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Finance and Credit
 

Financial bubbles and crises in the light of the new theory of money

Vol. 27, Iss. 2, FEBRUARY 2021

Received: 25 November 2020

Received in revised form: 30 December 2020

Accepted: 18 January 2021

Available online: 26 February 2021

Subject Heading: MONETARY ACCOMMODATION

JEL Classification: A11, E52, G28, H12, O24

Pages: 296–320

https://doi.org/10.24891/fc.27.2.296

Evgenii А. SKOBLIKOV Fund of Financial Initiatives, Penza, Russian Federation
eas-eik@mail.ru

https://orcid.org/0000-0003-0017-4927

Subject. The article investigates the formation of financial bubbles and crises, using the concepts of the New Theory of Money.
Objectives. The aim is to show that the use of tenets of the New Theory of Money enables to reduce the consequences of crises and slows down the growth of financial bubbles.
Methods. The study employs methods of economic analysis, comparison, expert assessments, scientific skepticism, content analysis of literature sources and statistics, the systems approach, analogy, and the project method.
Results. The findings are essential for public domestic and foreign policy, aimed at streamlining the money circulation within the country and in foreign trade activities based on the use (application) of the national currency in bilateral and multilateral relations with other States; for reforming the stock exchanges and the banking system to focus their activities on investing in the economy and eliminating (weakening) the speculative nature of banking and exchange business.
Conclusions. The use of the New Theory of Money makes it possible to develop and apply a set of scientifically grounded measures to reduce the negative impact of economic crises and the rate of financial bubbles formation, ultimately enabling the economy to grow faster, without shocks and collapses.

Keywords: bank, stock exchange, economic law, theory of money, crisis

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