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The crisis and beyond: Thinking outside the box

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  • Hillinger, Claude

Abstract

In this paper the author attempts an analysis of the current financial/economic crisis that is wider ranging and more fundamental than he has been able to find. He discusses alternatives to the financial bailouts and shows how the crisis could have been dealt with more efficiently and at little cost to taxpayers. Finally, the author discusses fundamental reforms that would reduce the volatility of financial markets and increase their efficiency. He reviews some social science literature that views the current crisis as an episode in the secular decline of the United States and more generally of the Western Democracies. The timidity of current reforms, which is striking when compared to those that followed the excesses of the Gilded Age and the Great Depression, can be understood in this framework. The author concludes that the industrialized world is now dominated by a financial-political complex that maximizes speculative profits in good times and socializes losses in times of crisis.

Suggested Citation

  • Hillinger, Claude, 2010. "The crisis and beyond: Thinking outside the box," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-61.
  • Handle: RePEc:zbw:ifweej:201023
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    File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2010-23
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    File URL: https://www.econstor.eu/bitstream/10419/39434/1/633726249.pdf
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    References listed on IDEAS

    as
    1. Hillinger, Claude, 2008. "Science and Ideology in Economic, Political and Social Thought," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-70.
    2. Rajan, Raghuram G., 2013. "The Credit Crisis and Cycle-Proof Regulation," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 461-467.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 1065-1188, November.
    4. Reinhart, Carmen & Rogoff, Kenneth, 2009. "This Time It’s Different: Eight Centuries of Financial Folly-Preface," MPRA Paper 17451, University Library of Munich, Germany.
    5. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
    6. Liebowitz Stan J, 2009. "ARMs, Not Subprimes, Caused the Mortgage Crisis," The Economists' Voice, De Gruyter, vol. 6(12), pages 1-5, November.
    7. Hillinger, Claude, 2008. "How to deal with the US financial crisis at no cost to the taxpayer," Discussion Papers in Economics 6929, University of Munich, Department of Economics.
    8. Gerald P. Dwyer & R. W. Hafer, 1999. "Are money growth and inflation still related?," Economic Review, Federal Reserve Bank of Atlanta, issue Q2, pages 32-43.
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    Citations

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    Cited by:

    1. Musgrave, Ralph S., 2010. "The flaws in Keynsian borrow and spend," MPRA Paper 25434, University Library of Munich, Germany.
    2. Musgrave, Ralph S., 2014. "The Solution is Full Reserve / 100% Reserve Banking," MPRA Paper 57955, University Library of Munich, Germany.
    3. Musgrave, Ralph S., 2011. "Consolidation causes little austerity," MPRA Paper 34295, University Library of Munich, Germany.

    More about this item

    Keywords

    Deficit financing; financial crisis; financial instability; full reserve banking; sovereign default; toxic assets;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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