Ext. Links & Notes

This page is literally just a reminder to myself of some good links. Bookmarks are a pain: they're different on every machine I'm at, they're a pain to use (on Firefox) and "organize," and I don't want to go through the process of trying to save them. As an alternative I've often gmailed myself good links (or sets of links) in the past with helpful key words in the email body so I could search for them again later (a poor man's cloud database), but it occurs to me "Why not use this blog for that?" I don't care if it's public... feel free to check them out yourself, but I'm not going to worry about making this page look pretty! ... It's just a quick and dirty (searchable) clipboard, and nothing more:

http://pragcap.com/understanding-moneyness

science tackles economics with "agent based" modeling:
http://pragcap.com/noah-smith-declares-the-synthesis-lost/comment-page-1#comment-151911
Here are couple articles you may be interested in on agent-based economic models:
http://www.nature.com/nature/journal/v460/n7256/full/460685a.html
http://www.santafe.edu/media/workingpapers/05-09-037.pdf
here is a wikipedia site: https://en.wikipedia.org/wiki/Agent-based_computational_economics
I believe this is the future of economic modeling.

Nick Rowe's comments on "The supply of money is demand determined." ... Not even not even wrong, and all that. Also some bits about "perfectly inelastic wrt" and perfectly elastic, etc. Basically one of two talking about money being endogenous in the short term (between six week meetings of the BoC or Fed) but not in the longer term (like two years out) where inflation targeting makes it exogenous. (see Nick Rowe's 2012.08.22 comment below)
http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/04/the-supply-of-money-is-demand-determined.html

Links having to do with the division of total Tsy debt into categories. As of today (2013.08.22) Cullen Roche found some good info on that that I tried to square with a pie chart I'd found from a couple years back:
http://www.fms.treas.gov/bulletin/index.html
http://www.optimist123.com/optimist/2011/08/pie-chart-of-who-owns-the-national-debt-mid-2011.html
http://banking-discussion.blogspot.com/2013/08/auburn.html?showComment=1377236088617#c2383959775535565255 

Cullen's discussion of Banking with Krugman (and a little from Sumner, Rowe and Keen too (and Me!: Cullen's figs 1 and 2), and Mike Sax):
http://pragcap.com/banks-are-special-the-ins-outs-of-money/comment-page-1#comment-152510
http://www.themoneyillusion.com/?p=23124
http://www.themoneyillusion.com/?p=23072
more comments between Sumner and Cullen:
http://www.themoneyillusion.com/?p=23083
http://krugman.blogs.nytimes.com/2013/08/24/commercial-banks-as-creators-of-money/?_r=0 
Even Steve Keen jumps in a bit.
http://www.businessspectator.com.au/article/2013/8/26/economy/reductionism-stops-here?utm_source=exact&utm_medium=email&utm_content=398232&utm_campaign=kgb&modapt=
Here's Rowe (not directly related, but and interesting side bar):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/08/is-money-exogenous-or-endogenous.html
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/08/what-steve-keen-is-maybe-trying-to-say.html
More interesting Rowe comments on Cullen's blog:
http://pragcap.com/banks-and-the-monetary-base-a-friendly-response-to-paul-krugman
Direct from Rowe, and more from Cullen:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/08/banks-and-the-medium-of-exchange-are-both-special-or-neither-special.html
http://pragcap.com/when-non-banking-experts-become-overnight-banking-experts
Mike Sax:
http://diaryofarepublicanhater.blogspot.com/2013/08/contributing-to-krugman-piece-major-eco.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29 
and Steve Roth:
http://angrybearblog.com/2013/08/why-banks-are-special-the-short-story.html 
Now JP Koning too?
http://jpkoning.blogspot.com/2013/08/do-banks-have-widows-cruse.html
This piece he does here on the "convenience yield" is also interesting:
http://jpkoning.blogspot.com/2013/08/the-fed-funds-rate-was-never-feds.html 

Now Sumner too (linking to Rowe) and Wang? (but now we're talking recessions):
http://www.themoneyillusion.com/?p=23152#comment-271114 (more from Sumner & Nick below this) 
And Waldman too:
http://www.interfluidity.com/v2/4522.html 

More on Tobin from Ramanan and JKH at monetaryrealism.com
http://monetaryrealism.com/krugman-and-tobin-on-banking/#comment-44176:
The one below Ramanan talks shadow banks "non-bank financial institutions" and he and I had an email exchange about that:
http://www.concertedaction.com/2013/09/01/james-tobin-turns-in-his-grave/ 
Follow up exchange with Nick Edwards on the above:
http://uneasymoney.com/2014/03/31/can-there-really-be-an-excess-supply-of-commercial-bank-money/#comment-81253
http://www.concertedaction.com/2013/08/26/james-tobin-banking-widows-cruse/
http://www.concertedaction.com/2013/08/24/holier-than-tobin/
Steve Keen too (what Ramanan is writing about in 1st link at concertedaction):
http://debunkingeconomics.com/2013/08/the-getting-of-wisdom/
NBFI = non-bank financial intermediary
NIPA = national income and product accounts
http://en.wikipedia.org/wiki/National_Income_and_Product_Accounts
http://monetaryrealism.com/krugman-and-tobin-on-banking/#comment-44185 (JKH responding to Fed Up's Rowe link; "macro is hard.")  

Good Cullen quote here, on the diff between MR and MM views of recessions (related to the above, but standalone too):
http://pragcap.com/banks-are-special-the-ins-outs-of-money/comment-page-1#comment-152840
"Geoff" also has some good statements above there. The quote itself:
"[recessions are caused by] Or said a little differently, there’s not enough income relative to desired saving. That’s a function of bigger problems and not just an excess demand for money." 

Loans create deposits, funding, etc discussion with JKH, Cullen and more recently "anon":
http://monetaryrealism.com/loans-create-deposits-in-context/
http://pragcap.com/banks-are-special-the-ins-outs-of-money/comment-page-1#comment-152558
Joe in Accounting too. 

Cullen on gov deficits equal private surpluses with some qualifications and S = I + (S-I) and some accouting with accountant FlimFlam and examples from Cullen etc.: S = I + (S-I) accounting examples:
http://pragcap.com/yes-government-deficits-equal-private-surpluses 
http://pragcap.com/yes-government-deficits-equal-private-surpluses/comment-page-1#comment-151097
http://pragcap.com/yes-government-deficits-equal-private-surpluses/comment-page-1#comment-151157
http://pragcap.com/yes-government-deficits-equal-private-surpluses/comment-page-1#comment-151169
http://pragcap.com/yes-government-deficits-equal-private-surpluses/comment-page-1#comment-151169
http://pragcap.com/yes-government-deficits-equal-private-surpluses/comment-page-1#comment-151250
Log cabin example next:
http://pragcap.com/yes-government-deficits-equal-private-surpluses/comment-page-1#comment-151309 
http://pragcap.com/yes-government-deficits-equal-private-surpluses/comment-page-1#comment-151340
http://pragcap.com/yes-government-deficits-equal-private-surpluses/comment-page-1#comment-151345

pragcap, 1930s, FDR, Irving Fisher, debt deflation, "suvy," QE, devalue:
http://pragcap.com/when-non-banking-experts-become-overnight-banking-experts/comment-page-1#comment-152638
http://fraser.stlouisfed.org/docs/meltzer/fisdeb33.pdf

 Cullen talks about daylight overdrafts from the Fed while explaining to "Tom":
http://pragcap.com/banks-and-the-monetary-base-a-friendly-response-to-paul-krugman/comment-page-1#comment-152690
http://www.federalreserve.gov/paymentsystems/psr_dlod.htm

Lars Christensen recommended Free to Choose w/ Milton Friedman, QTM, inflation, etc, from Sumner's page:
http://www.youtube.com/watch?v=jE7zxo61Xc8
http://www.themoneyillusion.com/?p=10116
and Mike Sax & Greg too:
http://diaryofarepublicanhater.blogspot.com/2013/08/contributing-to-krugman-piece-major-eco.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29 

info from Cullen on foreign sector Tsy and Fed deposits & their relation to bank deposits:
http://www.federalreserve.gov/monetarypolicy/bst_frliabilities.htm 
http://pragcap.com/economics-is-mostly-a-policy-debate-masquerading-as-a-scientific-debate/comment-page-1#comment-152770

