Sunday, March 1, 2015

Understanding Banking After the Crisis

At his blog Spontaneous Finance, Julien Noizet clarifies some of the basics on banking theory and practice (relevant posts are here, here, here, and here). Since the 2008 financial crisis, the Post-Keynesian and so-called "Modern Monetary Theory" (MMT) camps have gained some traction in debates about how central bank policy affects the banking sector.

Their view is juxtaposed to standard monetary theory, which is based on the money multiplier effect. Though the MMT view is becoming more popular, many of its tenets seem to contradict the basic tenets of smart business. Farmer Hayek readers who are interested in banking theory and practice will likely enjoy Julien's article and the rest of his blog.

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