Keynes and Fractional Reserve Banking: The NPV vs. MEC
DOI:
https://doi.org/10.52195/pm.v15i1.60Abstract
This paper develops a framework for the economic analysis of frac- tional reserve banking. After introducing the loan market theory and the net present value, the paper shows how fractional reserve banking causes the busi- ness cycle by systematically falsifying net present value rankings. Next, the paper demonstrates that Keynes’s IS-LM model and marginal efficiency of cap- ital rule out fractional reserve banking as the cause of the business cycle. Finally, the paper shows that Keynes’s theory is fundamentally flawed because his theory of investment in incorrect.
Keywords: Fractional reserve banking, Austrian business cycle theory, John Maynard Keynes, Keynesian economics, net present value, marginal efficiency of capital.
JEL Classification: E12, E22, E32, E43, E51, E58, G30.
Resumen: Este trabajo desarrolla un marco para el análisis económico de la banca con reserva fraccionaria. Después de presentar la teoría del mercado de préstamos y el valor presente neto, el documento muestra cómo la banca con reserva fraccionaria causa el ciclo económico al falsificar sistemática- mente las clasificaciones del valor presente neto. A continuación, el docu- mento demuestra que el modelo IS-LM de Keynes y la eficiencia marginal del capital descartan la banca con reserva fraccionaria como la causa del ciclo económico. Finalmente, el artículo muestra que la teoría de Keynes es fundamentalmente defectuosa dado que su teoría de la inversión es inco- rrecta.
Palabras clave: Banca con reserva fraccionaria, teoría austriaca del ciclo eco- nómico, John M. Keynes, economía keynesiana, valor actual neto, eficiencia marginal del capital.
Clasificación JEL: E12, E22, E32, E43, E51, E58, G30.
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