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The central bank’s dilemma, the inflation-deflation paradox and a new interpretation of the Kondratieff waves

Author

Listed:
  • Felix Fuders

    (Economics Institute, Universidad Austral de Chile; camino al Phoenix s/n, Valdivia, Chile.)

  • Cristian Mondaca

    (Economics Institute, Universidad Austral de Chile; camino al Phoenix s/n, Valdivia, Chile.)

  • Mustapha Azungah Haruna

    (Economics Institute, Universidad Austral de Chile; camino al Phoenix s/n, Valdivia, Chile.)

Abstract

The article tries to contribute to a new understanding of how money is created by commercial banks and to describe the dilemma, which after some time, every Central Bank within the fractional reserve banking system faces. This dilemma provides an explication for the politics of “cheap money” that has been applied by Central Banks of almost every industrialized economy during the last years, despite the fact that the money supply has reached unprecedented levels. This context is then used to describe what might be called the “Inflation-Deflation Paradox” and to offer a new interpretation of the long economic cycles, the so-called Kondratieff waves.

Suggested Citation

  • Felix Fuders & Cristian Mondaca & Mustapha Azungah Haruna, 2013. "The central bank’s dilemma, the inflation-deflation paradox and a new interpretation of the Kondratieff waves," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 38(36), pages 33-66, july-dece.
    • Handle: RePEc:ula:econom:v:38:y:2013:i:36:p:33-66
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    References listed on IDEAS

    as
    1. Hyman P. Minsky, 1995. "Longer Waves in Financial Relations: Financial Factors in the More Severe Depressions II," Journal of Economic Issues, Taylor & Francis Journals, vol. 29(1), pages 83-96, March.
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    More about this item

    Keywords

    Fractional reserve banking; money multiplier; financial crisis; Kondratieff waves.;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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