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Make a bubble, take a free lunch, break a bank

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  • Kakarot-Handtke, Egmont

Abstract

Standard economics is known to be incapable of integrating the real and the monetary sphere. The ultimate reason is that the whole theoretical edifice is built upon a set of behavioral axioms. Therefore, the formal starting point is moved to structural axioms. This makes it possible to formally track the complete process of value creation and destruction in the asset market and its consequences for the household and business sector. From the set of structural axioms emerge the well-known phenomena of a bubble from free lunches through appreciation to defaults due to a lack of potential next buyers.

Suggested Citation

  • Kakarot-Handtke, Egmont, 2012. "Make a bubble, take a free lunch, break a bank," MPRA Paper 42996, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42996
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    File URL: https://mpra.ub.uni-muenchen.de/42996/1/MPRA_paper_42996.pdf
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    References listed on IDEAS

    as
    1. Kakarot-Handtke, Egmont, 2011. "Reconstructing the Quantity Theory (I)," MPRA Paper 32421, University Library of Munich, Germany.
    2. Bezemer, D.J., 2009. "No one saw this coming. Understanding financial crisis through accounting models," Research Report 09002, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    3. Kakarot-Handtke, Egmont, 2011. "The pure logic of value, profit, interest," MPRA Paper 30853, University Library of Munich, Germany.
    4. Bezemer, Dirk J, 2009. "“No One Saw This Coming”: Understanding Financial Crisis Through Accounting Models," MPRA Paper 15892, University Library of Munich, Germany.
    5. repec:dgr:rugsom:09002 is not listed on IDEAS
    6. Kakarot-Handtke, Egmont, 2012. "General formal foundations of the virtuous deficit–profit symmetry and the vicious debt deflation," MPRA Paper 42912, University Library of Munich, Germany.
    7. Frank Ackerman, 2001. "Still dead after all these years: interpreting the failure of general equilibrium theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 9(2), pages 119-139.
    8. Kakarot-Handtke, Egmont, 2011. "Primary and secondary markets," MPRA Paper 32996, University Library of Munich, Germany.
    9. Michael Hudson, 2012. "Veblen's Institutionalist Elaboration of Rent Theory," Economics Working Paper Archive wp_729, Levy Economics Institute.
    10. Tovar, Camilo Ernesto, 2009. "DSGE Models and Central Banks," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-31.
    11. Lawrence H. Summers, 1986. "Some skeptical observations on real business cycle theory," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 10(Fall), pages 23-27.
    12. Michael Hudson & Dirk Bezemer, 2012. "Incorporating the Rentier Sectors into a Financial Model," World Economic Review, World Economics Association, vol. 2012(1), pages 1-1, September.
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    1. Kakarot-Handtke, Egmont, 2012. "General formal foundations of the virtuous deficit–profit symmetry and the vicious debt deflation," MPRA Paper 42912, University Library of Munich, Germany.

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    More about this item

    Keywords

    new framework of concepts; structure-centric; axiom set; profit; rate of interest; liquidity preference; rentier; primary market; secondary market; parrot economics; theory of value; valuation price; appreciation; depreciation; net worth; debt/income ratio;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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