Duncan's comments that
>What this model doesn't address is why agents are holding this bank money
>at all. One can give a good answer to this question in real-life
>historical terms by referring to the credit of the state, but the
>equations you write down, while they determine a path for the price
>level, don't consider alternative institutional structures... <snip>
Actually, there is no money held as such in this model: instead, capitalists
have positive or negative bank balances. The bank balances themselves are
the vehicle through which all transactions are effected, so the money in
this system is (a) one capitalist telling the bank to transfer funds from
his/her account to that of another capitalist; (b) effectively, "bonds"
letting a worker buy commodities from any capitalist to the value of the
wage; (c) etc.
Cheers,
Steve
Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney
PO Box 555 Campbelltown NSW 2560
Australia
s.keen@uws.edu.au (046) 20-3016 Fax (046) 26-6683
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