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Keynes, the Pope and the IMF

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  • Mark Hayes

Abstract

This paper discusses Keynes’s surprisingly positive views on the medieval scholastic teaching on usury and draws upon his work to argue that the traditional view of usury (understood as the charging of rent for the use of money) as anti-social is well-founded. Keynes’s understanding of the nature of probability allows a clear distinction to be made between debt and equity finance which most economists dismiss. Rather than meriting remuneration, the demand for the security provided by money against an uncertain future imposes a social cost in one form or another. This proposition is illustrated with reference to the problems of the modern international financial and monetary system, specifically the role of deposit insurance and the obstacles to a renewed system of managed exchange rates, without which many regions appear doomed to enduring long-term austerity.

Suggested Citation

  • Mark Hayes, 2015. "Keynes, the Pope and the IMF," Working Papers PKWP1502, Post Keynesian Economics Study Group (PKSG).
  • Handle: RePEc:pke:wpaper:pkwp1502
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    File URL: http://www.postkeynesian.net/downloads/working-papers/PKWP1502.pdf
    File Function: First version, 2015
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    References listed on IDEAS

    as
    1. Edward Kane, 2010. "The Importance of Monitoring and Mitigating the Safety-Net Consequences of Regulation-Induced Innovation," Review of Social Economy, Taylor & Francis Journals, vol. 68(2), pages 145-161.
    2. John H. Munro, 2011. "Usury, Calvinism, and Credit in Protestant England: from the Sixteenth Century to the Industrial Revolution," Working Papers tecipa-439, University of Toronto, Department of Economics.
    3. Coopey, Richard & Clarke, Donald, 1995. "3i: Fifty Years Investing in Industry," OUP Catalogue, Oxford University Press, number 9780198289449.
    4. Kaldor, Nicholas, 1987. "The role of commodity prices in economic recovery," World Development, Elsevier, vol. 15(5), pages 551-558, May.
    5. Nicholas Kaldor, 1939. "Speculation and Economic Stability," Review of Economic Studies, Oxford University Press, vol. 7(1), pages 1-27.
    6. Kenen Peter, 2010. "An SDR Based Reserve System," Journal of Globalization and Development, De Gruyter, vol. 1(2), pages 1-14, December.
    7. Douglas Gale & Martin Hellwig, 1985. "Incentive-Compatible Debt Contracts: The One-Period Problem," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 647-663.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Interest; monetary system; commodity standard; deposit insurance;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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