The Global Financial Crisis broke the monetary system. Here's how to fix it.
In
Making Money Work: How to Rewrite the Rules of Our Financial System,
Matt Sekerke and Steve H. Hanke deliver a rigorous and fascinating exploration of the monetary economy. You'll find a detailed and clear roadmap of how and why fiat money is created and destroyed, its connections to the broader economy, and the objective mechanisms that underwrite and maintain its value.
In their exploration, Sekerke and Hanke solve many problems and puzzles and shed light on several important questions:
Why economists misunderstand the structure and function of the monetary system
The central role of the commercial banking system in fiat money regimes, and why commercial banks are not like other financial intermediaries
The economic and regulatory constraints on bank money creation
The interplay between banking and capital markets in funding investment projects
How the “banks” that dominate the international financial landscape distort the lines between banking and capital markets business
Why banking regulation and fiscal policy determine and constrain monetary policy to an equal or greater extent than central bank actions
Sekerke and Hanke trace important post-crisis policy developments and sketch the broad strokes of a new operating model that would restore the performance of the monetary system and make better use of aggregate savings:
Making neutrality the explicit goal of monetary policy, properly understood
Increasing the supply of bankable projects and keeping them on bank balance sheets
Breaking the financial system's fatal attraction to land and real estate
Reducing regulatory distortions in lending markets
Reforming universal banking institutions and stimulating competition
Transitioning to a quantity-based monetary policy framework
An engaging and incisive guide to the global systems of money and banking,
Making Money Work
is destined to become a sought-after classic for bankers, finance professionals, policymakers, regulators, academics, and laypeople with an interest in money and banking.