The last five years after the financial crisis have made clear that the workings of money, credit, and debt have profound consequences for the functioning of our economic system.
But for many, the fundamental principles that make money work remain opaque.
Is it possible to create an economic system that does not produce bubbles and crises? And is it possible to solve our current debt crisis?
In this four-part series of short videos, Institute for New Economic Thinking grantee Dirk Bezemer tackles these important questions and offers a straightforward explanation of how money works.
He describes money as a means by which members of a society can settle their debts to one another. He then uses this understanding of money to explain the mechanics of the housing market and how bubbles grow and lead to economic crises. And he explains what can be done after the 2008 crisis to build a more effective and stable financial system that can once again serve the real economy.
Economics should pay much closer attention to debt - one of the key variables in the economy. And Bezemer’s work is an important step in the right direction.