Money and Banking Today

Huber, Joseph

doi:10.1007/978-3-319-42174-2_4

Cited by 5 publications

(42 citation statements)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…One set of authors aligned broadly with “credit creation” theories focus on commercial banks, and they have sought to challenge the mainstream “money multiplier” story. They argue that, rather than bank lending depending on the prior existence of deposits or reserves that are subsequently “multiplied” (as per the orthodox understanding), in fact banks take the lead when creating deposits and only later attempt to cover any shortfall in reserves via the process of inter-bank “settlement” 6 (Ryan-Collins et al 2012 ; Werner 2014a , 2016 ; Huber 2016 ; Hook 2022 ). In this rendering, commercial banks are ultimately responsible for expanding 7 the total amount of bank deposits within the banking system by virtue of the fact that they first decide if they are going to create new credit (i.e.…”

Section: Heterodox Theories Of Money Creation: Three Different Instit...mentioning

confidence: 99%

“…In this rendering, commercial banks are ultimately responsible for expanding 7 the total amount of bank deposits within the banking system by virtue of the fact that they first decide if they are going to create new credit (i.e. bank deposits) for a “borrower” and only afterwards seek central bank reserves to back or “cover” the transaction (Huber 2016 ). As Ryan-Collins et al ( 2012 , p. 122) summarize:…”

Section: Heterodox Theories Of Money Creation: Three Different Instit...mentioning

confidence: 99%

“…McLeay et al 2014 ; Jordan 2018 ). Overall, it has been highly successful in shifting the conversation about money creation and, by emphasizing that commercial banks can theoretically create unlimited new credit provided there is always a willing borrower, in debunking a founding myth of orthodox theory that casts money as “scarce” (Huber 2016 ). Adding to its credibility, Werner ( 2014a ) ran what he claimed was the first “empirical test” of the credit theory of money creation, demonstrating that when banks create deposits on making a new loan, no transfers are made from other accounts at the bank when the loan is made: it is brand new money that is being created in the customer’s account at the same time as the bank creates a new asset for itself .…”

Section: Heterodox Theories Of Money Creation: Three Different Instit...mentioning

confidence: 99%

“…Indeed, in recent years, various heterodox 1 explanations of money creation have sought to challenge established myth-laden orthodoxies. “Credit creation” theories have gained particular prominence, arguing that it is commercial banks that are the main (perhaps the sole ) creators of bank deposits, and that they do so exclusively in the act of making new loans (Ryan-Collins et al 2012 ; Werner 2014a , 2016 ; Huber 2016 ). Such theories [seemingly confirmed by key central banks (e.g.…”

Section: Introduction: the Under-analysis Of Money Creation And Its I...mentioning

confidence: 99%

See 3 more Smart Citations

Towards an institutional “landscape” view of modern money creation mechanisms and some reflections on their ecological significance

Hook

2023

Sustain Sci

View full text Add to dashboard Cite

In recent years, a number of different strands within heterodox economic thinking have successfully provided more empirically robust and sociologically informed analyses of how money gets created. However, there is a tendency within these analyses to discuss the different money creation theories and institutional practices in isolation, inhibiting a broader audience from grasping the whole institutional picture. By integrating contemporary heterodox theories and the latest empirical evidence, this article therefore attempts to develop a “landscape” view of modern money creation that visualizes and explains the different ways that modern money is created. It suggests that, while it is ultimately only commercial banks that can “create” new bank deposits in customers’ accounts, this may be initiated by one of three institutional mechanisms: by customers “borrowing new money into existence” when commercial banks make loans; by central banks creating new money when they purchase assets such as government bonds from investors; and by the government “spending new money into existence”. The article also reflects on how a clearer institutional understanding of these processes may be helpful in improving our overall capacity to think about how money creation may better serve current urgent social and environmental needs, especially in the post-COVID-19 context.

