February 21, 2015

The real limit of Heterodoxy

Comment on 'The real limit of public debt'


David Graeber makes the crucial point that money and credit are two sides of the same coin. What follows from this? In rough terms it follows that the Quantity Theory, which is complementary to General Equilibrium theory, is wrong. And from this it turn follows that Heterodoxy should come up as soon as possible with a new Theory of Money.

That the Bank of England shares Graeber's insight is a good sign. On the other hand, does this eliminate the need for a better Theory of Money, nay, for an entirely new paradigm, that is, for rethinking economics from the ground up? Certainly not.

Time for everybody to switch into constructive mode (for a start see 2011).

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2011). Reconstructing the Quantity Theory (I). SSRN Working
Paper Series, 1895268: 1–26. URL