Money View
The Money View is a monetary-financial school of thought that links the (usually separate) intellectual realms of economics and finance. It offers an integrated approach for conceptualizing money, finance and (shadow) banking, which it sees as the fundamental infrastructure of late capitalism[1]. Other than most economic theories, it denotes analytical importance to the notion of liquidity as well as to the centrality of profit-seeking dealers as market makers.[2] The Money View has first been developed, formulated and put forward by Perry Mehrling and is now - despite still being an academic minority view - popularized by scholars[3][4], central bankers[5] and market practitioners[6][7] around the world.
Description
The speciality of the Money View is its ability to adequately synthesize current features of our integrated monetary and financial system, which Mehrling describes as money market funding of capital market lending', a.k.a. shadow banking, by paying attention to both the money market and the capital market.
The Money View includes elements of theories and insights by H.P. Minsky, Charles Kindleberger, Marcia Stigum, to name just a few.
Central institutions
Money, as a means of payment, to facilitate (final) settlement. Credit, as a promise to pay (money). Finance, to facilitate valuation of promises to pay. Banking, as a means of allocation of credit.[1]
Hierarchy of Money
Inspired by Minsky's Hierarchy of Money, the Money View recognizes the de facto inequality of economic agents or entire countries in their capacity to issue something called money. A privileged few at the top of the hierarchy may issue money while the rest can only issue mere promises to pay money, i.e. credit (further down the hierarchy). The US dollar is at the top of the international hierarchy of money.
Politics
The Money View is inherently political. Its political dimensions are manifold and include
- a direct application of the values the Enlightenment as a philosophical movement purports by, inter alia, abstaining from vulgar assumptions on the nature of human beings (that often prevails in economics)
- a recognition of the "difficulty of money"[8]
- an open rejection of equilibrium accounts of the economy (and therefore of mainstream economic thought & teaching)
- a refutation of the quantity theory of money
- critical thinking about the monetary-financial system (as opposed to proficient manipulation of formal models)
Epistemology
The Money View relies on comparatively few assumptions. Generally, its analytical framework is based on viewing every monetary entity in terms of their stylized balance sheet, which serves as basic tools for asset-liability management, i.e. to measure sources and uses of funding and lending.
Online sources
MOOC offers a popular free online course taught by Perry Mehrling in 2013 entitled The Economics of Money and Banking[9]
References
- ↑ 1.0 1.1 Perry Mehrling, 2017. "Financialization and its discontents", Finance and Society 3(1), pp. 1–10. Cite error: Invalid
<ref>tag; name "Mehrling" defined multiple times with different content - ↑ Perry Mehrling (December 17, 2018). "Where is the Politics in the Money View". Retrieved July 5, 2019.
- ↑ Daniela Gabor and Jakob Vestergaard (April 17, 2016). "Towards a theory of shadow money". Retrieved July 9, 2019.
- ↑ Steffen Murau, 2017. "Shadow Money and the Public Money Supply: The Impact of the 2007-09 Financial Crisis on the Monetary System", Review of International Political Economy 24(5).
- ↑ Adrien d’Avernas and Quentin Vandeweyer and Matthieu Darracq Paries (May 6, 2019). "Unconventional Monetary Policy and Funding Liquidity Risk" (PDF). Retrieved July 9, 2019.
- ↑ Zoltan Pozsar, 2014. "Shadow Banking: The Money View", Office of Financial Research 14(4).
- ↑ Perry Mehrling, Zoltan Pozsar, James Sweeney, Daniel Neilson, 2013. "Bagehot was a shadow banker: shadow banking, central banking, and the future of global finance", Shadow Banking Within and Across BordersWorld Scientific Publishing Company.
- ↑ Perry Mehrling (June 8, 2015). "Why is Money Difficult?". Retrieved July 7, 2019.
- ↑ "Economics of Money and Banking". Retrieved 6 July 2019.
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