show abstract

Section: Heterodox Theories Of Money Creation: Three Different Instit...mentioning

confidence: 99%

Section: Heterodox Theories Of Money Creation: Three Different Instit...mentioning

confidence: 99%

Section: Heterodox Theories Of Money Creation: Three Different Instit...mentioning

confidence: 99%

Section: Introduction: the Under-analysis Of Money Creation And Its I...mentioning

confidence: 99%

See 2 more Smart Citations

Towards an institutional “landscape” view of modern money creation mechanisms and some reflections on their ecological significance

Hook

2023

Sustain Sci

View full text Add to dashboard Cite

show abstract

“…[…] A build-up of monetary and financial assets disproportionate to GDP thus creates a distributional bias in favor of financial income, resulting in a reduced share of earned income. […] The more financial assets grow GDP-disproportionately, the bigger the share that goes into unproductive non-GDP transactions which nonetheless demand to be serviced by the flow of actual income and additional debt“ (Huber 2016 ).…”

Section: Auswirkungen Von Covid-19-wirtschaftsmaßnahmen Auf Unterschimentioning

confidence: 99%

Inflation bald als Folgeeffekt der COVID-19-Pandemie?

Beretta

2021

List Forum

View full text Add to dashboard Cite

ZusammenfassungObwohl man im Zuge der COVID-19-Pandemie aufgrund des dramatischen Einbruchs aller Wirtschaftsprognosen weltweit bislang von rezessiv-deflationären Auswirkungen ausgegangen ist, lassen sich Inflationsrisiken keineswegs ausschließen. Welche Folgeeffekte kann die Kombination aus milliardenhohen Liquiditätsspritzen bei starkem Produktionsrückgang sowie streng einzuhaltenden (und ebenso kostenträchtigen) Sicherheits- und Schutzauflagen entfalten? Und wieso sollte aus makroökonomischer Sicht zwischen „Inflation“ und „steigenden Lebenshaltungskosten“ unterschieden werden? Im vorliegenden Beitrag wird mithilfe eines logisch-analytischen Denkansatzes auch argumentiert, wie sich derartige Inflationsszenarien wirtschaftspolitisch abwenden ließen. Denn eins ist genauso sicher: die Relation zwischen Naturkatastrophen und Inflation besteht seit je. Umso mehr, falls Inflationserscheinungen – wie heutzutage – nur zum Teil erkannt werden.

show abstract

The macroeconomic money-nature nexus: Are growing money supplies a relevant obstacle on the way to an ecologically sustainable global economy?

Möckel

2024

PLOS Sustain Transform

View full text Add to dashboard Cite

Production, consumption and nature depletion have been growing rapidly for more than 300 years, even faster than exponential population growth. A comprehensive understanding of the causes behind this great acceleration is necessary if we are to achieve a sustainability transformation. This paper is intended to draw the attention in the sustainability debate to the amounts of money that have been growing rapidly all over the world. The money supply has not been a main focus so far, since for the economic mainstream it is not a growth driver, as according to the neoclassical view, money growth is largely neutralized by inflation, while for Keynesians it merely follows economic growth. However, the growing money supply means greater liquidity for consumption as well as for investments in production, assets and resource exploitation. An expansion of the money supply is even a prerequisite for a simultaneous increase in investment and consumer spending. At the same time, the expansion in the supply of raw materials, goods and services keeps inflation rates behind money growth globally. The paper aims to identify and illustrate the causalities of how the money supply and the use of natural resources are interconnected by means of economic activities. This money-nature nexus would explain why, due to high money growth rates, both the real economy and the depletion of natural resources and ecosystems continue to increase despite all efficiency improvements and sustainability efforts to date. It should therefore be a realistic fear that without a global limitation of exponential money growth, ecological sustainability cannot be achieved.

show abstract

Money and Banking Today

Cited by 5 publications

References 22 publications

Towards an institutional “landscape” view of modern money creation mechanisms and some reflections on their ecological significance

Towards an institutional “landscape” view of modern money creation mechanisms and some reflections on their ecological significance

Inflation bald als Folgeeffekt der COVID-19-Pandemie?

The macroeconomic money-nature nexus: Are growing money supplies a relevant obstacle on the way to an ecologically sustainable global economy?

Contact Info

Product

Resources

About