The economic limits of the ‘originate to distribute’ model

Wed 27 January 2016

Mill Lane Lecture Rooms

As students, we learnt that the financial system is a satellite that moves around the planet (the real economy). What happens when the satellite becomes bigger than the planet and takes the lead in innovation? This is the result of the current financialization process based on the connivance between traditional banking (able to create credit-money out of nothing) and the shadow banking (that uses this liquidity to multiply asset-based-securities disguising their risks). In this paper we analyze the economic limits to the “originate to distribute model” and show the consequences of surpassing them. We complete the postKeynesian model by separating the circuit of output transactions (where credit-money is endogenous) and the circuit for non-output transactions (where credit is exogenous and generates asset bubbles). Our main proposal is to discriminate the regulation of credit according to their allocation. The purchase of assets with credit should be banned.

Biography:
Oscar Dejuan is Professor of Economics at the University of Castilla – La Mancha, Spain. During the academic year 2015-16 he is a Visitor to the Department of Land Economy in the University of Cambridge. He learnt Economics from the history of economic thought. His personal synthesis combines the Classical-Sraffian theory of value and distribution and the postKeynesian theory of output and money. He has applied these theories in the analysis of growth and crisis. His expertise in input-output economics has enabled him to analyze other relevant topics such as energy demand and CO2 emissions.

Cost: Free