Why is Money difficult? Comment on Perry Mehrling’s blog (by Wolfgang)

Perry Mehrling has written an excellent blog-entry entitled “Why is money difficult?”  He points out 4 essential obstacles to understanding monetary economies he has encountered again and again in teaching his money and banking course over the years:  (1) the alchemy of banking, (2) the essential hybridity of the monetary system, (3) the inherent hierarchy of credit and money, and (4) the inherent instability of credit.

In his comment, Wolfgang suggests adding a point (5) to the list: the paradox of thrift, which essentially is based upon accounting identities (my obligation is your claim and vice versa) and the mechanics of balances (W. Stützel) resulting from them. Continue reading “Why is Money difficult? Comment on Perry Mehrling’s blog (by Wolfgang)”

Financialization and Development: our comments on Perry Mehrling’s blog (by Nicolas and Wolfgang)

Perry Mehrling has published a comment on UNCTAD’s 2015 Trade and Development Report, “Making the international financial architecture work for development“.

We agree with Mehrling that “the deep suspicion of financial development that is evident throughout the report might rather be considered part of the problem than part of the solution” and, as Mehrling is clearly aware of, monetary economies have to be closely monitored and managed by informed and wise fiscal and monetary policy. We add, however, that to create a monetary and financial infrastructure in developing countries, a reliable and strong state and legal infrastructure has to be created. It cannot be taken for granted, and to develop it is no small task. Continue reading “Financialization and Development: our comments on Perry Mehrling’s blog (by Nicolas and Wolfgang)”