In 1974, Jim Cairns, my former teacher at the University of Melbourne who at the time was Treasurer in the Whitlam ALP government, asked me to be Governor of Australia's central bank (the Reserve Bank of Australia). I replied: ‘You know me, Jim, I'm a real man not a money man, so thanks but no thanks.’
So in my lectures I usually mentioned money and finance only in passing. Hence this is a short chapter; it concentrates on whether the money supply may or should be regarded as exogenous or endogenous.
My own view is that it is mainly, but certainly not completely, endogenous. I take as my authority Keynes himself, who for virtually all of his professional life was overwhelmingly an endogenous money person. As a follower of Marshall, he understood the role of mutual determination; but also, as Luigi Pasinetti has pointed out (see Pasinetti 1974, 44), Keynes also argued most strongly (and led by example):
that it is one of the tasks of the economic theorist … to specify which variables are sufficiently interdependent as to be best represented by simultaneous relations, and which variables exhibit such an overwhelming dependence in one direction (and such a small dependence in the opposite direction) as to be best represented by one–way–direction relations.
Immediately, the apparent exception of The General Theory surely comes to mind. Sheila Dow (1997) has provided a convincing explanation of why this is not so.