Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324094 
Authors: 
Year of Publication: 
2023
Citation: 
[Journal:] PSL Quarterly Review [ISSN:] 2037-3643 [Volume:] 76 [Issue:] 307 [Year:] 2023 [Pages:] 315-335
Publisher: 
Associazione Economia civile, Rome
Abstract: 
This paper introduces the notion of monetary disorder. The underlying theory rests on a twin circuits view of the macro economy. The idea of monetary disorder has relevance for understanding the experience and consequences of the recent decade-long period of monetized large budget deficits and ultra-easy monetary policy. Current policy rests on Keynesian logic whereby a large fall in aggregate demand warrants robust offsetting monetary and fiscal policy actions. That logic neglects potential monetary disorder being bred within the financial circuit in the form of inflated asset prices and leveraged balance sheets. That disorder is likely to develop long before inflation accelerates so that inflation targeting fails to protect against it. Political factors increase the policy danger as the benefits of disorder are front-loaded and the costs backloaded. The paper concludes with a policy discussion regarding how to prevent Keynesian goods market counter-cyclical stabilization policy from causing monetary disorder.
Subjects: 
asset price bubbles
budget deficits
inflation
modern money theory
Monetary disorder
Twin circuits
JEL: 
E00
E12
E30
E40
E63
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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