How Are “Financial Balances” Financed? Wicksell, (Keynes) and the US Mainstream Don't Fit Today's Institutions; Kalecki, Triffin, and Minsky Got it Right
Year: 2025
Type: article
Abstract: ABSTRACT The paper examines the financial balances of the US economy. Government is the main borrower and households and the foreign sector the main lenders. Business net lending is minimal. The balances and their underlying transactions contradict the loanable funds theory and its “global savings glut” variation. Keynes's liquidity preference theory is correct but, in its original formulation, overlooked government and foreign sector flows. The internal finance of business investment aligns with Kalecki's profit equation. The foreign deficit, tied to the dollar's role as a reserve currency, reflects systemic global demand for dollar assets, as explained by Triffin and Minsky.
Source: Metroeconomica
DOI: 10.1111/meca.70007
Authors: Michalis Nikiforos, Lance Taylor
Institutions: University of Geneva, The New School
Language: English
Topic: Economic Theory and Policy
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,350
OpenAlex ID: W4417030561