The getting of wisdom part two

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This is the sec­ond part in a two-part series. To read the first part, click here.

In my arti­cle yes­ter­day I showed how Paul Krug­man had used the views of a young James Tobin to dis­miss the rel­e­vance of banks to macro­eco­nom­ics – even though those views were lat­er dras­ti­cal­ly revised by James Tobin him­self. The con­trast between the the­o­ries advanced by the young James Tobin and Tobin the Elder were stark, and a salu­tary les­son in the ben­e­fits of always remain­ing open-mind­ed to new infor­ma­tion. But the ques­tion remains, which Tobin should you believe?

I sug­gest you believe nei­ther, but con­sid­er sim­ple log­ic, and also con­sid­er which per­spec­tive makes sense of the empir­i­cal data. On both fronts, the ‘banks don’t mat­ter’ view is a total los­er – as Tobin the Elder came to appre­ci­ate.

Read the remain­der of this post here. I also rec­om­mend read­ing Nick Rowe’s post “What Steve Keen is maybe try­ing to say”, which is the first con­cert­ed (and very accu­rate) attempt to put my endoge­nous mon­ey approach in a form that Neo­clas­si­cal­ly trained econ­o­mists can under­stand. This could be the start of a real dia­logue in eco­nom­ics.

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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.