Cullen's list of stylized facts about MR:
http://pragcap.com/economics-is-mostly-a-policy-debate-masquerading-as-a-scientific-debate/comment-page-1#comment-152743

phil explains to Frances how to make blogger text wider:
http://coppolacomment.blogspot.com/2013/08/the-law-of-rotten-apples.html?showComment=1377513078287#c3409676144024580882 

hyperinflation & default links:
http://pragcap.com/hyperinflation-and-wars/comment-page-1#comment-153224
http://www.theatlantic.com/business/archive/2013/08/what-syria-teaches-us-about-hyperinflation/279184/
http://www.theatlantic.com/business/archive/2012/03/the-hyperinflation-hype-why-the-us-can-never-be-weimar/254715/
http://www.slate.com/blogs/moneybox/2013/08/29/syria_inflation_hyperinflation_s_not_about_money.html
http://www.themoneyillusion.com/?p=23186&cpage=1#comment-271835 
http://www.tradingeconomics.com/syria/inflation-cpi
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102
http://pragcap.com/the-russian-default-what-happened
http://howfiatdies.blogspot.com/
http://www.cato.org/sites/cato.org/files/pubs/pdf/hanke-krus-hyperinflation-table-may-2013.pdf
http://trendfollowingtrader.blogspot.nl/2012/11/hugh-hendry-notices-death-spiral-of.html 
http://thefaintofheart.wordpress.com/2012/10/31/two-kinds-of-money/#comment-11355

Sumner qualifies his EMH = no bubbles statements, to say that's only for asset markets (he describes the difference between bubbles and booms and responds to George Selgin):
http://www.themoneyillusion.com/?paged=2 

Sumner talks about MOE vs MOA and addresses Nick Rowe. Bill Woolsey (MMist) disagrees w/ Scott and responds in the comments. Nick is thinking about it, but offers some criticisms. George Selgin in the comments too. Marcus Nunes is linked to about Brazil being an example of MOE and MOA diverging:
http://www.themoneyillusion.com/?p=23269
http://thefaintofheart.wordpress.com/2012/10/31/two-kinds-of-money/#comment-11355  (Marcus Nunes)
Marcus changes his mind on MOA vs UOA (seems to think Sadowski's use might be better):
http://thefaintofheart.wordpress.com/2014/03/08/macroeconomic-theory-is-not-the-best-analytical-framework-for-making-monetary-policy-decisions/#comment-13225 
Bill Woolsey's comments about electricity as MOA (he uses kw, but should probably use kw-hr). kw = kilowatt:
http://www.themoneyillusion.com/?p=17368#comment-200929

Sumner explains HPE (hot potato effect) again:
http://www.themoneyillusion.com/?p=23314
"...a few MMTers in the ditch along the way, still scratching their heads." ... is that supposed to be me? Hahaha 

Fun w/ Sumner:
http://pragcap.com/hyperinflation-and-wars/comment-page-1#comment-153248 

Sumner approves of Nick's 1st comment (below) about money endogeneity:
http://www.themoneyillusion.com/?p=23186#comment-271969
http://www.themoneyillusion.com/?p=23186#comment-271999

JP Koning's medium of accounts post:
http://jpkoning.blogspot.ca/search/label/medium%20of%20account
JP Koning's answer to my question about Fed finding coins:
http://jpkoning.blogspot.com/2013/09/the-convenience-yield-as-epicentre-of.html?showComment=1378395860825#c5768195352548990388 

Milton Friedman interviewed by Gene Epstein in 1998 re: Austrians Hayek, ABCT harm, etc:
http://www.hoover.org/publications/hoover-digest/article/6459 

Steve Waldman/Steve Roth/Mike Sax vs Scott Sumner/Mark A. Sakowski/Marcus Nunes on what caused inflation in the 1970s (the great inflation): monetary issues or demographics:
http://www.themoneyillusion.com/?p=23432
http://thefaintofheart.wordpress.com/
http://diaryofarepublicanhater.blogspot.com/2013/09/sumner-vs-waldman-on-great-inflation.html?showComment=1378612289919#c5221526966047838512
http://thefaintofheart.wordpress.com/2013/09/07/eureka-the-great-inflation-was-the-result-of-demographic-trends/ 

From monetayrealism article on Tobin & Krugman (JKH):
http://monetaryrealism.com/krugman-and-tobin-on-banking
http://www.palgrave.com/products/title.aspx?pid=512989 (Godley-Lavoie) 
http://monetaryreflections.blogspot.co.uk/ (Nick Edmonds' blog: MR commentator)
http://www.concertedaction.com/ (Ramanan's blog: MR commentator)
http://ritwikpriya.blogspot.com/ (Ritwik's blog: Glasner commentator):
http://uneasymoney.com/2012/05/09/yeager-v-tobin/ (Glasner article I was discussing w/ JKH et al) 

econ blog rankings:
http://www.onalyticaindexes.com/2013/07/31/top-200-influential-economic-blogs-aug-2013-2/ 

Fed paper on inside vs outside money:
http://www.minneapolisfed.org/research/sr/sr374.pdf  

mercantilism & related post by Coppola:
http://www.economist.com/blogs/freeexchange/2013/08/economic-history 
http://coppolacomment.blogspot.com/2013/09/savings-investments-and-dose-of-realism.html

Sept 12, 2013:
O/T: New film about the Fed: I just heard about this on Kai Ryssdal’s “Marketplace” on NPR:
http://www.businessinsider.com/money-for-nothing-film-2013-9
http://www.marketplace.org/ (Kai did an interview w/ the filmmaker, but I don’t think it’s shown up yet in their archive)

Scott's "Are there any Non-QTM theories" article... Japan thing (Greg & Mike Sax) and the 15 to 50 times price level (to base) http://www.themoneyillusion.com/?p=10116

Sadowski vs Roche @ pragcap (Sept 20, 2013 "Matrix"):
http://pragcap.com/the-monetary-realism-matrix/comment-page-1#comment-155086 
more at themoneyillusion:
http://www.themoneyillusion.com/?p=23727&cpage=1#comment-277646 

Nick Rowe says this Bill Woolsey article is good at discussing why they quantity of QE doesn't matter:
http://monetaryfreedom-billwoolsey.blogspot.ca/2013/09/qe-continues.html
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/09/interest-rates-and-aggregate-demand.html?cid=6a00d83451688169e2019aff81aed5970d#comment-6a00d83451688169e2019aff81aed5970d 

Sumner says OMOs (QE?) is "just a swap" (paraphrasing):
"For me an OMO is a roughly equal swap, and the seller of bonds to the Fed is not really richer, if the bonds are sold at market prices. "
http://www.themoneyillusion.com/?p=23247#comment-271524

Sumner disagrees w/ Sproul:
http://www.themoneyillusion.com/?p=23516#comment-275450
TallDave disagrees with Sumner (and agrees with Sproul?):
http://www.themoneyillusion.com/?p=23761&cpage=3#comment-279489 

Joe Franzone (accountant) looks at Example #5 in Ask-Cullen and blesses it:
http://ask-cullen.com/when-a-bank-earns-interest-on-loan-repayments-where-does-it-show-up-on-their-balance-sheet/

Scott Sumner describes QE as "just an asset swap" but actually uses the words "merely an exchange" (in his battle with hyperinflationist Kotlikoff) (my link is to a follow on article the next day, where I respond to another commenter who noticed this):
http://www.themoneyillusion.com/?p=23967&cpage=1#comment-281416 

Mark A. Sadowski on RBC:
"I've wagered my whole economic life on the defeat of RBC."
and
"Kydland and Prescott's [RBCers] work is a tough sell to me. You don't seem to get it. As far as I'm concerned they are the dark side. I'll combat with every ounce of energy I have into the darkest corners of hell."

http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/04/monetary-policy-is-just-one-damn-interest-rate-after-another.html
http://ask-cullen.com/whats-rbc/ 
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/10/degrees-of-freedom-forward-guidance-and-rules.html?cid=6a00d83451688169e2019afff9b923970c#comment-form
More on Prescott from Mark (horse manure piles comment):
http://www.themoneyillusion.com/?p=26043#comment-315774
Plus that Sumner article includes the "established scientific fact" quote from Prescott and Scott's view of Prescott: "not a good monetary economist." 
I summarize this at Rowe's (plus one other Sadowski link to Prescott's work):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/05/the-new-keynesian-conspiracy.html?cid=6a00d83451688169e201a73dbb7fc4970d#comment-6a00d83451688169e201a73dbb7fc4970d

Sadowski's graph of how long term interest rates went up with QE1, QE2, and QE3, and went down again when they ended.
http://1.bp.blogspot.com/-BAnvd5XkIkc/UnKFj667RyI/AAAAAAAAAyM/-xbQBsjqcm0/s1600/QE+Rates.png

Fed's new (as of 2014) reverse repo facility they're trying out with explanations by JKH, Sadowski and Cullen, and "Marcin" at pragcap and "Max" at howfiatdies:
http://howfiatdies.blogspot.com/2014/02/preventing-crises.html?showComment=1392996883644#c4808988489320200351
"The Fed could at least bring up seignorage to break-even if it borrowed from non-banks, which it's experimenting with:

http://www.newyorkfed.org/markets/rrp_faq.html
 " -- Max (at Vincent Cate's howfiatdies blog)


Max, I read through that link a bit more and found a bit that I had a question about: I asked Cullen Roche at pragcap, and he answered. It may be of interest to you:

http://pragcap.com/what-caused-the-great-financial-crisis/comment-page-1#comment-168086

I'm not sure the following post by JKH is related, but I suspect it is:

http://monetaryrealism.com/a-new-operating-framework-for-the-federal-reserve-joseph-gagnon-and-brian-sack/

Both JKH and Sadowski (the latter in a comment) refer to this paper:

http://www.piie.com/publications/pb/pb14-4.pdf

I've been too lazy to read much of any of it except Sadowski's comment. Am I correct that these issues are related?

