Title: Teaching money, fiscal and monetary policies: basic principles

Authors: Hassan Bougrine

Addresses: Department of Economics, Laurentian University, 935 Ramsey Lake Road, Sudbury P3E 2C6, Ontario, Canada

Abstract: This paper presents some challenges encountered by non-neoclassical economists in explaining that money is not a commodity, that it is not backed by gold, and that it is not scarce. We discuss the role of commercial banks in creating money by simply granting loans. We then explain that, in a similar manner, the central bank can easily pay for any government expenditure simply by accepting to credit the government's account. Once students understand the mechanism behind the creation of money, they are led to formulate the correct economic policies that are needed for the creation of wealth and prosperity.

Keywords: barter; commodity money; credit; debt; fiscal policy; interest rates; monetary policy; public finance; taxes; commercial banks; bank loans; economic education; economic policies; creation of money.

DOI: 10.1504/IJPEE.2012.051141

International Journal of Pluralism and Economics Education, 2012 Vol.3 No.3, pp.320 - 332

Published online: 16 Aug 2014 *

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