Perry Mehrling has a wonderful new book that advocates for the reintegration of money into macroeconomics. His claim is that neither economics nor finance have been helpful in understanding the current crisis because both abstract from money. By combining the history of economic thought into his analysis of the current economic crisis, Mehrling shows how by taking money for granted, the inherent instability of credit was lost in economic theory and the DSGE models of modern macro. In order to make macroeconomics more useful, the practitioners of the field will need to relearn how to include the story of money in their story of how the economy functions.
Perry has also started writing a blog, “Money View“, which will fit in nicely on our blogroll. The aim of the blog seems to be mostly to “read between the lines” of Financial Times articles. And then he also includes other fun items, such as a recent post that reviewed the film “Inside Job.”