 BTW, here was Sadowski's comment:
http://www.themoneyillusion.com/?p=26159#comment-318483

"As a practical matter the fed funds rate is no longer of much importance. Joseph Gagnon and Brian Sacks have argued that the Fed should change its policy interest rate to the soon to be instituted reverse repo rate:"

... I think I first encountered this via this comment at pragcap, which makes a stronger claim than what Cullen explained to me about this facility. I tend to trust Cullen more:

http://pragcap.com/when-will-the-fed-end-its-zero-rate-policy/comment-page-1#comment-167236

"The Fed doesn’t have to unwind QE before raising rates due to their new overnight full allotment reverse repo facility. With that they will be able to control ST end of the curve while allowing that system to remain in the excess liquidity state."


"Yes, same thing. The fact that only banks are allowed to hold reserves has created an arbitrage (presumably by accident, although the Fed hasn't been in any hurry to fix the problem). Actually the simplest fix would be to just let anyone and everyone open a Fed account. But borrowing overnight on the open market would also work.

Using the established repo mechanism is kind of funny because it involves the borrower posting collateral - as if lending to the Fed were risky! Everyone would be happy to lend to the Fed without any collateral." -- Max at howfiatdies.


----------------------------------------------------------------------------

My questions about booms, busts, bubbles, recessions, NGDP and "perfect" monetary policy to David Glasner, but answered by Mark Sadowski (I'd also asked Sumner a few weeks back,  but couldn't understand his brief answer):
My question to Glasner (on the Say's Law post that I like to think I inspired):
http://uneasymoney.com/2014/02/20/whos-afraid-of-says-law/#comment-48069

Mark Sadowski's take:
http://www.themoneyillusion.com/?p=26219&cpage=2#comment-319538

Tom Brown:
“1. A boom is to a bust as a bubble is to a __________? A popped bubble? A recession?”

A “panic”.
“2. If bubbles did exist, what would distinguish them from booms?”
“Bubbles” refer to irrationally overpriced assets. “Booms” refer to unusually rapid growth in real output in the entire economy, or in a specific sector of the economy.
“3. In your view, if monetary policy were perfect, would there still be booms and busts? If so, then if we had perfect monetary policy but still experienced a boom or a bust, would the NGDP level still keep on trend?”
Yes and yes.
“4. How is a bust different than a recession caused by a modest nominal shock in combination with poor monetary policy?”
If it is an economy wide “bust” then it would manifest itself in a slowdown in the growth rate of one or more factor inputs (labor, capital, or natural resources) or in a slowdown in the growth rate of total factor productivity (TFP). If it is a sectoral “bust” then it simply manifests itself in declining output within the affected sector.

Lars Christensen's similar quote about RBC that mimic's Rowe's quote about Say's Law:
http://uneasymoney.com/2014/02/20/whos-afraid-of-says-law/#comment-47923 
...that Sadowski echos here:
http://www.themoneyillusion.com/?p=26219&cpage=2#comment-319544 
Tom Brown,
In most RBC models stochastic changes in TFP are the main source of business cycles. Needless to say reality is very different. Perhaps NGDPLT will make RBC true someday 


--------------------------------------------

Sadowski's summary of MM evidence:
http://diaryofarepublicanhater.blogspot.com/2014/02/ben-bernanke-proves-sumners-wrong-about.html?showComment=1392522337032#c7994232829032945412 

--------------------------------------------

Sadowski tears John Williams and ShadowStats a new one (arguing w/ "Willie2"):
http://www.themoneyillusion.com/?p=26219

--------------------------------------------

Cullen' & Glasner's bubble definitions (Sadowski's is above):
Cullen:
“A bubble is an environment in which the market price of an asset has deviated from the underlying asset’s fundamentals to an extent that renders the current market price unstable relative to the underlying asset’s ability to deliver the expected result.”
http://pragcap.com/takeaway-from-2008-fomc-transcripts-predictions-are-hard/comment-page-1#comment-168186
David:
“Tom, As far as I am concerned, there is no clear distinction between boom and expansion and bust and recession. That doesn’t mean that there is no way of making a distinction, just that I don’t have one at the tip of my tongue. I don’t believe in EMH, but I don’t have a good definition of a bubble, but if the value of an asset implies a flow of revenues that are extremely unlikely to be realized, that seems like a bubble.”
http://uneasymoney.com/2014/02/20/whos-afraid-of-says-law/#comment-48688

Sadowski, Yellen, and Don Gellin explain why 2% inflation target:
http://www.themoneyillusion.com/?p=26274#comment-321844
http://www.themoneyillusion.com/?p=26274#comment-321895
http://www.themoneyillusion.com/?p=26274#comment-321966

Glasner:
http://uneasymoney.com/2014/02/28/exposed-irrational-inflation-phobia-at-the-fed-caused-the-panic-of-2008/
From the comments:
“The mechanism I think is simple. Contractionary monetary policy reduces total spending and income. Debts are fixed in nominal terms. Contracting nominal income implies that fewer debts fixed in nominal terms will be repaid. See my post on Hawtrey’s account of financial crises in Good and Bad Trade.”
So that’s a tie-in with the debt deflation BSR concept, isn’t it?
http://pragcap.com/the-feds-crisis-failure-too-much-wall-street/comment-page-1#comment-168622
http://diaryofarepublicanhater.blogspot.com/2014/03/monetary-offset-and-japans-lost-decade.html?showComment=1393963246284#c3364437583020601178 

One of Cullen's favorite sayings:
"spending is a function of income relative to desired saving"
http://pragcap.com/exonerating-milton-friedman/comment-page-1#comment-170171 

Mark Sadowski and I discuss the money multiplier, the BoE paper on endogenous money, how there's no "exogenous school" and the (1+c)/(r+c) form of the money multiplier, and an interesting post buy Nick Rowe on "supply determined" quantity of money:
http://www.themoneyillusion.com/?p=26355#comment-323692 

Case in which Sadowski says Sumner and Coppola are close in substance. Plus Mark complains about FRED and what they did to his plots, and where he sounds mildly annoyed with Scott about the existence of both potential RGDP and NGDP data from the CBO.
http://www.themoneyillusion.com/?p=26445#comment-325585

Why Sadowski doesn't have a blog:
http://www.themoneyillusion.com/?p=26438#comment-325346 

Cullen, Rowe, Koning and others chime in on the money multiplier. Rowe talks "asymmetric redeemability" and "The Law of Reflux" again. Glasner comes up. Endogenous vs exogenous comes up. JP Koning posts link to Lavoie and his take on Reflux.:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/alpha-banks-beta-banks-fixed-exchange-rates-market-shares-and-the-money-multiplier.html
http://pragcap.com/of-course-all-economists-already-understood-the-money-multiplier-not

From Sadowski:
“The Monetary Base is Special”:

http://www.themoneyillusion.com/?p=17357
http://www.themoneyillusion.com/wp-content/uploads/2012/10/Screen-Shot-2012-10-28-at-9.28.30-AM.png

Matheus, of the Fields Institute  (Steve Keen contributor) and "accounting police" (JKH, Ramanan) complaining:
http://fieldsfinance.blogspot.ca/2012/10/of-course-its-model-duh-final-post-on.html
http://fieldsfinance.blogspot.com/2013/08/accounting-identities-for-keen-model.html
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/08/what-steve-keen-is-maybe-trying-to-say.html?cid=6a00d83451688169e2019aff2bcdee970b#comment-6a00d83451688169e2019aff2bcdee970b
http://uneasymoney.com/2014/03/13/hawtrey-v-keynes-on-the-general-theory-and-the-rate-of-interest/#comment-65361   

Sumner's personal favorite post (having to do with nickels & the great depression?):
http://www.themoneyillusion.com/?p=26451#comment-326114 
http://web.hbr.org/email/archive/dailystat.php?date=022712

The time I helped Sadowski with something: (corrected him?)
http://www.themoneyillusion.com/?p=26463#comment-326353
Also "Philippe" has a nice "fairytale" in there he tells MF. 
Definitely corrected in the case of Glasner:


More from Nick Rowe on endogenous vs exogenous (also a continuation of the Rowe vs Glasner money multiplier / reflux issue):
http://uneasymoney.com/2014/03/27/the-uselessness-of-the-money-multiplier-as-brilliantly-elucidated-by-nick-rowe/#comment-76975
"We take the central bank’s target as exogenous, and anything which depends on that target is endogenous. Unless the central bank has an M target, M is endogenous." 

