Banking is an ongoing area of controversy in popular discussion of economics and finance. What sets it apart from other areas of economic controversy is that it is not seen as contentious by the mainstream. This has meant that arguments are largely done at the fringes, and generally ignored by conventional economists. I see two main drivers of the difficulties in dealing with the subject: ideology and theoretical intractability.
If one affirms that money is endogenous, new private and public debt are new spending power and human beings often act as irrational and not well-informed, then all kind of non-equilibrium states are possible, such as placing astronomical size of off-balance sheet liabilities for CDS and other gambling instruments. Especially, when one party, the public state, plays one role in the game (especially changes in public debt) and an other role by changing and enforcing the rules of the game for everybody.
Would it be more useful for theory to give plausible explanations for 90% of the time instead of being upside-down deadwrong 100% of the time with loanable funds model? E.g. does quantum physics give useful insights even though they know 'everything' except small stuff, big stuff, cold stuff, hot stuff, fast stuff, slow stuff, heavy stuff, dark stuff and turbulence?
Did you read Steve Keen, The New Economics: A Manifesto, chapter two: Money Matters?
It contains some systems dynamics models of bank and government money, credit. Different sectors of the economy can be added to create a more complex model. The benefit of engineering based systems dynamics modeling is that it shows oscillating behavior including the "great moderation" and the following great recession.
The mainstream is not totally blind. I was amused to find that the Reserve Bank of Australia (RBA) has attempted to fit a banking sector into MARTIN (their macro model of Australia). It's a dog's breakfast, like mainstream macro models are, and it is hilarious that they managed to do this without referencing Minsky (ideological blinkers); but at least someone at the RBA is aware of the need for a banking sector in their macro model! Check it out here: https://www.rba.gov.au/publications/rdp/2022/2022-01/introduction.html
I once started to build a stock flow consistent Godley type model to use as simulation trainining in the Strategic ALM courses I taught. It got pretty complex and decided it would be too much to run in a two day professional course. But was a fun intellectual challenge!
If one affirms that money is endogenous, new private and public debt are new spending power and human beings often act as irrational and not well-informed, then all kind of non-equilibrium states are possible, such as placing astronomical size of off-balance sheet liabilities for CDS and other gambling instruments. Especially, when one party, the public state, plays one role in the game (especially changes in public debt) and an other role by changing and enforcing the rules of the game for everybody.
Would it be more useful for theory to give plausible explanations for 90% of the time instead of being upside-down deadwrong 100% of the time with loanable funds model? E.g. does quantum physics give useful insights even though they know 'everything' except small stuff, big stuff, cold stuff, hot stuff, fast stuff, slow stuff, heavy stuff, dark stuff and turbulence?
Did you read Steve Keen, The New Economics: A Manifesto, chapter two: Money Matters?
It contains some systems dynamics models of bank and government money, credit. Different sectors of the economy can be added to create a more complex model. The benefit of engineering based systems dynamics modeling is that it shows oscillating behavior including the "great moderation" and the following great recession.
The mainstream is not totally blind. I was amused to find that the Reserve Bank of Australia (RBA) has attempted to fit a banking sector into MARTIN (their macro model of Australia). It's a dog's breakfast, like mainstream macro models are, and it is hilarious that they managed to do this without referencing Minsky (ideological blinkers); but at least someone at the RBA is aware of the need for a banking sector in their macro model! Check it out here: https://www.rba.gov.au/publications/rdp/2022/2022-01/introduction.html
I once started to build a stock flow consistent Godley type model to use as simulation trainining in the Strategic ALM courses I taught. It got pretty complex and decided it would be too much to run in a two day professional course. But was a fun intellectual challenge!
Suppose you are already in contact with Tyrone Keynes. If you describe your model he could probably rebuild it in Steve Keen's Minsky software.