The Policy Implications of the Current Bank Crisis, or, ‘Is Free Market Capitalism Compatible with Endogenous Money?’

Abstract

What I am going to say is extremely simple, indeed so simple that I am sure that it will be misunderstood. To avoid that possibility I shall make the argument as complex as possible to try to circumvent that natural instinct to react negatively to any proposition which challenges the status quo. The proposition is not, however, new; indeed many may be surprised by the historical precedents. I also hope to be provocative, at least enough to start people thinking about a series of problems that once exercised the best monetary theorists, but seems to have disappeared from modern discourse.