Horizon SFC: Reconstructing the Hidden Logic of the Economy

This article provides an in-depth analysis of the Stock-Flow Consistent (SFC) paradigm, pioneered by Wynne Godley and Marc Lavoie. The authors abandon traditional general equilibrium models in favor of rigorous financial hydraulics based on balance sheet identities and cash flows. The text provides a detailed discussion of macroeconomic balance sheet mechanics, explaining how the relationships between the private, public, and foreign sectors determine economic stability. The reader will learn a typology of analytical models—from closed economies to complex monetary unions—and understand the systemic role of endogenous money and credit creation. The analysis also addresses the social and political consequences of balance sheet imbalances, shedding new light on the issue of conflict inflation. This is an essential compendium for those seeking a coherent account of contemporary macroeconomic processes.