When is Finance Bloated and Dysfunctional?

This essay analyses how the role of central banks changed since the global financial crisis, and how this directional change was accelerated by the outbreak of Covid-19.

Modern Monetary Theory (MMT) is a school of monetary and macroeconomic thought that focuses on the analysis of the monetary and credit system, and in particular on the question of credit creation by the state.

Özlem Onaran analyses the current problems of secular stagnation from a global perspective. At the core of global economic problems is insufficient demand caused by falling wage shares, because most individual countries, and the world as a whole are “wage-led”. Hence a strategy for global growth is to aim at increasing wages and thus the wage share, and the abandonment of policies focusing purely on national competitiveness. Financialization has broken the link between corporate profitability and investment. Reregulation of finance and higher public investment is required in order to crowd in private investment, in this way, reversing the declining trend of potential output growth.

Führt die Digitalisierung in eine smarte grüne Welt oder in eine Wachstumsökonomie mit zunehmender Einkommensungleichheit, Machtgefällen und ökologischen Schäden?