POLS 1090 Lecture Notes - Lecture 5: Overnight Rate, Monetarism, Keynesian Economics

• School: York University
• Department: Political Science
• Course: POLS 1090
• Professor: Jay Goulding

Document Summary

All 3 pillars of the kws came under attack: keynesianism, argued that it was inflationary and ineffective. The(cid:455) argued that capitalis(cid:373) (cid:449)as (cid:373)ost efficie(cid:374)tl(cid:455) orga(cid:374)ized through (cid:862) free (cid:373)arkets(cid:863) Reassertio(cid:374) for the orthodo(cid:454) eco(cid:374)o(cid:373)ic thi(cid:374)ki(cid:374)g of the (cid:1005)93(cid:1004)"s (cid:894)co(cid:374)(cid:374)ected (cid:449)ith the great depression) This assertion is responding to the keynesian welfare state. Its purpose to undercut the consensus that was determining policy in the advance economies. The focus of these arguments was on controlling the money supply. Cash and demand deposits (chequing account, liquid investments) Monetarists argued that the kws had led to an excessive growth of government spending to fund all the new welfare state programs that were being created. This led to state deficits (government did not fund welfare state program through budget but did so with deficit spending which in turn lead to inflation) This is an inflationary process because according to the monetarist the government printing money or expanding the money supply to support their deficits.