Nick gets back to me on perfect reflux between bank money and bank assets (so n-2 other markets instead of n-1, was my hypothesis). He says "false" but qualifies it in such a way that it COULD be true I think, given we remove the exceptions he's identified:
http://uneasymoney.com/2014/03/27/the-uselessness-of-the-money-multiplier-as-brilliantly-elucidated-by-nick-rowe/#comment-78596
Also, more there Glasner's take on Sadowski's take on Mishkin's take on "reserve ratio," "currency ratio," and MB and who chooses what. I propose added a 4th chooser: "borrower" as distinct from depositors. money multiplier = mm = (1+c)/(r+c), etc. 

"Peter N " and I discuss closed loop systems in the context of a "gain" for the money multiplier in the comments to one of Nick Rowe's articles. He gives me a link to a reference: (feedback control Euler equations, Z^-1, poles, characteristic polynomial, LTI, stable systems, roots, characteristic equation, open right half plane, unit circle, etc.):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/two-first-year-multipliers-their-truth-beauty-and-usefulness.html?cid=6a00d83451688169e201a73d9de984970d#comment-6a00d83451688169e201a73d9de984970d
http://www.econ2.jhu.edu/people/ccarroll/death.pdf
Peter N provides me four more links here (these appear to be more clear):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/two-first-year-multipliers-their-truth-beauty-and-usefulness.html?cid=6a00d83451688169e201a73d9e0d1e970d#comment-6a00d83451688169e201a73d9e0d1e970d 

Sumner draws rectangular hyperbolas:
http://www.themoneyillusion.com/?p=26400

complements and substitutes and cross price elasticity (Nick Rowe's piece on reflux & money multiplier)
http://en.wikipedia.org/wiki/Cross_elasticity_of_demand
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/there-can-be-an-excess-supply-of-commercial-bank-money.html?cid=6a00d83451688169e201a3fce24efd970b#comment-6a00d83451688169e201a3fce24efd970b
http://en.wikipedia.org/wiki/Elasticity_%28economics%29 

Sadowski lists the goodness and badness of various kinds of taxes:
http://www.themoneyillusion.com/?p=26468#comment-326323
In other words taxes can be ranked according to their effect on long run growth in the following fashion:
1) Capital taxes (very bad)
2) Labor Taxes (slightly bad)
3) Consumption (moderately good)
4) Property (very good)

More from Sadowski on Sax's site:
http://diaryofarepublicanhater.blogspot.com/2014/03/capital-gains-taxes-paul-krugman-and.html?showComment=1396279611063#c4642485410534569476 
Consumption could be luxury and it could be progressive. Capital gains falls under Property on Mark's list, not Capital taxes:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/temporary-vs-permanent-money-multipliers.html?cid=6a00d83451688169e201a73da6debf970d#comment-6a00d83451688169e201a73da6debf970d
I think he had some works with Mike Sax about that time too on Mike's blog. That's where he brought up the idea that 3) is a luxury tax. And obviously "Property" is not restricted to land (since capital gains would fall under that).

March 2014: I revisit the Krugman "Banking Mysticism (Update)" quotes (Sadowski brings it up criticizing Cullen), on Rowe's blog. Rowe tends to agrees with my updated criticism of Krugman. Philippe criticizes me. And I point the whole thing out to "Kristjan":
I recently criticized those same bits from Krugman here: http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/alpha-banks-beta-banks-fixed-exchange-rates-market-shares-and-the-money-multiplier/comments/page/1/#comment-6a00d83451688169e201a73d9ae024970d
Nick Rowe comments on my comment (a few lines down):
“Tom: I tend to agree. Given the amount of miscommunication over the “loans create deposits!” issue, it really needed a very carefully written piece.”

… and Philippe adds some critiques of my critique in between
http://www.themoneyillusion.com/?p=26355&cpage=3#comment-326877 

I ask Nick an important question about the title of this post: "The sense in which the stock of money is "supply-determined:""
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/the-sense-in-which-the-stock-of-money-is-supply-determined/comments/page/2/#comments 

Rowe and Sumner discuss targeting 0% inflation rate. This ties into Woolsey and Kimball proposals on this. You have to be an "extreme socialist" to want to do it. Sumner uses that to rib his conservative pals who want a 0% inflation rate.
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/monetary-policy-fiscal-policy-the-target-and-the-size-of-the-central-bank.html
http://monetaryfreedom-billwoolsey.blogspot.com/2014/02/more-on-negative-interest-rates.html
http://blog.supplysideliberal.com/post/76196184332/reply-to-bill-woolsey-on-the-possibility-of-ending
comment to Johnny Evers on pragcap tying all this together:
http://pragcap.com/to-control-money-you-must-control-the-payment-network/comment-page-1#comment-171985 

DOB's "Catalyst of Growth" blog with "construction of a fiat currency" with two targets: MB & inflation rate, using two levers: FFR and IOR.
http://catalystofgrowth.com/theory/fiat-currency-construction/ 

Mark Buchanan: physics guy does econ:
https://medium.com/the-physics-of-finance/8b45018f432a
Sadowski's not a fan. But I did find another guy named Jason Smith he's more favorable about:
http://informationtransfereconomics.blogspot.com/2013/10/revealing-true-business-cycles.html 
Jason discusses the limitations of physics in econ:
http://informationtransfereconomics.blogspot.com/2014/04/economics-is-neither-physics-nor.html
So does Chris House:
http://orderstatistic.wordpress.com/2014/03/21/why-are-physicists-drawn-to-economics/
And Noah Smith mentions it too:
http://noahpinionblog.blogspot.com/

Martin Feldstein does a piece in the WSJ which Sadowski says amounts to crying "fire in a flood" about inflation worries (April 2014). I point it out to Vincent Cate and he and Sadowski have an interchange in which Sadowski pulls out all kinds of facts about high debt interest rates high inflation, etc. Showing that Weimar is really really rare. His date goes back to early 1800s. Marcus Nunes and Scott Sumner do pieces on the Feldstein piece about this same time:
 http://howfiatdies.blogspot.com/2014/03/living-like-parasites.html?showComment=1396421062430#c9006414579951882554
http://www.themoneyillusion.com/?p=26514

Now it's JKH's turn to be alone against the world, but this time regarding "asymmetric redeemability"
Nick Edmond's blog:
http://monetaryreflections.blogspot.com/2014/04/palley-on-keen-demand-and-debt.html?showComment=1396435210868#c2521806656567064362x
Glasner's:
http://uneasymoney.com/2014/03/31/can-there-really-be-an-excess-supply-of-commercial-bank-money/#comment-82377
But mostly Nick Rowe's (several posts in this time period):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/there-can-be-an-excess-supply-of-commercial-bank-money.html?cid=6a00d83451688169e201a3fce264ba970b#comment-6a00d83451688169e201a3fce264ba970b

Nick Edmond's explains how he does simulations in Excel:
 http://monetaryreflections.blogspot.com/2014/03/simulation-model-for-samuelson-and.html
thoughts on Keen reviewed by Thomas Palley:
http://monetaryreflections.blogspot.com/2014/03/simulation-model-for-samuelson-and.html
And thoughts on Nick's "the sense in which the stock of money is "supply-determined"":
http://monetaryreflections.blogspot.com/2014/03/the-demand-and-supply-of-money-and.html

More on Keen vs Palley from JKH, Ramanan, Peter N, Nick Edmonds, Cullen, Coppola:
(they give me some good tips on Keens problems and modeling difficulties)
http://monetaryreflections.blogspot.com/2014/03/the-demand-and-supply-of-money-and.html

Sadowski's rant about the BoE "endogenous" money paper (w/ pictures of balance sheets etc.).. in which he says the supposed "exogenous money school"  is a straw man that doesn't exist, and that the argument about a causal money multiplier is made up straw man too. reserve ratio, currency ratio, Mishkin's textbook, etc. He posted in Sumner's bog too, but this is the Rowe version:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/one-general-theory-of-money-creation-to-rule-them-all.html?cid=6a00d83451688169e201a73d908bb3970d#comment-6a00d83451688169e201a73d908bb3970d


Nick Edmonds blog posts of interest. His take on Rowe's "the sense in which the stock of money is "supply-determined"":
http://monetaryreflections.blogspot.com/2014/03/the-demand-and-supply-of-money-and.html
This also ties into to the idea of whether or not commercial banks can force an excess of their money into the public's hands:
http://uneasymoney.com/2014/03/31/can-there-really-be-an-excess-supply-of-commercial-bank-money/#comment-82338
Here he discusses Keen vs Thomas Palley:
http://uneasymoney.com/2014/03/31/can-there-really-be-an-excess-supply-of-commercial-bank-money/#comment-82338
Which comes up here too:
http://monetaryrealism.com/thomas-palley-on-steve-keens-model-of-aggregate-demand/
And then this on how he does his simulations/models using Excel:
http://monetaryreflections.blogspot.com/2014/03/simulation-model-for-samuelson-and.html?showComment=1396543196581#c9039631605829798223

Frank Restly brings this Lars Christensen quote to attention:
"If the NGDP target is 100% credible the correlation between growth in M and growth in V to be exactly negative 1."  
http://marketmonetarist.com/2012/03/18/how-unstable-is-velocity/
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/temporary-vs-permanent-money-multipliers.html?cid=6a00d83451688169e201a51196d166970c#comment-6a00d83451688169e201a51196d166970c
Sumner objects:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/temporary-vs-permanent-money-multipliers.html?cid=6a00d83451688169e201a73da1ea26970d#comment-6a00d83451688169e201a73da1ea26970d
Nick's post itself is about how MMists should complain that expectations are not part of the money multiplier story. 

