tag:blogger.com,1999:blog-6245381193993153721.post8605831704897039634..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: The Various Versions of the Quantity TheoryLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-6245381193993153721.post-33101575602019203232014-09-12T16:48:01.214-07:002014-09-12T16:48:01.214-07:00Is there any literature on that? Books, articles e...Is there any literature on that? Books, articles ect?Nicholashttps://sites.google.com/site/malthus0splace/homenoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-44293643441190342812014-09-12T13:45:47.976-07:002014-09-12T13:45:47.976-07:00And I never said "endogenous money does not e...And I never said "endogenous money does not exist" Just that Post Keynesians are wrong about its significance Edwardnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-86142257478640563652014-09-12T13:08:35.280-07:002014-09-12T13:08:35.280-07:00Wow,
You are an seriously the most LITERAL person ...Wow,<br />You are an seriously the most LITERAL person Ive ever blogged at., LK. I'll spell out what's implied in my posts.<br /><br />Endogenous money theory, as espoused by the Post Keynesians considers the role of the central bank to be trivial and private credit to be where the action is. While they are right on the surface, they are wrong on the deeper significance. Cash does NOT have to be lent out à lá money multiplier for it to be important. Cash and reserves are important for precautionary and liquidity preference motives. (In a bank run and when people stand on line panicking in front of ATMs) Since the central bank controls both, it follows that the central banks's role is still important.<br /><br />Have I sufficiently clarified the market monetarist counter-response to the Post Keynesians?Edwardnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-29678776048955450772014-09-12T12:22:57.771-07:002014-09-12T12:22:57.771-07:00Seriously, just consider how your comment is incoh...Seriously, just consider how your comment is incoherent. <br /><br />You are saying on the one hand: "endogenous money does not exist!", but at the same time, "well, if the endogenous money system that **actually functions now** did not function, then we would not have endogenous money!"Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-88919375627316229512014-09-12T12:18:39.802-07:002014-09-12T12:18:39.802-07:00So what you are saying is that, if an endogenous m...So what you are saying is that, if an endogenous money system did not exist, then... it would not exist?<br /><br />That is hardly a refutation.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-4460068379759233182014-09-12T10:56:03.136-07:002014-09-12T10:56:03.136-07:00"Inflation is always and everywhere a monetar..."Inflation is always and everywhere a monetary phenomenon IN THE SENSE THAT IT IS AND CAN BE PRODUCED ONLY BY A MORE RAPID INCREASE IN THE QUANTITY OF MONEY THAN IN OUTPUT. … (emphasis mine)<br /><br />The full quote suggests that Friedman had a slightly more sophisticated view of inflation than post-Keynesians would have us believe. It stands to reason that he would admit that negative supply shocks, oil disturbances could cause inflation . But in the absence of government supply restrictions, such an increase in the price level would quickly peter out. That would be what someone like him would say.<br /><br />Phil, wage inflation IS demand push inflation. Wages are typically part in nominal income, which is a measure of MV. <br /><br />Lets perform a simple thought experiment as to why endogenous money theory is nonsense. Let us say that the uk or us central bank freezes production of M0 base money (currency plus reserves. In the US. case the United States Bureau of Engraving and Printing physically prints the notes, but at the behest of the US Federal Reserve.) The central bank sees an asset price boom in place, and is fearful of a bubble even though inflation is under control. It doesn't want to raise interest rates, but it doesn't want the boom to continue either, so it simply holds the line, neither selling securities nor buying them slowing the monetary base growth to absolute zero.<br /><br />Now what do you think would happen?<br /><br />I'll tell you, the effect would be dramatically contractionary. (there is no neutral monetary policy) Even though money created by private banks comprises the vast majority of money in the economy, (and so it LOOKS like endogenous money rules) part of the reason its accepted is because the people and banks believe that their checks can be exchanged for cash. Cash doesn't have to be landed out in the traditional money multiplier fashion (Indeed, I accept that Friedman was wrong about this and you guys are right.. but it still misses the point) for it to have value. People like to hold it for precautionary liquidity preference motives. If their ATMS stop spitting bills, "endogenous" and credit money will collapse, lending will slow. and a massive recession will ensue<br />Edwardnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-62786653753303361792014-09-12T09:23:54.693-07:002014-09-12T09:23:54.693-07:00Yes. Majority are probably wage inflations though....Yes. Majority are probably wage inflations though.Philip Pilkingtonhttp://fixingtheeconomists.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-58957369693264140662014-09-12T09:09:05.690-07:002014-09-12T09:09:05.690-07:00Thanks -- I have fixed the definition of k.
So wo...Thanks -- I have fixed the definition of k.<br /><br />So would it be better to say as a PK definition of inflation the following:<br /><br />"inflation -- or changes in the general price level -- are not explained by the monocausal and mathematical quantity theory.<br /><br />In an endogenous money world, although monetary factors play a role, changes in individual prices that cause inflation/deflation can also be driven by independent non-monetary causes, such as supply side factors, costs, wages, demand factors, without being driven by imagined exogenous money supply changes."?Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-53365733178026024202014-09-12T08:49:42.631-07:002014-09-12T08:49:42.631-07:00Interesting post. I hadn't seen some of these....Interesting post. I hadn't seen some of these. One quibble. You write:<br /><br />"k or kd = the amount of money held as cash or money balances or the demand to hold money per unit of money income"<br /><br />The latter part of that statement seems odd to me. Surely only when we join k up with P.Y we get "the demand to hold money per unit of money income". k alone does not seem to me to have this definition.<br /><br />Finally, I am with Keynes: the quantity theory is useless. Unless we assumed fixed V or k then it tells us nothing at all. The only point in laying it out is really to knock it back down.Philip Pilkingtonhttp://fixingtheeconomists.wordpress.com/noreply@blogger.com