One effect of the crisis has been to revive that ancient beast, the monetary crank - the sort of person who thinks our economic ills can be cured simply by a reform of the monetary system. Ben Dyson illustrates this beautifully when he says that 'a very simple solution to the financial crisis' would be to ban banks from creating 'electronic money.'

The point here is not that this is a left-wing proposal; you can find complaints about fractional reserve banking on the rococo fringes of the right. Nor is the point that it is gibbering idiocy - though it is.

Rather, the point is that this is old idiocy. It goes back through C.H. Douglas (pdf) and William Jennings Bryan and further. As David Clark wrote in the New Palgrave Dictionary of Economics:

Any explanation of the appeal of these ideas over generations would have to invoke sociology and psychology. Such ideas found strong support because they enabled persons to impress their peers with their apparent understanding economics, even though they had no formal training in the discipline. They offered the false hope that there were simple solutions to the complexities of modern economic life. They also transcended party allegiances - similar passages about 'credit slavery' and 'Shylocks' can be found in Hitler's Mein Kampf and left-wing pamphlets of the same era''Funny money' beliefs provided a kind of ideological relief valve.

These beliefs they fly in the face of both neoclassical and Marxist economics, both of which downplay the role of money. To Marx, money was a veil which hid the real fact of workers' exploitation. And in a lot of neoclassical economics money plays little role. Early general equilibrium models got by without it at all - consistent with the 'classical dichotomy' which says that, in the long-run, money affects only nominal variables (the price level) rather than real aggregate ones such as output. Yes, monetary disturbances might have real effects in the short run, but these can be corrected by orthodox monetary policy - not that it's obvious (pdf) that monetary policy needs money.

This dichotomy matters. The crisis we're in is a real phenomenon, not a monetary one:

- Debt is a real phenomenon. Debtors - government or private - have incurred a real obligation, to transfer some of their future incomes to creditors. The problem for Greece and for over-burdened households is that these real obligations are more onerous than they anticipated. That's a real problem. Yes, debt can be reduced by inflation - printing money. But this is just a backdoor way of achieving a redistribution of real resources away from creditors and towards debtors.

- Banks' misjudgements of risks - whether they arose from stupidity or from misaligned incentives - were real mistakes, not monetary ones.

- Banks' current reluctance to lend, and companies' reluctance to borrow, are also real things. The reflect genuine pessimism about future real output and hence the viability of the real obligations that debt represents.

- The sharp slowdown in UK productivity and the dearth of investment opportunities are real phenomena.

Now, I don't want to overstate the case here and completely deny a role for money. I'll concede that money illusion might have played a role in causing households to over-estimate house price returns and so over-accumulate mortgage debt. And I'll even concede that quantitative easing can have small real effects. But the point is that our problems are real ones which do not have simple solutions, and there is little that money can do about them.To quote her out of context, Jessie J got it right: 'It's not about the money, money, money.'