-----------------------------------------------------------------

Glasner v Rowe debate of April 2014 (on reflux and whether or not there can be a sustained excess supply of commercial bank deposits)
JP Koning:
http://jpkoning.blogspot.com/2014/04/rowe-v-glasner-round-33.html
David Glasner:
http://uneasymoney.com/2014/03/31/can-there-really-be-an-excess-supply-of-commercial-bank-money/
Nick Rowe:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/there-can-be-an-excess-supply-of-commercial-bank-money.html
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/two-first-year-multipliers-their-truth-beauty-and-usefulness.html
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/what-is-a-managed-exchange-rate.html
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/temporary-vs-permanent-money-multipliers.html
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/deflationary-banks.html
Nick Edmonds:
http://monetaryreflections.blogspot.com/2014/04/palley-on-keen-demand-and-debt.html?showComment=1397044928802#c8802718899867609180
Jason Smith:
http://informationtransfereconomics.blogspot.com/2014/04/whats-up-with-m1.html?showComment=1397052503839#c7290849583546494767 
JW Mason's take:
http://slackwire.blogspot.com/2014/04/a-quick-note-on-money.html#comment-form 
A H and stone too:
http://monetaryrealism.com/market-monetarism-monetary-base-overdrive/#comment-112947

----------------------------------

Jason Smith on hyperinflation, Nunes, and Sumner, and inflation in general:
http://informationtransfereconomics.blogspot.com/2013/09/hyperinflation.html
http://informationtransfereconomics.blogspot.com/2014/04/inflation-predictions-are-hard.html#comment-form
Jason's modified quantity theory of money (QTM)
http://informationtransfereconomics.blogspot.com/2013/07/dotting-is-and-crossing-ts.html
Nick Rowe refers to the lesson we learned in Weimar:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/deflationary-banks.html?cid=6a00d83451688169e201a51199cf02970c#comment-6a00d83451688169e201a51199cf02970c

 
Start of thread between HJC (Nick Rowe commentator) and myself about MOA, UOA, and MOE and he has Jurg Niehans' book, so that made it interesting. I bring up Bill Woolsey and his electricity example. No resolution though.


Nick Rowe and I squabble about his claim that the relation between the size of Hn and Hb helps determines whether or not dPY/dRd < 0. Also I think he was wrong about the definition of M0 in the US (it should be currency in circulation and not in bank vaults). Although I noticed that Wikipedia seemed to have a discrepancy in their article, and Investitopia has a totally different definition, and I couldn't find one on the Fed's website. I left a question for Mark Sadowski here about it:
http://www.themoneyillusion.com/?p=26552&cpage=2#comment-328753  (also see my comments above and below).
I also ask Mark about Jason Smith's view of expectations:
http://www.themoneyillusion.com/?p=26552&cpage=2#comment-328745
Mark answers those questions in the thread.


Physicist Michio Kaku on programming mice brains, etc.:
http://sbstatesman.com/2014/03/27/physicist-dr-michio-kaku-captivates-student-audience/


Mark Sadowski: more on hyperinflation as a monetary phenomena:
http://www.themoneyillusion.com/?p=26552#comment-328793


What percentage of vault cash is used to satisfy the reserve requirement (from Sadowski):
https://research.stlouisfed.org/fred2/graph/?graph_id=123515&category_id= 
Sadowski talks about IOR on vault cash and when banks were allowed ot count vault cash as reserves:
http://www.themoneyillusion.com/?p=26531#comment-328060
http://www.law.cornell.edu/cfr/text/12/204.10
JKH disputes that:
http://monetaryrealism.com/thomas-palley-on-steve-keens-model-of-aggregate-demand/#comment-109311
JKH digs up a paper on how banks model vault cash:
http://research.stlouisfed.org/publications/review/98/07/9807da.pdf
http://monetaryrealism.com/thomas-palley-on-steve-keens-model-of-aggregate-demand/#comment-109743
Also a nice summary from EconCCX:
http://monetaryrealism.com/thomas-palley-on-steve-keens-model-of-aggregate-demand/#comment-109869Interesting Flow5 comment on the money multiplier and vault cash
http://www.themoneyillusion.com/?p=26479#comment-326895
pliu412 seems to have solved the IOR on vault cash mystery, "no" is the answer (see #11):
http://www.federalreserve.gov/newsevents/press/monetary/monetary20081006a2.pdf
Also of interest (e.g. #10) (name for bank Fed deposits which are neither required nor excess reserves):
"Clearing balances will continue to receive earnings credits" ... rather than IOR.
http://pragcap.com/did-market-monetarists-accurately-predict-low-inflation/comment-page-1#comment-173505
To Sadowski & JKH:
http://www.themoneyillusion.com/?p=26531&cpage=2#comment-332850
http://monetaryrealism.com/market-monetarism-monetary-base-overdrive/#comment-113448



JP Koning talks about durable assets and perishable assets in his Rowe v Glasner article:
"durable assets (i.e. gold, houses, stocks, and bonds)"
http://jpkoning.blogspot.com/2014/04/rowe-v-glasner-round-33.html
Which makes me wonder if loans are also durable assets.


Morgan Warster's three player game:
http://www.themoneyillusion.com/?p=26562#comment-328858


Very first to think of NGDP targeting and/or NGDPLT? From a reference on Marcus Nunes' site:
http://thefaintofheart.wordpress.com/2014/04/09/smile-youve-been-secularly-stagnated/
http://fmwww.bc.edu/EC-P/wp802.pdf
from Mark Sadowski:
http://www.themoneyillusion.com/?p=26562#comment-328891


John Taylor rule as a special case of NGDP targeting (Sadowski):
http://www.themoneyillusion.com/?p=26562&cpage=1#comment-328897

Engineer from the past that Glasner brought up: Thorstein Veblens
Talking about HTF and efficiency
http://uneasymoney.com/2014/04/08/the-real-problem-with-high-frequency-trading/ 

Sadowski's views on inequality:
http://www.themoneyillusion.com/?p=26562&cpage=1#comment-328919 
Scott's views under that in a subsequent comment: biggest diff is Scott likes subsidies for low pay rather than min wage.

Sumner & Sadowski are critical of hyperinflation view (not a hyperinflationsit though):
http://www.themoneyillusion.com/?p=26552#comment-328864
also " Rajan is a very good economist"
Mark find's fault with Jason Smith's view of expectations:
http://www.themoneyillusion.com/?p=26552#comment-328760 
Sumner says Hayak came up with NGDP (but not NGDPLT) earlier than James Meade in  1978:
http://www.themoneyillusion.com/?p=26562#comment-328891
Holbrook Working (1923), didn't advocate NGDP targeting, but price level targeting.

