Irving Fisher’s 100% Money – are banks criminal institutions?

Those who tend to regard as the main evil of our time the excessive concentration of economic and ultimately political power in a few hands, will be skeptical as to promises of salvation based on mere technical modifications, be it in the sphere of money or anywhere else. Such promises were made more than half a century ago by the American economist Irving Fisher who proposed a reform of the monetary system. He wanted to introduce what he called 100% Money. At his time the proposal attracted some attention and does so again nowadays. It seems to offer a simple and seemingly plausible explanation for the current crisis as it is based on the assumption that banks act in a criminal way!

The Money Multiplier – a dead end of economic theory

Regarding the extent of credit, supposedly "created" by the commercial banking system, the most fantastic ideas present themselves to the public. I'm not talking about mere verbal inaccuracies, based on vague definitions. If I call commercial credits (or the corresponding savings deposits) by the name of “money” so as to make them undistinguishable from the coins or notes of a central bank, then commercial banks must in fact be considered the creators of vast sums of money, as they are the places were deposits and corresponding credits are to be found. Money properly speaking – the money created by central banks – will then represent nor more than an infinitesimal fraction of the total amount of „money“ to be found in the economy.

Europe’s Fiscal Pact - or how to make a deal with the devil

The euro area is struggling for survival. If you are still in doubt, listen to all those by now far less self-conscious, far less apodictic pronouncements of leading representatives from politics and economy. At the G20 summit in Los Cabos Jose Manuel Barroso even lost countenance!

Transatlantic pundits

During the twenties of the last century Irving Fisher was an acclaimed economist, comparable only to Paul Samuelson or Joseph Stiglitz in our time. Like virtually all economists of international repute, he tended to be wrong - indeed fundamentally so. As late as October 1929, he reassured investors with his prophecy that their money would be perfectly secure in Wall Street. A few days later the world was horrified by Black Friday. (1)

Stiglitz contra Merkel

Profil (Austrian weekly): The debt brake advocated by Angela Merkel and Nicolas Sarkozy is the wrong way?

Stiglitz: Yes, absolutely.

So speaks Joseph Stiglitz, Nobel laureate and former economic advisor to Bill Clinton. The recipe is amazingly simple. If a patient is in danger of dying from hunger or thirst you will provide him with eating and drinking. Obviously we don’t need to be enlightened by a chief economist to find such an advice quite convincing.

Neoliberalism: Death of a pseudo-science

Ten logical objections and empirical arguments against persistently held dogmas in current economics

The principle of neoliberalism may be summarized in the following formula: The best way of guaranteeing a maximum performance for the economy is to keep government entirely out of its sphere. Its role should be confined to ensure the safety of personal property, which it does by using police and justice to this very purpose.

Open letter to Lord Wolfson With reference to the prize winning question of how to get out of the Euro

Dear Lord Wolfson

Please let me enjoy the platonic pleasure of an idealist by presenting my own proposal for your prize riddle even after the deadline has expired two months ago.

Economic decline and the doctrine of free trade

In my opinion the underlying reason for the impending disintegration of Europe is free trade policy as pushed by Germany (see my essay the "The ugly German – a specter is coming back"). I am, of course, aware that this view is diametrically opposed to accepted wisdom as to be found in economic textbooks.

The ugly German - return of a ghost long thought to be dead

Does he really deserve these accusations, this hatred, these comparisons with and incantations of a Fourth Reich? In Greece, Germany has become the enemy Nr. 1, but if you listen to Italian talk shows you will be acquainted with similar insinuations.

Wealth without growth - Why the current economic system is incompatible with sustainable development

Since 1972 when the Club of Rome first invoked the dramatic consequences of unlimited growth, global awareness as to the relationship between growth and environmental destruction has been considerably sharpened. Growth is no longer considered a boon pure and simple. Ecological minded people start to make a difference between positive and harmful growth. Of course, growth itself is no evil. To be alive means the same to societies as to individuals: They are vigorous only as long as they go through phases of bodily or mental growth. It is therefore of utmost importance to distinguish between different kinds of growth: damaging und positive. When labeling growth as a destructive force, we refer to quantitative growth alone, which essentially means an ever-swelling turnover of material goods and a concomitant depletion of nonrenewable resources. Growth however, that is based on renewable sources – including, of course, all growth pertaining to human knowledge and skills – testifies to the greatest achievements of any society.