On Some Equilibrium and Disequilibrium Theories of Endogenous Money: A Structuralist View

This paper is intended to be a contribution to a historico-critical analysis of some recent theories of endogenous money supply. Not a systematic survey of the literature on the subject. It is mainly concerned with the internal consistency of the 'circuit' theories developed in the 1980s and early 1990s and their later reappraisals and adjournments. It deals, inter alia, with some theoretical and practical problems concerning the monetary equilibrium framework of some of such theories, the endogenous or exogenous nature of the supply of money and of its single components, the relative importance of the different functions of money, the distinction between money and bank credit, the 'closure' of a monetary circuit and the institutional role of a central bank as a lender of last resort. The author is a non-fundamentalist post-Keynesian monetary theorist. He regards money demand and supply as two strictly connected variables, whose structural interdependence precludes a causal approach to an analysis of the way money enters the circular income flow.