Randall Wray did a guest post at FT Alphaville as part of a series devoted to the upcoming Mission-Oriented Finance conference.

In his post, Wray counters the conventional story about the nature and significance of money with an alternate view drawing on Schumpeter’s notion of bankers as the “ephors” of capitalism:

Bank and central bank money creation is limited by rules of thumb, underwriting standards, capital ratios and other imposed constraints. After abandoning the gold standard, there are no physical limits to money creation. We cannot run out of keystroke entries on bank balance sheets.

This recognition is fundamental to issues surrounding finance. It is also scary.

[…]

It is difficult to find examples of excessive money creation to finance productive uses. Rather, the main problem is that much or even most finance is created to fuel asset price bubbles. And that includes finance created both by our private banking ephors and our central banking ephors.

The biggest challenge facing us today is not the lack of finance, but rather how to push finance to promote both the private and the public interest — through the capital development of our country.

Read the post here.