banking, monetary, fiscal finance – history, politics, practice, theory

> money, monetary – history, politics, theory – banking, currencies, finance, fiat, interest, monetary policy, monetary system, money system

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> real existing monetary now Stephen Dover Global Market Perspectives blog  2022 Monetary Mechanics blog – archive 2022 hetero monetary policy blog 2015 Understanding the Modern Monetary System – by Cullen O. Roche

Abstract – This paper provides a general understanding of the workings of the modern fiat monetary system in the United States within the context of the global economy. The work is primarily descriptive in nature and takes an operational perspective of the monetary system using the understandings of Monetary Realism. 2021 “How China Escaped Shock-therapy” by Isabella Weber

amazon 2021 Three Days at Camp David: How a Secret Meeting in 1971 Transformed the Global Economy Hardcover

>Finance, Economic Sociology, Political Economy, Historical Sociology, Sociology of Knowledge, Democratization, Karl Polanyi, Monetary history, Sociological Theory, Democracy, Sociology of Money, Critical international political economy, Political Economy of Monetary Policy, United States Political History, Comparative and historical sociology, Monetary Reform, Social Inequality, Monetary Policy, Modern Monetary Theory, Public Debt, Sociology and anthropology of money, Debt, Historical and Comparative Sociology, Political Economy and History, Politics of Austerity

see also

banking, currency, finance, fiscal, monetary – updates 8-2023 10-2023 The Rise of Central Banks – State Power in Financial Capitalism – by Leon Wansleben

A bold history of the rise of central banks, showing how institutions designed to steady the ship of global finance have instead become as destabilizing as they are dominant.

While central banks have gained remarkable influence over the past fifty years, promising more stability, global finance has gone from crisis to crisis. How do we explain this development? Drawing on original sources ignored in previous research, The Rise of Central Banks offers a groundbreaking account of the origins and consequences of central banks’ increasing clout over economic policy.

Many commentators argue that ideas drove change, indicating a shift in the 1970s from Keynesianism to monetarism, concerned with controlling inflation. Others point to the stagflation crises, which put capitalists and workers at loggerheads. Capitalists won, the story goes, then pushed deregulation and disinflation by redistributing power from elected governments to markets and central banks. Both approaches are helpful, but they share a weakness. Abstracting from the evolving practices of central banking, they provide inaccurate accounts of recent policy changes and fail to explain how we arrived at the current era of easy money and excessive finance.

By comparing developments in the United States, the United Kingdom, Germany, and Switzerland, Leon Wansleben finds that central bankers’ own policy innovations were an important ingredient of change. These innovations allowed central bankers to use privileged relationships with expanding financial markets to govern the economy. But by relying on markets, central banks fostered excessive credit growth and cultivated an unsustainable version of capitalism. Through extensive archival work and numerous interviews, Wansleben sheds new light on the agency of bureaucrats and calls upon society and elected leaders to direct these actors’ efforts to more progressive goals.

see also 6-8-2023 Raghuram Rajan: the banker who warned of meltdown in 2005 – The former governor of India’s central bank now steers a tricky course between supporting free markets and campaigning against unfettered risk-taking – by Phillip Inman

…During his three years at the Washington-based fund, Rajan regularly warned that the financial sector was out of balance and calamity could ensue. Famously, in a speech in 2005, he argued that banks knew little about the risks they were taking. He said: “In the same way as parents are asked: ‘Do you know where your children are?’, bankers nowadays are asked: ‘Do you know where your risks are held?’”

This earned him the first of many rebukes from those at the top of the profession. Larry Summers, the former US Treasury secretary, called him “slightly Luddite” for his refusal to accept the assurances of bank bosses that 21st-century exotic investment strategies were safe.

After Lehman Brothers had gone bust and central banks had initiated a multitrillion-dollar rescue operation based on zero interest rates, Rajan began campaigning against maintaining this level of cheap money, arguing that it would again lead to asset bubbles.

