Conceptual Approaches Concerning The New Paradigm Of The Monetary Economy

The currency played in generally an important part within the popular conception as concerns the economy and life. The currency users have placed the currency within the economic activity, but in contradictory with the classical theory, they have proved that currency has not a real effect, opinion that has been checked within the real cycle theory of the business (according to authors F.E.Kydland and E. Prescott). While during a long duration of time, the monetary theory has been governed by the idea, according to which the currency has no significance, the FED has eliminated such an opinion – by its frequent decisions of modifying the interest rates, fact that confirmed that currency does matter, at least on short term. Within this context, the most important aspect of the economical theory is of explaining why and how it carries pout, in order to propose the best references to the political deciding representatives, when these were trying to use the monetary politics in order of reaching an economical expansion, until that point where the rate of inflation hasn’t increasing. The new paradigm of the monetary economy consists in the fact that it proves the inconsistency of the monetary theory, according to which the transactions have generated the currency demand. The part of the currency has been in adjusting between currency demand and available funds. This aspect assumes knowing the importance of the information imperfections and of banks behavior.