The Debate Over Money Manipulations: A Short History
The Intercollegiate Review, pp. 3-11, Fall 2010
Posted: 3 Aug 2011
Date Written: 2010
The financial crisis starting in 2008 exposed shortcomings in many mainstream economics models that did not foresee it. In this paper, I suggest that part of the problem lies in the mainstream’s diminution of capital theory and the history of economic thought because neither area is amenable to abstract modeling techniques popular within the economics profession. I present a short history illustrating the inherent incentives on behalf of those who create money to inflate it, and point out a centuries-long debate about the moral and economic consequences when such actions engender social conflict between the classes who benefit from inflation and those who must pay for it. While many considered the debate decided with the creation of the Federal Reserve in 1913, popular agitation against monetary inflation and central banking suggests that the debate may have only been in hibernation.
Keywords: economic history, monetary theory, inflation, central banking
JEL Classification: N1, N11, N13
Suggested Citation: Suggested Citation