This provoked a row with Nobel prizewinner Paul Krugman, who argued that the post-crash responsibility of central banks was to prop up businesses and protect jobs with low borrowing costs.

In what economists would call a slanging match, Rajan wrote back to Krugman in a New York Times article, saying: “[I] would like to get out of this recession in a way that is sustainable and does not merely pump up growth in the short term only to see it collapse later.”

His award-winning book, Fault Lines, cemented his reputation for guarded optimism. Looking back, Rajan says: “If you take risk and you don’t make losses, you are a lot less careful down the line. In hindsight we bailed out too much, and that has left us less able to deal with further crises further down the line and left the system more tolerant of taking risk because it knows it will be bailed out. And I don’t think that is a good state of affairs.”

Politically, all western governments believe it is naive to say businesses should be allowed to collapse and workers lose their jobs. But then, Rajan asks, what happens when the next crisis hits? “The west has been able to raise more and more debt to bail out the private sector through a sequence of crisis and the question is: ‘At what point will it be too much?’” … 11-5-2023 Interest rates: ‘This is terrible incompetence and this lot should just quit,’ says Danny Blanchflower

The Bank of England has raised its Base rate for the 12th consecutive period – this time up 0.25 percentage points to 4.5%. Speaking to Sky News, former Bank of England policy maker Danny Blanchflower said that “screeching U-turns are coming” and “this lot should just quit”. video here 10-5-2023 Krugman’s Magic Act by Antony Davies

In a recent string of tweets, economist Paul Krugman talked about the government issuing either a trillion-dollar coin or “premium bonds” as a means of keeping its nearly seven-decade-long spending spree going. He argued that premium bonds were more likely because, “nobody understands premium bonds,” and “…(it’s) hard to get outraged over something that baffles you.”

We’ve reached a point where the political class’s primary concern is no longer doing what’s best for the economy, but getting around the letter of the law while fooling the public as to what they’re really doing. Politicians are starting to look uncomfortably like drug addicts and the Fed as the neighborhood pusher. Both know what their futures hold, but they’ve come too far to change course… 3-5-2023 Nobel economist Paul Krugman says minting a $1 trillion coin to prevent a debt ceiling crisis wouldn’t be inflationary – by Jennifer Sor

  • The US could mint a platinum coin to solve the debt crisis without worsening inflation, Paul Krugman said.
  • The top economist said the inflationary effects of the coin would be offset by the Fed selling bonds.
  • “But as I said, people who really should know better constantly get this wrong, and imagine that the coin would be inflationary.” 3-2015 Million Dollar Fraudsters – by Paul Krugman 4-2023 The Fed—quantitative tightening or quantitative easing? Stephen Dover 3-2023 Raising Interest Rates Is Just The Rich Stealing From The Poor – The economic equivalent of blood-letting – by Indi Samarajiva 27-3-2023 The Fed’s dissonant monetary policy and the 2023 March Banking Crisis: Part I — Silicon Valley Bank 1995 Fractional Reserve Banking: Part II – Bankers Helped Cartelize Their Industry Through the Central Bank – by Murray N. Rothbard 1995 Taking Money Back: Part I – Money Is Different from All Other Commodities – by Murray N. Rothbard

twitter 19-2-2023 Charlie Chaplin criticises Winston Chuchill on the gold standard 2012 Lords of Finance: The Bankers Who Broke the World – by Liaquat Ahamed – PDF 4-2-2023 Do High Interest Rates Reduce Inflation? A Test of Monetary Faith – by Blair Fix

They did not mind stating apparently opposed truths;
they knew that they could give to men a higher truth,
in which the contradictories became two sides of the same truth.

— Rev. Stopford A. Brooke, 1872

Whenever inflation rears its head, the call soon comes to raise interest rates. The rationale is simple. Higher interest rates put a damper on the supply of money. And this monetary clamp slows inflation. It’s so intuitive that it must be true. Or is it?

