The Real-Bills Doctrine in the Light of the Law of Reflux

Glasner, David

doi:10.1215/00182702-24-4-867

Cited by 47 publications

(16 citation statements)

References 8 publications

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“…Most famously, the so-called notion of "cost-push inflation" led the Fed into various attempts to target the credit extended to particular economic sectors considered to be driving general inflation, and into attempts to control wage dynamics. The real bills doctrine (see Glasner 1992) with its notion that productive credit could never be inflationary long persisted within the Fed, so that targeting free reserves (reserves not backing productive credit) was seen as a way to combat speculative pressures that could lead to asset and, through it, generalized inflation. inflation as a multifaceted phenomenon that affects many constituencies in different ways (see Carruthers and Babb 1996), and included a greater diversity of possible causal mechanisms and (macro-economic) situations than the regime that followed it.…”

Section: How Governing Inflation Expectations Depends On Formalizing mentioning

confidence: 99%

„Formalizing the future: How central banks set out to govern expectations but ended up (en-)trapped in indicators“

Walter¹

2018

Preprint

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Modern ‘inflation targeting’ monetary policy has been one of the prototypes of future-oriented modes of social coordination which in recent years have captured the sociological imagination. Modern central banking is commonly presented as achieving greater efficacy by directly managing economic expectations, in particular when contrasted with the previous heavy-handed, “hydraulic” transmission of policy objectives through systems of economic aggregates. Such empirical claims are mirrored in the theoretical distinction drawn by sociologists between the openness and efficacy of future-oriented coordination of expectations, and the more rigid coordination achieved through formal organizing and formalization.This paper uses the case of the US Federal Reserve’s (Fed) transition to inflation targeting in the 1980s to show how the precision and flexibility of social coordination through expectations in fact relies on extensive formalization and rigid proceduralization. I show that the tightly coupled control relation on which inflation targeting rests is not possible without the constitutive exclusion of other modes of representing and intervening the economy achieved by this formalization. However, the price for the robust and precise reactivity that modern central banking has constructed between key indicators of inflation expectations and the interest rate set by monetary policy, is a comprehensive procedural dis-embedding of monetary policy from the structure of economic activities whose path into the future it is meant to govern.The paper concludes that in order to better understand the conditions under which future-oriented modes of coordination fail or succeed, we need to study more closely the formalization of social relations on which they are founded.

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Section: How Governing Inflation Expectations Depends On Formalizing mentioning

confidence: 99%

„Formalizing the future: How central banks set out to govern expectations but ended up (en-)trapped in indicators“

Walter¹

2018

Preprint

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“…The supporters of the banking school will continue the confrontation, as they believe that the revocation of Peel's Act during the crises in 1847, 1857 and 1866 proves a lack of consistency (pertinence) of the thinking trend of the currency school. Currency and Bank Notes Act in August 1914 rendered the system flexible, considerably and definitively [9].…”

Section: The Evolution Towards Thementioning

confidence: 99%

Stabilizing Valences of an Optimum Monetary Zone in a Resilient Economy—Approaches and Limitations

et al. 2017

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: Following De Grauwe (2016), this research advances the idea according to which economies that are part of a monetary union issue debt in a medium of exchange they cannot control: financial markets develop the capacity to impose default on such economies. We are interested in how previous research analyzed the notion that, when economies are autonomous and they employ the exchange rate as a vehicle to handle asymmetric shocks, they confront comparable constraints on the performance of exchange rate strategies. When a monetary union is affected by significant asymmetric shocks, the member economies have to deal with tough adjustment issues. Empirical and secondary data are used to back the assertion that, in a monetary union, economies that are affected by long-lasting asymmetric demand shocks demand wage elasticity and labor flexibility to rectify for them, and if the latter generate substantial budget deficits, financial markets tend to intensify the consequences of the asymmetric shocks, boosting the demand for severe regulation of wages and labor flexibility. Our article makes conceptual and methodological contributions to the view that member economies of a monetary union are exposed to varying market reactions, generating more volatility in the business cycle: an economy undergoing a recession and a rise in the budget deficit might be affected by wide-ranging transactions of its government bonds, causing a liquidity crisis and superior interest rates, and possibly coercing the government of that economy to adopt budgetary austerity measures, thus intensifying the recession.

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“…Forthcoming in The Princeton Guide to Adam Smith, edited by Ryan Hanley Maria Pia Paganelli Adam Smith's analysis of banking is often studied as part of the history of banking in Scotland, of free banking, or of the Real Bill doctrine debate i (e.g. : Checkland 1975b;Munn 1981;Glasner 1985;Selgin 1989;Glasner 1992;Gherity 1994;White [1994] 1995; Arnon 2011; Rockoff 2011; Rockoff 2013)-topics that are not part of traditional mainstream economic doctrines. It is seldom centerstage in the Smith scholarship.…”

Section: Adam Smith and The History Of Economic Thought: The Case Of mentioning

confidence: 99%

15. Adam Smith and the History of Economic Thought: The Case of Banking

Paganelli

2016

Adam Smith

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The Real-Bills Doctrine in the Light of the Law of Reflux

Cited by 47 publications

References 8 publications

„Formalizing the future: How central banks set out to govern expectations but ended up (en-)trapped in indicators“

„Formalizing the future: How central banks set out to govern expectations but ended up (en-)trapped in indicators“

Stabilizing Valences of an Optimum Monetary Zone in a Resilient Economy—Approaches and Limitations

15. Adam Smith and the History of Economic Thought: The Case of Banking

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