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The central bank’s dilemma, the inflation-deflation paradox and a new interpretation of the Kondratieff waves

Felix Fuders (), Cristian Mondaca () and Mustapha Azungah Haruna ()
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Felix Fuders: Economics Institute, Universidad Austral de Chile; camino al Phoenix s/n, Valdivia, Chile.
Cristian Mondaca: Economics Institute, Universidad Austral de Chile; camino al Phoenix s/n, Valdivia, Chile.
Mustapha Azungah Haruna: Economics Institute, Universidad Austral de Chile; camino al Phoenix s/n, Valdivia, Chile.

Economía, 2013, vol. 38, issue 36, 33-66

Abstract: The article tries to contribute to a new understanding of how money is created by commercial banks and to describe the dilemma, which after some time, every Central Bank within the fractional reserve banking system faces. This dilemma provides an explication for the politics of “cheap money” that has been applied by Central Banks of almost every industrialized economy during the last years, despite the fact that the money supply has reached unprecedented levels. This context is then used to describe what might be called the “Inflation-Deflation Paradox” and to offer a new interpretation of the long economic cycles, the so-called Kondratieff waves.

Keywords: Fractional reserve banking; money multiplier; financial crisis; Kondratieff waves. (search for similar items in EconPapers)
JEL-codes: G20 G21 G28 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ula:econom:v:38:y:2013:i:36:p:33-66

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