginnings of a Monetary Analysis 38
2.3 Modelling the Interaction of Agents 42
2.4 Conclusion/Summary 49
References and Further Reading 50
Chapter 3 The Adjustment Process of the Money Multiplier and the Loanable Funds Model 51
3.1 Introduction 51
3.2 The Geometric Mechanism and the Rounds 51
3.3 The Loanable Supply Function 55
3.4 The Loanable Demand Function and the Equilibrium in the Market 56
3.5 Money in an Open Economy 60
3.6 Conclusion/Summary 62
Further Reading 64
Chapter 4 The Demand for Money: Another Piece of the Jigsaw Puzzle 65
4.1 Introduction 65
4.2 The Demand for Money 67
4.3 The Inventory Approach 68
4.4 The Precautionary Motive 73
4.5 The Speculative Demand for Money 74
4.6 Money Demand and the Rate of Inflation 78
4.7 The Monetarists’ Revival of the Quantity Theory of Money 79
4.8 The Determination of the Rate of Interest on Savings 81
4.9 Conclusion/Summary 83
References and Further Reading 83
Chapter 5 The Rate of Interest and the New Monetary Theory of Loanable Funds 85
5.1 Introduction 85
5.2 Definition and Composition of Nominal Interest Rates 86
5.3 Classical Version of Interest Determination: Loanable Funds Theory (LFT) 86
5.4 The Real Rate of Interest in LFT 87
5.5 The Introduction of the Rate of Inflation 88
5.6 The Fisher Effect 90
5.7 Liquidity Preference Theory (LPT) 90
5.8 An Alternative Theory: The New Loanable Funds Theory 92
5.9 Conclusion/Summary 97
References and Further Reading 97
Chapter 6 The Term Structure of Interest Rates 99
6.1 Introduction 99
6.2 The Effect of Term 99
6.3 The Effect of Risk 102
6.4 The Expectations Theory 103
6.5 The Segmented Markets Theory 105
6.6 The Liquidity Premium and the Preferred Habitat Theories 105
6.7 Using the Term Structure of Interest Rates in the New Loanable Funds Theory 107
6.8 Conclusion/Summary 109
Appendix A: An Econometric Case Study: Does the Expectations Theory Exist? 109
References and Further Reading 117
Chapter 7 The Loanable Funds Cycle and the Variability of the Deposit Base 118
7.1 Introduction 118
7.2 The Loanable Funds Cycle 119
7.3 Three Types of Borrowers 120
7.4 Inflation and Expansion 124
7.5 Sowing the Seeds for a Crisis 125
7.6 Deflation and Stagnation 126
7.7 Recovery and Growth 132
7.8 Conclusions/Summary 133
Appendix A 135
Appendix B: A Portfolio Theory of Loanable Funds: Default and Risk 136
References and Further Reading 142
Chapter 8 A Catastrophe Theory of the Endogenous Cycle of Loanable Funds 143
8.1 Introduction 143
8.2 The Catastrophe Theory of the Endogenous Cycle of Loanable Funds 145
8.3 The Conclusions to Be Drawn 157
References and Further Reading 158
Chapter 9 Rebuilding the Theoretical Model of Inflation on Credit with Loanable Funds 160
9.1 Introduction 160
9.2 The Theories of Inflation 161
9.3 The Proposed Theoretical Model of Inflation with Loanable Funds 163
9.4 Conclusions/Summary 170
Appendix 171
References and Further Reading 172
Chapter 10 The Conclusions and the Policy Recommendations 174
10.1 Introduction 174
10.2 Stability of an Asymmetrical Economy 174
10.3 The Possibility of More Stabilisers 177
10.4 The Conclusion 178
Index 180

Produkt-Details

• Erscheint lt. Verlag: 26.6.2018
• Zusatzinfo: XXIII, 167 p. 37 illus.
• Verlagsort: Cham
• Sprache: englisch
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre
• Schlagworte: Catastrophe framework • commercial banks • credit • credit risk • Depositors • Financial instability • Inflation • Modern Portfolio Theory • Monetary Economy • Money Supply • Real economy • Retail banks
• ISBN-10: 3-319-90257-1 / 3319902571
• ISBN-13: 978-3-319-90257-9 / 9783319902579