The “Solvency Rule” of the Central Banker in a Monetary Scheme of Reproduction

An alternative interpretation of monetary policy suggests that central bankers are not able to manage the business cycle and inflation. Rather, they set interest rates and other monetary policy variables in order to regulate the conditions of solvency in the economic system and the related tendency towards “centralization” of capital. This “solvency rule” of central banks is determined here within a two-sector monetary scheme of reproduction in which some restrictive assumptions contained in previous versions are removed. The main result of this scheme is that any sort of “neutrality” of monetary policy must be excluded, not only from the points of view of the scale of production or the distribution of income, but also from that of the solvency conditions and the related centralization of capital in each sector of the economic system