Ann Pettifor’s new book, The Production of Money, is an excellent contribution to the growing body of thought exposing mainstream, neoclassical economics’ poor understanding of money, banking, and finance, and how its thinking has led to a financial system that we serve, rather than one that serves us.
Drawing extensively on Keynes’ thinking and how the financial system worked from 1945-71, her proposals are fourfold; first that bank lending should be regulated so that credit is guided into productive lending not speculative activity, second that regulators should set interest rates across a spectrum of lending, third that controls on international capital flows should be undertaken, and finally that a new Bretton Woods is adopted. Ann wants to wind the clock back.
Whilst these ideas are important for getting finance under control, when discussing why they aren’t being taken seriously, it is disappointing that Ann tends to take the easy option of blaming vested interests, rather than getting into the detail of how mainstream economists and policy makers misunderstand interest rates and capital flows, and how in practice these ideas could be implemented.
Ann takes a whole chapter to criticise Positive Money’s proposals, however the criticisms are mostly based on a flawed understanding of what our proposals are trying to achieve.
— source positivemoney.org | Fran Boait | 2017/04