Posted by: Dirk | January 8, 2015

The credit view in 1948 (video)

The last decades of macroeconomics and monetary theory are clearly a regression (h/t to Lasse and Lars). Schumpeter, Wicksell and also Keynes outside of his General Theory have been giants in economics in the first half of the 20th century, and they all shared the view that money – or more correctly, credit – was created by banks who themselves lent money from the central bank in order to be able to honour their promise that one dollar of deposits would equal one dollar of cash. The occasional bank run not withstanding.

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