As the Reverend Brooke observes, it takes a person of true conviction to ignore apparent contradictions. As such, this post is designed to test your monetary faith. According to monetary orthodoxy, higher interest rates reduce inflation. Yet the evidence demonstrates that the opposite is true: higher interest rates are associated with higher inflation. With this evidence in mind, I invite you to read on. Put your monetary faith to the fire and see if it can survive…”…

medium/mpi 16-1-2023 The Australian Central Bank Governor’s Apology Signals More Fundamental Issues with the Conduct of Monetary Policy – by Peter Docherty

medium/mpi 9-1-2023 Convergence on Conflict? Blanchard, Krugman, Summers and Inflation – by James K. Galbraith

“Does the Federal Reserve, at its highest levels, know these things? One can’t be sure about the economists. But the bankers at the Fed certainly do; it’s their business to know how the world really works. So what are they up to? A power struggle between oligarchs, is the obvious answer. Real estate, construction, tech and energy at the moment are losers; banks as always are among the winners. No surprise in this: the Federal Reserve works for the banks. The interest rate it sets is not natural in any sense: it is a weapon in the struggle. “Fighting inflation” is just a smokescreen for the real fight.” 2011 Geld macht Geschichte: Kriege, Krisen und die Herrschaft des Kapitals seit dem Mittelalter – Wie aus Geld Kapital wurde – eine Geschichte unserer Wirtschaft – von Alexander Jung

Spekulanten, Geldverleiher und Glücksritter bestimmen seit Jahrhunderten die Geschicke ganzer Länder. Von den Anfängen des modernen Finanzwesens im 12. Jahrhundert bis zur jüngsten Weltrezession zeigte sich die wachsende Macht des Kapitals auch immer wieder in Staatspleiten und Börsenkrächen. SPIEGEL-Autoren und renommierte Wissenschaftler geben einen Einblick in die Welt der Finanzen und beschreiben, wie Geld Geschichte gemacht hat.

>monetary – interest rates- inflation -central banking – ortho neo liberal – Wicksell – fed, Bernanke, Friedman 11-2022 The Impotence of Monetary Policy – The entire edifice upon which monetary policy is built is not grounded in empirical validation. This explains why central banks must go beyond a few increases in interest rates to tame inflation. 5-11-2022 It’s still Ben Bernanke and Milton Friedman’s Fed – by Brendan Greely

monetary - interest rates- inflation - ortho neo liberal - Bernanke Friedman - B Greeley FT 5-11-2022 2022 Moral Economies of Money Politics and the Monetary Constitution of Society -JAKOB FEINIG

For much of American history, large numbers of people claimed that money was a public good and asserted the right to shape money creation practices. If popular knowledge about money creation was once widely shared, how and why did it disappear?

In this astute new work, Jakob Feinig shows how the relation between money users and money-issuing governments changed from British colonial North America to today’s United States, discussing how popular movements reshaped money-creating institutions, and how their opponents attempted to silence them. He also reveals how monetary and political history unfolds in the tension between “moral economies of money” and “monetary silencing.” Offering an introduction to money creation practices since the colonial era, the book enables readers to understand why most people are disconnected from knowledge about money creation today. At the same time, the book also allows readers to situate the recent prominence of Modern Monetary Theory (MMT) against a broader historical background. Historians of capitalism, economic and political sociologists, social theorists, anthropologists of money, and anyone seeking to understand monetary activism, will find this book helps to clarify present-day possibilities in light of historical processes.

moneyontheleft 9-2022 RISING TIDES SINK ALL BOATS – By David M. Fields

So, what is the Fed’s deal? Has Jerome Powell fallen prey to inflationary paranoia and hysteria for all the wrong reasons? Or is a “strong’ dollar a manifestation of a particular response to a policy choice that is more calculated and direct? By facilitating aggressive monetary austerity, the Federal Reserve is ensuring the US dollar is a safety asset to insulate the global rentier from cost-push-markup inflationary unpredictability.

