Contributions To Economical Thought
Fekete's contribution to the development of economic thought is his introduction of speculation via his Theory on the Formation and Origin of Interest, on Hoarding and on Speculation. Speculation is absent in Keynesian, Marxian, Walrasian, and Austrian economic theory. By merging the Time Preference Theory on the Origin of Interest with the Productivity of Capital, resulting in what he calls his Hexagonal Model, the drivers for the ceiling and the floor rate, Fekete maintains that economic thinking has been enriched, since the above has been missing in both Austrian and traditional economic thought. Grounded in Mengerian roots, the floor rate of interest is formed by the time preference theory as treated by Von Mises but adapted to the marginal time preference and the ceiling rate of interest is formed by the marginal productivity of capital theory as treated by Eugen Böhm von Bawerk. He has reconciled both theories existing for more than a 100 years in a single disequilibrium model, the only one of his kind. This reconciliation ends all reason to treat both theories as opposing each other. The same model works, slightly adapted for a fiat credit system such as the one in operation worldwide to date.
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