The IMF goes radical?

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An IMF work­ing paper has received a lot of atten­tion recently – and not for the usual rea­sons. Whereas the IMF is usu­ally crit­i­cised for being dog­matic about free mar­ket eco­nom­ics and effec­tively beholden to the banks, this paper is being both praised and crit­i­cised for want­ing to rad­i­cally reform them.

This clearly isn’t offi­cial IMF pol­icy, but the fact that it has been released by the IMF is note­wor­thy, and the paper deserves care­ful atten­tion. It is an enor­mous paper, not just in length (56 pages of text) but also in the range of top­ics cov­ered, and it will take at least three posts to do it jus­tice. In this one, I’ll focus on its analy­sis of today’s mon­e­tary system.

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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6 Responses to The IMF goes radical?

  1. Mich says:

    Money and addi­tional spend­ing power has been cre­ated pari passu with addi­tional bank debt. Impatient’s spend­ing power has risen, with­out any off­set­ting fall in patient’s spend­ing power.”
    Dream’n! Of course the savers spend­ing power falls (by rais­ing prices), only to be returned when the loan is payed back or an investor takes the loss on the loan when defaulted on (falling prices, oh no! deflation!).
    You guys don’t see this? Really?

  2. richard hodge says:

    Steve

    The link aint work­ing for me, which is a shame cos I really want to hear your opin­ion on this paper

  3. Nebbiolo71 says:

    The full link is here:

    http://www.businessspectator.com.au/bs.nsf/Article/IMF-free-market-banks-debt-Krugman-Minsky-pd20121105-ZQR8S

    By the way Steve, you did a won­der­ful job in Swedish tele­vi­sion (broad­casted yes­ter­day) when you raised the ques­tion about the impor­tance of pri­vate debt, money and banks and the fail­ures of main­stream eco­nom­ics — it will cer­tainly start a lot of dis­cus­sions all around the polit­i­cal and eco­nomic establishment!

    The jour­nal­ists also told us that you and Beze­mer were given some data on the swedish debt bub­ble but unfor­tu­nately your opin­ion didn’t really get to the viewers.

  4. Ralph37 says:

    That IMF paper is rub­bish. As regards the idea that national debts can be writ­ten off by print­ing money and buy­ing back such debt, that’s not orig­i­nal: I’ve been mak­ing that point on my blog for two years now (as have oth­ers). Indeed that sort of debt buy-back has been tak­ing place on a MASSIVE scale and under the guise of QUANTITATIVE EASING. Per­haps they haven’t heard of QE.

    As regards the idea that we can just print loads of money and use it to write off a sig­nif­i­cant pro­por­tion of pri­vate debts, the effect would be a mas­sive rise in pri­vate sec­tor net finan­cial assets, which in turn would result in ram­pant infla­tion (assum­ing the econ­omy is ini­tially at capacity).

  5. Pingback: Anti-Bernanke Keen lauds IMF authors’ paper on changing banking

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