From the Use to the Production of Money: Monetary Theory and Economic Institutions — Theme and Outline of the Conference
Even today, when metallic currencies are for all practical purposes a memory of a not even very recent past, the chief obstacle to a correct understanding of monetary phenomena is the identification of money with a commodity. At least for what concerns the Anglo-American tradition, monetary theorists are still children of the metallic currency system. They oscillate between an ambiguous and reluctant acceptance that in a general equilibrium system there is no general theorem proving the existence of an equilibrium in which money has a positive value; and an inclination to follow Marshall’s own solution, treating money as a good like any other — a capital good, preferably — whose demand and supply conditions can be determined, even if they present peculiarities whose description and analysis are modern monetary theory. In this vein one can assemble names like Hicks, Keynes, Patinkin, and Friedman. Different though they are, their approaches are similar in that they all give the limelight in their analysis of money to the demand side, to the individual’s demand for money as a store of value. Money is a good, but an exogenously produced good whose supply conditions need not be investigated.
KeywordsMonetary Policy Social Convention Financial Innovation Monetary Theory Treasury Bill Rate
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