Jim Glass has a good soviet era joke here concerning losing eyes:
http://www.themoneyillusion.com/?p=26562&cpage=2#comment-328900
Also there is a link in there from me to Nick Rowe's "Moaist phase" (as joked about by W.  Peden) 

Sadowski describes how inflation reached it's peak of 14.6% in March 1980, its post war (WWII or WW II) high when the debt to GDP ratio was near its post war low and base money as a % of GDP was also near its low:
http://www.themoneyillusion.com/?p=26219&cpage=1#comment-319340
I point Vincent Cate and Max to this interchange w/ Sadowski too. Argentina also comes up as "not part of the developed world."
http://howfiatdies.blogspot.com/2014/02/preventing-crises.html?showComment=1393013640794#c1681702660942070616 

Small disagreement between Sadowski and Sumner?
http://www.themoneyillusion.com/?p=26562#comment-329037 

Noah Smith on the "Finance Macro Canon" of false beliefs:
http://noahpinionblog.blogspot.com/2014/03/the-finance-macro-canon.html
"...the canon goes against the bets of the finance industry itself - inflation expectations, as measured by TIPS breakevens, are around 2%, even in the long term."
"MMT is a great halfway house for recovering Austrians." It wasn't long after this that Smith tweeted that MMT and PKE were "cults" akin to Scientology.

flow5 counts banks, S&Ls and CUs:
http://www.themoneyillusion.com/?p=26571#comment-329024 

Sumner says he distrusts empirical studies in macro, excepting Sadowski's of course:
http://www.themoneyillusion.com/?p=26562#comment-329050 

Max on why the Fed won't have a problem with rising [IOR?] rates:
http://howfiatdies.blogspot.com/2014/04/problem-with-central-banks-making-it-up.html?showComment=1397349832760#c5548213446775364769 

Mark Sadowski's rebuttal to Vincent Cate where he mentions the Japanese and US deficits are falling as a % of GDP and expected to go into surpluses soon (April 2014):
http://www.themoneyillusion.com/?p=26507#comment-327639 

Nick Rowe talks about monetary policy being 99% a social construct of reality and 1% about balance sheets in a comment on JKH's article about Market Monetarism:
http://monetaryrealism.com/market-monetarism-monetary-base-overdrive/#comment-111079 
Nick Rowe also gives a speech about communications strategies and why he thinks that that rate setting is a terrible one at the ZLB, and why something like monetary base is much better.
http://monetaryrealism.com/market-monetarism-monetary-base-overdrive/#comment-110832 

Sumner's reaction to investor article about long term bond prices/yields:
http://www.themoneyillusion.com/?p=26603#comment-329919
http://www.minyanville.com/business-news/markets/articles/Vince-Foster-Why-Long-Term-Interest/4/14/2014/id/54583?refresh=1

Great MM discussion at monetaryrealism.com with Nick Rowe, JKH, Nick Edmonds, Jussi, AH, Cullen, winterspeak, Fed Up and me:
http://monetaryrealism.com/market-monetarism-monetary-base-overdrive/

David Beckworth on endogeneous money (about this time: just prior, he Frances Coppola and me discuss "envelopes" and degrees of endogeneity/exogeneity at pragcap):
http://macromarketmusings.blogspot.com/2014/03/market-monetarism-and-endogenous-money.html 
Here's probably my best comment on measuring endogeneity/exogeneity with rho the correlation coefficient:''
http://monetaryrealism.com/market-monetarism-monetary-base-overdrive/#comment-111416

Jason Smith on Walras' Law:
http://informationtransfereconomics.blogspot.com/2014/04/the-downward-trend-in-real-interest.html?showComment=1396722510267#c7373030682010104702 

Great comment here by Alex Godofsky on Nick Rowe's "Monetary monarchy" post:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/monetary-monarchy.html?cid=6a00d83451688169e201a73dadbd9f970d#comment-6a00d83451688169e201a73dadbd9f970d
Also plenty more below that and on the previous page, like from Nick Edmonds and JKH. Very good! The spend a lot of time on my 1-alpha / 1-beta, cashless hypothetical, which was nice. Even Rowe chimes in again. 

My question to Information man Jason Smith about my attempt to explain Walras' Law to SS:
http://informationtransfereconomics.blogspot.com/2014/04/the-downward-trend-in-real-interest.html#comment-form 

Glasner promotes the "bubble" concept in regards Bitcoin, and also the idea that taxes make fiat money valuable (thus distinguishing it from Bitcoin... which I was a bit surprised at, since Philippe repeated that assertion recently in the comments to Nick Rowe's "Monetary monarchy" post... and a bit further down JKH says that view is a bit too narrow and explains why).:
http://uneasymoney.com/2014/04/18/ok-tell-me-please-tell-me-why-bitcoins-arent-a-bubble/
Of course Sumner disputes that in the comments (sumnerbentley is  his name there). Also comments form JKH, JP Koning and Mike Sproul under Glasner's post. Ramanan too. 

Mark A. Sadowski lists what the Fed can buy (gold, municipal bonds, etc):
http://www.themoneyillusion.com/?p=26304#comment-322387
http://www.themoneyillusion.com/?p=26587&cpage=1#comment-331997 (the trick is to get the latest!) 

stone's store of value vs MoE quote and post:
http://directeconomicdemocracy.wordpress.com/2014/01/05/money-demand-that-lowers-interest-rates/ 
http://monetaryrealism.com/market-monetarism-monetary-base-overdrive/#comment-113305

In the quest to determine if IOR is paid on vault cash the issued of "clearing balances" and (a kind of bank held Fed deposit, the required portion of which is not considered to be "reserves") and their associated "earnings credits" came up. Pragcap commentator pliu412 and Mark A. Sadowski both contribute to an answer:
http://www.themoneyillusion.com/?p=26531&cpage=2#comment-333146 
More in both threads with David Andolfatto, Daniel Thorton (both of St. Louis Fed) and on pragcap, and much more from Sadowski:
http://andolfatto.blogspot.com/2014/03/employment-along-canada-us-border-part-2.html?showComment=1398178195801#c5303734110317385634 
http://pragcap.com/did-market-monetarists-accurately-predict-low-inflation/comment-page-1#comment-173682 

Brad DeLong's "smackdown" of Sumner about 2008 and financial crisis:
http://www.themoneyillusion.com/?p=26617 

Sumner's old article "The monetary base is special" with a photo of a $100,000 bill/reserve note/large denomination note,  that Sadowski found for me twice:
http://www.themoneyillusion.com/?p=17357 
drug dealers, cashless economy and Tyler Cowen are all discussed.

My response to PeterN on pragcap about MMists and fiscal policy. I give Sumner and Rowe examples. Helicopter comes up, as well as conterfeiting, Say's Law, Brad DeLong, Mike Sax, Mark Sadowski, Keynes' views, "dancing on Keyne's grave" etc:
http://pragcap.com/did-market-monetarists-accurately-predict-low-inflation/comment-page-1#comment-173622
Rowe does say in a sense its’ ALL fiscal in that link above:
“But either way you could always claim it is “fiscal”. Because giving it away is a money-financed transfer payment, which is “fiscal”. And buying something is ‘fiscal”. What is *not* “fiscal”?”
Back to “efficiency”: I was correct he used that word. Here’s my question (regarding counterfeiting)
http://www.themoneyillusion.com/?p=26213#comment-319935
and his answer:
“Tom, It’s better to buy the bonds, counterfeiting makes the economy less efficent, as taxes must rise to cover the cost.”
http://www.themoneyillusion.com/?p=26213#comment-319940
And his response to Beckworth’s helicopter drop ideas:
“I’m opposed to the helicopter drop idea, for several reasons. First, it’s less effective than people think. No country has been doing more “helicopter dropping” over the past 20 years than Japan. ”
http://www.themoneyillusion.com/?p=21867
But he brings it up several times, even taking Krugman’s side against Rowe once. Here’s several:
http://www.themoneyillusion.com/index.php?s=helicopter
Regarding Rowe’s view, he has a couple of interesting quotes here:
 If I were a Big Government guy, I would still want (the government’s) central bank to make Say’s Law true in practice. Especially since it would free up the rest of the government to do all the other big things I would want the government to do, without the constraint of managing AD:
and this:
Tom: “I think he’s worried that if MMists are right [I'm talking about Mike Sax], that this will eliminate the justification for having a gov with an expansionist fiscal policy, …”
Remember as well, it would also eliminate the justification for having a government with a contractionist fiscal policy: “Aggregate Demand is too high! We must cut government spending!”
Fiscal policy is not about the average size of government over time; it is about volatility in the size of government over time.
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/02/tiff-macklem-retail-competition-flexible-it-vs-ngdplt.html?cid=6a00d83451688169e201a73d76062a970d


Sumner: "If I was a socialist my views on monetary policy would be exactly the same"
http://www.themoneyillusion.com/?p=25886#comment-313204

US notes or "United States Notes" are not subject to the Statutory Debt Limit:
http://www.treasurydirect.gov/govt/reports/pd/mspd/2013/opdm122013.pdf
Approximately $239 million in Treasury liabilities as of the end of 2013
 http://en.wikipedia.org/wiki/United_States_Note

JKH on the fiscal / monetary vocabulary debate (it being a "mug's game"):
http://monetaryrealism.com/market-monetarism-monetary-base-overdrive/#comment-111445 

Free econ textbooks:
http://iclass.iuea.ac.ug/intranet/E-books/ECONOMICS/
http://digilib.mercubuana.ac.id/manager/file_ebook/Isi5255073448113.pdf (chapters 24-end+glossary of McConnell & Brue macro)

More on asymmetric redeemability from Nick Edmonds, ATR, Nick Rowe, etc.:
http://macromoneymarkets.blogspot.com/2014/03/money-creation-bank-of-england-and-nick.html
http://macromoneymarkets.blogspot.com/
http://monetaryreflections.blogspot.com/2014/04/asymmetric-redeemability-in-woodfords.html#comment-form 

Sumner favors taxing "rents". Germany, Piketty, etc:
http://www.themoneyillusion.com/?p=26630#comment-334291 

pliu412 shows document about NIPA and Z1 flow of funds:
http://pragcap.com/did-market-monetarists-accurately-predict-low-inflation/comment-page-1#comment-173744 
He's got some suggestions below too.

