Real World Economics Review Out Now

real world economics

The latest RWE review serves up some excellent articles, including Blair Fix on the “Ritual of Capitalisation”, John Komlos on the US economy and Radhika Desai with Michael Hudson on the “Dollar Creditocracy”. But it is the discovery of Ib Ravn’s “educational” writing on banking, money creation and credit money that stood out for me: uniquely comprehensible introductions to the real existing money system. Highly recommended!

Educators and economists concerned with monetary reform face the extraordinary challenge of explaining … how the current system works. Centrally, the point that in a modern economy money is largely created by commercial banks, as explained by the Bank of England recently … is often met with incredulity: “What do you mean, created?”

This paper introduces five easy-to-grasp analogies that educators and reformers may use to convey key money-creation concepts to a lay audience. The analogies offered include (1) money as patches in an expandable patchwork quilt that covers a nation’s real assets, (2) the money supply as water in a bathtub with a faucet and a drain, (3) money understood as debt in a model economy run by schoolchildren, (4) the misleading concept of a bank “loan” explained by reference to gold that a London goldsmith could have lent, and (5) the money-creating capacity of bankers’ clearing systems illustrated by the example of neighbors working for each other without money.

pure.au.dk/explaining-money-creation-by-commercial-banks Ib Ravn 2015

Read or download the above 2015 paper “Explaining money creation by commercial banks: Five analogies for public education” here.

Or go straight for Ib Ravn’s current article : “How financial bubbles are fueled by money creation a.k.a. bank lending” which explicitly ignores “…the obsolete intermediation theory of modern banking, as well as the misleading fractional reserve theory, and settle for the credit creation theory of banking.” read/download here

All articles in this edition of RealWorldEconomics Review:

Has economics become a new theology?           2
Andri W. Stahel
Beyond dollar creditocracy: A geopolitical economy           20
Radhika Desai and Michael Hudson
A black-swan shock exposes the deep fissures, endemic imbalances,
and structural weaknesses of the U.S. economy
           40
John Komlos
Fuck the market           62
Terry Hathaway
The ritual of capitalization           78
Blair Fix
Economic hypocrisies in the pandemic age           96
Raphael Sassower
The politics of economics           106
Shu Shimizu
Putting Minsky into space: The geography of asset price
bubbles in the United States, 1994–2018
           123
John Posey
How financial bubbles are fueled by money creation a.k.a. bank lending:
An explanation for public education
           143
Ib Ravn
China, the exception that proves the growthist rule?  REVIEW of
Smith, R. (2020) China’s Engine of Environmental Collapse
            155
Jamie Morgan

see also

GaiaMoney YouTube

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