Posted by: Dirk | April 19, 2016

John Smithin on money (INET video)

It is always interesting to see other economists talk about the very same things that oneself is teaching. I prefer to show much more balance sheets, John Smithin uses puzzles and controversies to structure his lecture. This is a widespread way of “doing economics”, but I have my doubts about it. While history of economic thought is a very interesting subject, students should first be taught what we think today and then go back. Otherwise their head gets stuck in old bottles with old ideas, and they are biased towards the older stuff. This is a psychological problem that Kahneman and others have pointed out many times. What you first hear/see/think you will take as true unless some heavy intellectual lifting makes you understand that it’s not. This is why I find it wiser to start with a description of the actual monetary and financial system and only then return to the neoclassical school, Keynes, Wicksell, Knapp, etc. Having said that, I nevertheless recommend the video to students.

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