The US dollar is surging to new heights. For instance, the US Dollar Index, which values the greenback against a basket of currencies, has advanced considerably. One of the burning questions is whether this will last? For now, I think, yes, it will, simply because there is no alternative for global trade invoicing and financial accounting. Aggressive monetary austerity policy from the Federal Reserve, a project aimed at using unemployment to tame cost-push-markup inflation, is pushing rival currencies lower, particularly in emerging market economies that suffer from balance of payments constraints, as investors from around the globe rush to purchase US Treasuries for security in the face of world-systemic economic uncertainty….”… gg/pdf 2022 Money as a computational machine – by Inigo Wilkins, Bogdan Dragos

Abstract – This article presents a speculative philosophical account of money as a computational machine. It does so by leveraging a computational and machinic framework, drawing primarily from the work of Philip Mirowski and Jean Cartelier. The argument is focused on a specific level of abstraction, i.e., the monetary operations involved in the creation and transfer of units of account, asking whether it is possible to view these operations as computations that mediate economic relations. As the primary function of such a machine would be one of social coordination, the article also highlights the political consequences of its implementation across society. What Comes After Bretton Woods? Neoliberals Debate and Fight for a Future Monetary Order – by Matthias Schmelzer  (p197–218)

Finance, History, Economic History, Political Economy, Neoliberalism, Bretton Woods, Exchange Rates

see also 2022 The wartime power of central banks: Lessons from the Napoleonic era – by Patrick O’Brien Nuno Palma

…”…From its foundation as a private corporation in 1694, the Bank of England extended large amounts of credit to support the British private economy and to support an increasingly centralised British state. It was playing a public role and in many ways acting like a central bank well before Bagehot’s doctrine came on stream. The Bank helped the British state reach a position of geopolitical and economic hegemony in the international economic order. It contributed to form an effective and efficient fiscal-naval state and promoted the development of a system of financial intermediation for the economy. This symbiotic relationship became stronger after 1793, with the start of the French Wars which would last until Waterloo in 1815. …”… gg/pdf 2018 Beyond Double Movement and Re-regulation: Polanyi, the Organized Denial of Money Politics, and the Promise of Democratization – Jakob Feinig

Although Karl Polanyi is best known for his theorization of market regulation and the double movement, democratizing the economic was one of his core concerns. He believed societies need to bring labor, land, and money under collective oversight to displace the logic of market fundamentalism with the logic of human needs. In this article, the author draws on Polanyi’s vocabulary to shed light on the denial of money politics and the possibility of democratization. The author illustrates these dynamics through an analysis of long-term dynamics of (de)politicization in British colonial America and the United States through the 1930s. The author developed this approach hoping that it can contribute to nudging public debates beyond regulation and monetary policy techniques and toward popular involvement and knowledge. 2021 A Regulatory Role of Money in the Interwar and Beyond. Global Actors and Local Players”, Paper presented in the Conference Monetary Integration and Disintegration in the Interwar Europe: the Impact of the Great Depression, from Institutional Agency to Local Conditions», TransMoNEA project – by Catherine Brégianni

Description – The presentation focuses on the monetary order applied since 1922 via international cooperation: this optic valorizes a global perception of monetary policies, integrated in the evolution of market mechanisms. In this framework, the monetary destabilization provoked by the Great Depression and the deriving protectionist policies applied in Continental Europe in order to tackle crisis, are examined from an interdisciplinary perspective.
Furthermore, the agency of international institutions was crucial as concerns the implementation of monetary and financial stability policies in the 1920s: such cases consist, for example, the intervention of the LON in Austria and the accomplishment of the refugee rural reestablishment in Greece by the same institution. This action taken by the interwar global actors interacts with the local [i.e., national] economic policies and with the establishment of local institutions. On the other hand, the monetary cooperation in the 30s -under the Great Depression

Economic History, Monetary Economics, Globalization, International Political Economy, Money, Financial Institutions, Gold Standard 3-2021 “Empire of Silver: A New Monetary History of China” by Jin Xu – review by Peter Gordon