Development And Impact

Development and impact of functional finance presentation The last of these principles by Lerner caused much debate in the decades of 40 and 50 of the twentieth century, when most of the Keynesians (including Keynes himself) were much more measured in their proposals. 12 However, for the 60s of the same century, the rules of Lerner became the standard interpretation of Keynesian macroeconomics texts both as in discussions of political economy, especially in the U.S., because of some peculiarities of the economy that country. (see below) It has been argued that this is because Keynes texts contain almost no practical proposal for economic action. They contain, for example, references to fiscal policies. but also had powerful forces demanding the implementation of policies “Keynesian”.Consequently, when he attacked those policies, in reality the proposals were attacked by Lerner. Whatever the case, those policies were implemented throughout the world, prompting Time magazine observed that “men in Washington made the nation’s economy Keynesian principles have been used not only to avoid the violent cycles of pre-war days but to produce a phenomenal economic growth and achieve remarkably stable prices …figuring that the U.S. had somehow discovered the secret of stable and non-inflationary growth, leaders from many countries on both sides of the Iron Curtain openly tried to emulate his success ” However, the attack on these “Keynesian” is intensified through the 1970s and 1980s, led by, among others, Ludwig von Mises, Friedrich Hayek and Milton Friedman, the last of which had the greatest influence in the U.S., where, from the end of the 60s of the twentieth century and beginning of 70, his monetarist proposal began to replace functional finance. The situation, suggested above, U.S. is peculiar historical trend of the country to show deficits in its fiscal budget. This led to two visions, though they may be seen as generally similar in its practical effects are perceived as competitive: the aforementioned vision of functional finance (See L.Randall Wray, op cit) and the monetarist, exemplified by Friedman, according to which, the crisis could be averted if the U.S. central bank-the Federal Reserve expanded the amount of circulating since the money works as a “money multiplier” Comparing the two visions, Paul Krugman writes: “A central theme of Keynes’s was the impotence of monetary policy in terms of the type of depression. But Milton Friedman and Anna Schwartz, in his magisterial history of U.S. monetary propose that the Bundesbank might have prevented the Great Depression-a proposal that later, in popular writings, including Friedman himself, is transformed into the proposal Federal Bank caused the depression. Now, what the Bank was actually controlled the monetary base-currency plus bank reserves. As the figure shows, the base expanded in reality during the Great Depression, making it difficult to make the case that the Fed caused the depression.