CRITICAL REVIEW OF MONETARISM AND CREDIT DERIVATES. Giorgio Bellucci

Over the last thirty years due to the bursting of the speculative bubble the distribution of wealth has brought abaut the destruction of earnings, purchases and investiment Giorgio Bellucci CRITICAL REVIEW OF MONETARISM AND CREDIT DERIVATES More rules and less finance in order to get over the crisis Bellucci analyses the new financial instruments starting with the big bubble in 1929 Through to the “internet bubble” and the sub-prime loans. The origin and the bursting of these bubbles is not always the same and the summary interpretation given by economic analysis has cast doubt on the causes at the root of the crises and has prevented a solution to the problem. The author ,tracing a line from Keynes to Minsky and Galbraith underlines the fact that it is the self-referential nature markets which has caused the crisis. This critical review of monetarism closet interwined with the Modigliani-Miller theorem and the Rule of Taylor ends with a hipothetical duel between Friedman and Galbraith over the crisis in 1929. The distribution of wealth which started with the growth of a bubble and ended with its bursting appears totally unequal. The effect of the wealt produced shows the asymmetrical distribution of earning and a reduction of demand. Despite the fact that an adeguate analysis of incombe trends bifore, during and after the bursting of the financial bubble is not available, it appears clear that over the last thirty years the distribution of wealth caused by the bursting of these bubbles brought abaut the destruction of incombe, demand and investments. The decision was to finance demand by the effects of wealth and distribution of credit rather than by a different form of incombe distribution. Today governments are looking for a solution to the crisis by shifting resources from the pubblic to the private sector, that is from pubblic expenditure to financial markets, without facing the que- stion posed by the destination of this flux of money into the system. It must be said that this course of action has not been fruitful since it does not disclose the so-called shadow banking system or answer question concerning the destructive nature of financial by-products.

Giorgio Bellucci Critica del monetarismo e dei derivati del credito parte 3