Please use this identifier to cite or link to this item: http://hdl.handle.net/1959.13/920002

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Title
A modern monetary perspective on the crisis and a reform agenda
Author/Creator
Mitchell, William
Institution
The University of Newcastle. Research Division, Centre of Full Employment and Equity (CofFEE)
Description
In this paper, we develop an understanding of the origins of the current global economic crisis from a modern monetary theory perspective and outline an operational plan for the future structure of the banking system and government financial conduct which will reduce the risk of a crisis of this type from recurring. We argue that the crisis has undermined the neo-liberal belief that self-regulated financial markets and budget austerity provide the conditions for sustained prosperity. All the logic that justified government cut backs in the last three decades; the run-down of public infrastructure; the harsh treatment of welfare recipients; the wasteful privatisations, and the rest of the neo-liberal litany that served to transfer wealth from poor to rich and create a disadvantaged underclass has been rendered without credibility by these events. The crisis has demonstrated the effectiveness of fiscal policy to stimulate output and instil confidence among investors of continuing growth. It has demonstrated that there is no financial crisis so deep that cannot be dealt with by public spending . Yet, major resistance against the use of fiscal policy remains evidenced by an almost hysterical response by some commentators and politicians. Much of that hysteria reflects a failure to understand the options available to a sovereign government in a modern monetary system. The paper considers the opportunities that a government has under a gold standard monetary system compared to a non-convertible monetary system. It also outlines some operational principles that should govern national policy formation given that we operate in a fiat monetary system.
Relation
Labour Underutilisation, Unemployment and Underemployment incorporating the 11th Path to Full Employment Conference and 16th National Conference on Unemployment. Labour Underutilisation, Unemployment and Underemployment incorporating the 11th Path to Full Employment Conference and 16th National Conference on Unemployment: Proceeedings Refereed Papers (Newcastle, N.S.W. 3-4 December, 2009) p. 213-230
Relation
http://e1.newcastle.edu.au/coffee
Date
2009
Publisher
Centre of Full Employment and Equity, University of Newcastle
Keyword(s)
global financial crisis;  modern monetary theory;  banking system;  fiscal policy;  government financial policy
Resource Type
conference paper
Identifier
http://hdl.handle.net/1959.13/920002
Identifier
ISBN:9780980603460
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"A modern monetary perspective on the crisis and a reform agenda"
 
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