Nick Rowe says that his argument in the "Temporary vs permanent money multipliers" argument could be applied to his "There can be an excess supply of commercial bank money" which affects the whole "Rowe v Glasner round #33" post that JP Koning put up I think.
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/temporary-vs-permanent-money-multipliers.html?cid=6a00d83451688169e201a3fcf5c64f970b#comment-6a00d83451688169e201a3fcf5c64f970b

Sadowkski's opinion of Woodford "brilliant for a Neo-Wicksellian"
http://www.themoneyillusion.com/?p=26531&cpage=2#comment-334556
We also talk about FedCoin (electronic MOA (for the average citizen?)), Tyler Cowen's version of FedCoin, and right above he gives his opinion of Dan Thornton. 

Rajiv, Robert Waldman, Mark Sadowski on hyperinflation/deflation Weimar and targeting a fixed interest rate:
http://rajivsethi.blogspot.com/2010/08/lessons-from-kocherlakota-controversy.html?showComment=1283121748455#c8952394443166180857
http://noahpinionblog.blogspot.com/2014/04/the-neo-fisherite-rebellion.html?showComment=1398472777773#c1954688344009492559 

Scott on Noah and the Neo-Fisherites:
http://www.themoneyillusion.com/?p=26671
Also I've got a link in there asking Mark more about Weimar and why they held the rate at 5% for 8 years when inflation was always much higher than that. Also I ask Scott again about the power of expectations (related to Neo-Fisherites) and point him to my question to Nick Rowe on this.
Ryan Avent responds to Noah: I like his answer because he also answers one of my questions to Scott And Rowe on expectations here, and rejects Neo-Fisherites, but admits expectations could overcome the "mechanics" of the situation:
http://www.economist.com/blogs/freeexchange/2014/04/monetary-policy?fsrc=scn/tw_ec/on_umbrellas_causing_rain

Marcus Nunes and David Beckworth also have articles up with cause me to ask about expectations (Marcus puts up a chart showing that expectations *have* been there all along, so I ask "what's missing then? David says less money injections if there'd been expectations, but you show there *were* expectations? Marcus answers me:
http://thefaintofheart.wordpress.com/2014/04/26/how-to-make-a-great-stagnation-come-true/#comment-13798

Noah vs the neo-reactionaries on "modernity"
http://noahpinionblog.blogspot.com/2014/04/what-is-right-with-modernity.html 
weird example of a neoreactionary:
https://radishmag.wordpress.com/2013/05/24/heroes-of-the-dark-enlightenment/
Sadowski discovers there unconventional economic thinking:
http://www.themoneyillusion.com/?p=26648#comment-340438

Nick Edmonds, stone, Sadowski, Tony Yates and Sakir on teaching post-2008 "bubbles" and "panics" in Manchester, UK (England):
http://monetaryreflections.blogspot.com/2014/04/simon-wren-lewis-defends-status-quo.html?showComment=1398499628977#c5260882446517419884
http://longandvariable.wordpress.com/2014/04/23/if-i-was-devising-a-panics-and-bubbles-course/comment-page-1/#comment-799
http://www.themoneyillusion.com/?p=26648#comment-340366

Also stone has some interesting links to PK types disputing the validity of "loanable funds" but Nick Edmonds says that they're not saying that loanable funds violates accounting constraints, just that an accounting perspective can help to see what's wrong with loanable funds:
http://monetaryreflections.blogspot.com/2014/04/simon-wren-lewis-defends-status-quo.html?showComment=1398508518087#c6767563884192413149
http://www.boeckler.de/pdf/p_imk_wp_100_2012.pdf
http://werdiscussion.worldeconomicsassociation.org/?post=does-saving-increase-the-supply-of-credit-a-critique-of-loanable-funds-theory

Example of Sadowski in an econometric battle? On Beckworth's blog, "Granger Causality" etc.:
http://macromarketmusings.blogspot.com/2014/04/this-one-figure-shows-why-fed-policy.html

Nick Rowe's inverted pendulum balancing a broom in your hand analogy on Wiliamson's site, plus some fun stuff about Stephen Williamson, and Edward Lambert, Angry Bear, etc:
http://newmonetarism.blogspot.com/2013/12/volcker-and-bernanke.html?showComment=1386534760870#c216980617599010100
http://www.themoneyillusion.com/?p=26671&cpage=1#comment-340549

And some stuff on neoreactionaries:
http://noahpinionblog.blogspot.com/2014/04/what-is-right-with-modernity.html?showComment=1398570544784#c8922870453478153492
http://www.themoneyillusion.com/?p=26648#comment-340438
That last one also is one of two in a series on Sumner criticizing those who think capital "income" taxes are a good idea (he's for a progressive consumption tax). 

A very clear post from Scott Sumner on MM vs Neo-Fisherites:
http://www.themoneyillusion.com/?p=26677

My pracap forum summary of recent (as of late April 2014) exchanges with MMs (mostly) on "expectations":
 http://pragcap.com/forums/topic/expectations

More on Noah's Neo-Fisherites and expectations, this time from a link to a Simon Wren-Lewis piece on another .pdf paper that Noah links to, attempting to explain the new zero interest rate steady state (not many comments, but a collection of high power ones: Nick Rowe, David Aldofatto, and Stephen Williamson himself):
http://mainlymacro.blogspot.co.uk/2014/03/more-thoughts-on-expectations-driven.html 

Nick Rowe's original late 2013 reaction to Stephen Williamson's Neo-Fisherite ideas (here he claims he's pretty sure he's more right wing than Steve is):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/11/why-inflation-will-not-fall-off-a-bottomless-cliff.html
Krugman  agrees:
http://krugman.blogs.nytimes.com/2013/11/29/on-the-importance-of-little-arrows-wonkish/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1
Brad DeLong too (link in Krugman's)
Also links to Williamson's and this guys (I think on the Minneapolis Fed?) Narayana Kocherlakota 
Brad links to a an interesting title by  Franklin Fisher:
http://equitablegrowth.org/2013/11/29/understanding-the-stability-of-general-equilibrium-as-a-requirement-for-getting-a-union-card-as-an-economist-friday-focus/ 

Sadowski talks about how Yellen convinced Greenspan that 2% was a good inflation rate target during FOMC meeting (he provided link to the minutes). Year: 1996
http://www.themoneyillusion.com/?p=26274#comment-321895 
http://www.themoneyillusion.com/?p=26274#comment-321966
http://www.federalreserve.gov/monetarypolicy/files/FOMC19960703meeting.pdf
Yellen’s remarks are on pages 42-45.
Miles Kimball discusses the possible benefits of a positive inflation target here in the sections entitled "The Possible Benefits of Inflation":
http://blog.supplysideliberal.com/post/67342414250/pieria-2-the-costs-and-benefits-of-repealing-the
Also interesting quote here regarding too low of an inflation rate in the Netherlands (from ):
http://www.telegraph.co.uk/finance/economics/10774013/Eight-EU-states-in-deflation-as-calls-grow-for-QE-in-Sweden.html
"The Netherlands is still positive at 0.1pc, but this level is already so low that it is causing debt-deflation trauma for Dutch households struggling to cope with loans near 250pc of disposable income. Dutch house prices have dropped by a fifth. A quarter of mortgages are in negative equity."

And more on Sweden and the deflation there currently (April 2014) from Lars Svensson:
http://larseosvensson.se/2014/04/23/fed-and-the-riksbank-about-low-inflation-and-increased-debt-burden-a-comparison/ 
http://pragcap.com/our-unhealthy-obsessions-with-central-banks/comment-page-1#comment-174105 

Sumner's take on taxing the rich (at 80%):
http://www.themoneyillusion.com/?p=26658&cpage=1#comment-341500

Sumner's take on Sweden (as of 4/2014), but first some from Sadowski:
http://www.themoneyillusion.com/?p=26658&cpage=1#comment-341281
http://www.themoneyillusion.com/?p=26658&cpage=1#comment-341282
http://www.themoneyillusion.com/?p=26612
http://www.themoneyillusion.com/?p=26671#comment-340535

Friedman's optimum quantity of money rule:
www.phil.frb.org/research.../brq412_optimum-quantity-of-money.pdf‎
http://macromarketmusings.blogspot.com/2014/04/the-cure-for-neo-fisherism-history.html?showComment=1398733177598#c8850817397596481821
Josh Hendrickson shows this whole "Neo-Fisherite" thing was all just a big misunderstanding:
http://everydayecon.wordpress.com/2014/04/28/on-pegging-the-interest-rate/ 
But then Willianson says something weird here:
http://macromarketmusings.blogspot.com/2014/04/the-cure-for-neo-fisherism-history.html?showComment=1398725721451#c1170132002183511081
Also Edward Lambert links to his stability analysis on the Fisher Effect in the comments there. 

