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The posited relationship between economic theory, energy and entropy, has been extended further by systems scientists to explain the role of energy in biological evolution in terms of such economic criteria as productivity, efficiency, and especially the costs and benefits of the various mechanisms for capturing and utilizing available energy ...
The theory of a credit channel has been postulated as an explanation for a number of puzzling features of certain macroeconomic responses to monetary policy shocks, which the interest rate channel cannot fully explain. For example, Bernanke and Gertler (1995) [2] describe 3 puzzles in the data:
Monetary policy is the outcome of a complex interaction between monetary institutions, central banker preferences and policy rules, and hence human decision-making plays an important role. [101] It is more and more recognized that the standard rational approach does not provide an optimal foundation for monetary policy actions.
Modern monetary theory or modern money theory (MMT) is a heterodox [1] macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires. [2]
An example is the weregild, the monetary value that must be paid to a family if one of his members is killed. The weregild was truly a reflection of personal values, in this case of a lost life, rather than the compensation for the income stream that the deceased would have provided to the family.
The monetarist theory states that variations in the money supply have major influences on national output in the short run and on price levels over longer periods. Monetarists assert that the objectives of monetary policy are best met by targeting the growth rate of the money supply rather than by engaging in discretionary monetary policy. [1]
Monetary policy affects real interest rates and the exchange rate, leading to changes in net exports [11] Tobin's q theory; Monetary policy affects stock prices, leading to changes in Tobin's q (the market value of firms divided by the replacement cost of capital) and investment [9] Wealth effects
Innes goes on to note that a major problem in getting the public to understand the extent to which monetary systems are debt based is the challenge in persuading them that "things are not the way they seem". [9] Since the late 20th century, Innes' credit theory of money has been integrated into Modern Monetary Theory.