Monetary Theory

Based on the actual operation of monetary economy, this book proposes that: the essence of money is a right, that is, holding money means obtaining "e;the right to claim future utility"e;; currency transactions are "e;pure"e; currency transactions in which the public and the central bank act as money suppliers and financial intermediaries act as money demanders. Based on the redefinition of currency and currency transactions, this book constructs the micro-foundation of the theory of bank (financial intermediary) currency demand, analyzes the superposition state of currency neutrality and non-neutrality; It deduces two theorems of excess money demand, and proves that the independence of bank credit and the formation of mortgage and pledge financing mechanism will drive the bank's excess money demand for the household sector, thus forming a cyclical economic-financial phenomenon of excessive investment and credit contraction; Finally, it conducts an in-depth analysis of the two currency cycles existing in the real currency economy-"e;output-currency cycle"e; and "e;asset-currency cycle"e;. It demonstrates how the mortgage and pledge financing mechanism drives asset bubbles and asset price inflation, and the "e;boosting"e; role of loose monetary policy in this process.