[lbo-talk] "Bedlamite economics" and the EMH

Mike Beggs mikejbeggs at gmail.com
Fri Nov 13 20:47:34 PST 2009


On Fri, Nov 13, 2009 at 1:31 PM, SA <s11131978 at gmail.com> wrote:


> Now, since I'm personally interested to know the answer to that question;
> and since you think behavioral economics is fatally flawed, can you point me
> to another research program that has a better literature seeking to answer
> the question: "if the government prints a lot of money, does that raise the
> odds of a bubble forming"?

I reckon only a research program that deals with financial institutions, their interconnected balance sheets, and their co-evolution within a system that is more than the sum of its parts. In other words, one that can cope with the idea that (to paraphrase the Great Beard) "a debt instrument is a contract for a future stream of payments; only in certain circumstances does it become _liquidity_".

A bunch of post-Keynesians have been doing this kind of work, with Minsky a major fore-runner. This decade, people like Jan Toporowski, Victoria Chick and Sheila Dow, Philip Arestis. Wynne Godley and Marc Lavoie came out in 2007 with a major book on modelling interconnected balance sheets and integrating them with a broader ensemble of behavioural relationships - 'Monetary Economics'. Eric Tymoigne has just come out with a book from Routledge from this perspective on money and asset price inflation - haven't read it yet but I look forward to it.

Ted's right that Keynes himself didn't have such a research program, but wrong that his ideas didn't lead to one. A number of the above work from a criticism of Keynes, that he did not pay enough attention to the stock of financial wealth.

Cheers, Mike scandalum.wordpress.com



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