| Summary: |
The chapter outlines the fundamental principles of Kalecki’s monetary economics. These are that in a capitalist economy, money belongs ultimately to capitalists, to whom it reverts when workers consume, and the function of the price system is to distribute the resulting accumulations of money among capitalists. For individual capitalists money originates through production and exchange, but also through the credit creation of banks. Additional money is not necessary to finance economic growth or investment, since these can be accommodated by an increase in the velocity of circulation of money. Money is therefore endogenous to the system, if not to individual capitalists. The function of fiscal policy and debt management is to recycle money from idle balances into circulation in the real economy, or to stabilize money holdings. |
