Monetary Realism Recommended Reading

What is Monetary Realism (MR)?

Monetary Realism (MR) is a set of understandings that help to describe how the monetary system functions (see here for our full primer). This sytem is deep, complex and often misunderstood.  We hope to bring balance and objective insights to the discussion in order to clarify many of the misconceptions about money, economics and the monetary system.  Our goal with MR is to focus on the core operational realities of the economy while any policy ideas are entirely peripheral to MR.

Our mission here is to provide an unbiased and apolitical (as best that can be achieved!) perspective of the monetary system.  We want to educate the public so that they can obtain a better understanding of the system and make more informed decisions.  In keeping with this educational approach we hope the reader will not be afraid to offer their own policy ideas, critiques of MR and utilize the comments for furthering education.

MR was established in 2011 by Cullen Roche, Michael Sankowski, Carlos Mucha, Brett Fiebiger and JKH (who can’t be named for professional reasons).  We are primarily market practitioners who have come to the conclusion that most economists just don’t understand the financial world as well as most people think.  Through our extensive real-world understanding in banking, futures markets, law and investment management we have developed an “in the trenches” view of the monetary battle field.  We have developed MR in large part to try to develop a more realistic and pragmatic view of the monetary system and the world of money by viewing it thru the lens of operational understandings as opposed to the theoretical and often flawed perspective that economists teach.

Below are some of our core views:

  • We believe in the importance of understanding the monetary system as it exists and not how we want it to exist.
  • We believe in the importance of understanding institutions as they exist with regards to their relationship to one another.
  • The fiat monetary system is a system made up of financial assets therefore we believe in the importance of understanding the accounting that comprises these financial assets.
  • We believe in the importance of using this accounting and institutional understanding to comprehend the sector financial balances within the monetary system.
  • We view banks as important distributors of money or bank deposits which make up the dominant medium of exchange.  Therefore, an in-depth understanding of banking is crucial to understanding the monetary system.
  • Monetary Realists believe markets are made up of irrational participants residing in a complex dynamical system.  Therefore, we reject the efficient market hypothesis, rational expectations and general equilibrium.

To obtain  a better understanding of Monetary Realism we recommend the following reading (some of which is quite advanced):

1.  Understanding The Modern Monetary System

2.  The “Dismal Science” and Getting Back to Da Vinci’s Methodology

3.  Understanding Inside & Outside Money

4.  Understanding Moneyness

5.  Credit IS Money

6.  The Disaggregation of Credit

7.  Where Does Cash Come From?  

8.  The Human Body, The Economy & The System of Flows

9.  Understanding the Fed’s Primary Purpose

10  JKH on Saving, Investment and S=I+(S-I)

11. The Treasury and Central Bank: A Contingent Institutional Approach

12.  Saving, stock/flow consistency and Kalecki

13.  Banking in the Abstract

14.  Some Simple Banking Examples

15.  What Makes Monetary Realism Unique?

* Some of these documents use the term MMR to refer to MR.  These were published prior to the official name as MR.  

 

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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