Did I ruffle a few feathers? :)
Chris M. Sciabarra
sciabrrc at is2.NYU.EDU
Fri Sep 22 13:14:31 MDT 1995
On Fri, 22 Sep 1995, Doug Henwood wrote:
> Chris, you really should bone up on some post-Keynesian theories of
> endogenous money - which holds that private demand is the real driving
> force in money creation, not the central bank, which in normal times merely
> accommodates private credit demand rather than being the fons et origo of
> new credit. This is quite consonant with Marx's critique of Ricardo and
> other monetarists of his time - as Marx argued, economic activity is what
> determined money rather than the other way around.
It is not my belief that money determines economic activity; it
is that INFLATION of money creates DISTORTIONS in economic activity.
> I might also make the point that the US had wilder booms and busts in the
> days before the 1913 founding of the Federal Reserve than it has since.
There were wilder booms and busts before 1913, and virtually
every one of them can be traced to state manipulation of banking. The
specific types of intervention that caused these cycles include:
government monopolization of the mint, legal tender laws, the creation of
paper money, the development of inflationary banking propelled by each
government, establishment of National Banks and greenback movements to
fund U.S. wars, and constant attempts to undermine specie-backed monetary
standards. Still, NONE of the 19th century booms and busts were remotely
as severe as the post-Fed cycle of the 1920s and 30s.
Dr. Chris M. Sciabarra
Visiting Scholar, NYU Department of Politics
INTERNET: sciabrrc at is2.nyu.edu
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