Marcus Nunes debates Vincent Cate about inflation (hyperinflation) in Japan and makes a prediction:
http://thefaintofheart.wordpress.com/2014/04/26/how-to-make-a-great-stagnation-come-true/#comment-13846
Also talks about "out of control budgets" and "high" money growth "relative to demand." 

Nick Rowe summarizes what's wrong with IS/LM:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/teaching-loanable-funds-vs-liquidity-preference.html?cid=6a00d83451688169e201a3fcfc299a970b#comment-6a00d83451688169e201a3fcfc299a970b 
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/teaching-loanable-funds-vs-liquidity-preference.html?cid=6a00d83451688169e201a3fcfc274a970b#comment-6a00d83451688169e201a3fcfc274a970b

Frances Coppola on scott not realizing woods are made of trees, and also a summary of my interaction with Rowe, Sumner, and Sadowski on Rowe's post about the stock of money being supply-determined, exogenous, endogenous, "in conjunction" etc.:
http://monetaryreflections.blogspot.com/2014/04/cohrane-and-wolf-on-full-reserve-banking.html?showComment=1398879978704#c6186512350379991014 

The time I told Nick Rowe that banks buy everything by crediting bank deposits: computers, donuts, salary, etc: 
"Tom: I *think* I agree with that"
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/08/banks-and-the-medium-of-exchange-are-both-special-or-neither-special/comments/page/1/#comments 

Super interesting Nick Rowe post on loanable funds vs liquidity preference (LF vs LP). A teaching post, but full of great comments from JKH, HJC and Nick Edmonds
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/teaching-loanable-funds-vs-liquidity-preference.html 
pliu412 has a mathematical ISLM "pun" to go along with that:
http://pragcap.com/why-the-endogenous-money-debate-matters/comment-page-1#comment-174240 
Also, Cullen's post there discusses his criticism of ISLM.

Nick Rowe and David Beckworth tell stories to explain balance sheet recessions and excess demand for money recessions:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/money-barter-the-clearing-house-and-balance-sheet-recessions.html
http://macromarketmusings.blogspot.ca/2014/04/observational-equivalence.html 

More on Sweden from Mark Sadowski:
http://thefaintofheart.wordpress.com/2014/04/28/using-interest-rates-to-get-in-all-the-cracks/#comment-13831 

When Nick told me about "rectangular hyperbolas" and 
 "Tom: economists normally put price on the Y axis, and quantity demanded and supplied on the X axis. (Yes, I know we are weird about that, and it violates all standard conventions, but there are historical reasons why we do it the "wrong" way, and now we are stuck with it.)"
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/one-general-theory-of-money-creation-to-rule-them-all.html?cid=6a00d83451688169e201a73d91d608970d#comment-6a00d83451688169e201a73d91d608970d 

Sadowski has another hyperinflation fact: large fiscal deficits neither necessary nor sufficient for hyperinflations:
http://macromarketmusings.blogspot.com/2014/04/the-cure-for-neo-fisherism-history.html?showComment=1398968326137#c1322903167262885205 

Loose to tight money spectrum and counter-intuitive result: tight money leads to over-leveraging? (Sadowski on one):
http://thefaintofheart.wordpress.com/2014/04/28/using-interest-rates-to-get-in-all-the-cracks/#comment-13831
http://macromarketmusings.blogspot.com/2014/04/observational-equivalence.html?showComment=1398974445916#c6694629498966655936 

Nick Rowe declares his support for NKers quest to make Say's Law true and RBC theory, and economies at equalibrium... interesting post (also good link to Simon Wren-Lewis, Krugman, and Thomas Palley):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/05/the-new-keynesian-conspiracy.html?cid=6a00d83451688169e201a511aec630970c#comment-6a00d83451688169e201a511aec630970c
Cullen's take on Palley's criticism of the mainstream:
http://pragcap.com/macro-wars-the-rise-of-the-real-salt-water-school
More on the heterodox vs orthodox wars, folding in the Cambridge Capital controversy of the 1960s:
http://pragcap.com/rewriting-of-history-is-what-seems-to-be-happening
Salt water, brackish water, and fresh water.  

Matthew Yglesias on DSGE modeling:
http://www.slate.com/blogs/moneybox/2014/01/10/dsge_is_useless_in_the_private_sector.html
http://pragcap.com/macro-wars-the-rise-of-the-real-salt-water-school/comment-page-1#comment-174483 

Krugman on 100% FRB advocated by Wolf and Cochrane and also discussed by Nick Edmonds:
http://krugman.blogs.nytimes.com/2014/04/26/is-a-banking-ban-the-answer/?_php=true&_type=blogs&module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body&_r=0 
http://monetaryreflections.blogspot.com/2014/04/cohrane-and-wolf-on-full-reserve-banking.html

Krugman complains that Chris House is drawing a false equivalence between types like him and Ed Prescott (RBCer):
http://krugman.blogs.nytimes.com/2014/04/29/the-hunt-for-false-equivalence/

Nick did the inverted pendulum and double pendulum thing back in 2011... he did beat me to it:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/08/the-macroeconomics-of-double-pole-dancing.html
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/05/the-new-keynesian-conspiracy.html?cid=6a00d83451688169e201a511aeeb08970c#comment-6a00d83451688169e201a511aeeb08970c
https://www.youtube.com/watch?v=Ep2lNMic_fk
http://pragcap.com/forums/topic/pendulums 

Jason Smith takes another look at expectations, and claims they "destroy information" in general (wrt the "maximally ignorant" case). This also ties into the EMH and to the Neo-Fisherite story too, oddly enough:
Jason's Neo-Fisherite post:
http://informationtransfereconomics.blogspot.com/2014/05/a-neo-fisherite-rebellion-yes-please.html
Jason's "expectations destroy information" post:
http://informationtransfereconomics.blogspot.com/2014/05/expectations-destroy-information.html
Also in his "light to no blogging" and car accident post:
http://informationtransfereconomics.blogspot.com/2014/04/light-to-no-blogging-starting-few-days.html

Nice chart that Sadowski points out showing ZIPR, 10 year yields and the S&P 500:
http://advisorperspectives.com/dshort/charts/index.html?indicators/ECRI-recession-call-crushed-by-the-Fed.gif
From Mike Norman Mark says:
http://www.themoneyillusion.com/?p=26717#comment-343853 
http://mikenormaneconomics.blogspot.com/2014/05/heres-nice-graph-showing-what-qe.html

Nick Rowe has a bunch of great posts, some with comment threads between physicist (turned quant) Avon Barksdale and Karsten which are good:
Say's law, RBC, etc (NK conspiracy):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/05/the-new-keynesian-conspiracy.html
women manicures, hairdressers and massages, and link to Beckworth's story with $100 and prostitute:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/money-barter-the-clearing-house-and-balance-sheet-recessions.html
Teaching loanable funds vs liquidity preference:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/04/teaching-loanable-funds-vs-liquidity-preference.html

Sadowski gives data on bank bailouts per country. US doesn't look so bad:
http://www.themoneyillusion.com/?p=26717#comment-343541

What Nick Rowe had to say to Sadowski once:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/08/how-can-you-get-an-economy-into-a-liquidity-trap.html?cid=6a00d83451688169e2019aff64d7fa970d#comment-6a00d83451688169e2019aff64d7fa970d 
"you are the best econoblog commenter out there." Not "World's Greatest" like I though.

Sadowski and Vincent Cate discuss hyperinflation and debt and deficits at Beckworth's:
http://macromarketmusings.blogspot.com/2014/04/the-cure-for-neo-fisherism-history.html?showComment=1398968326137#c1322903167262885205 

Jim or James Caton is a blogger/economist that had a theory of the value of fiat money I found interesting:
http://moneymarketsandmisperceptions.blogspot.com/ 
http://uneasymoney.com/2013/10/10/a-new-paper-shows-just-how-right-hawtrey-and-cassel-were/
Look for him on Glasner's and JP Koning's blogs.
Shoot, maybe it was this guy instead: Mike Freimuth:
http://jpkoning.blogspot.com/2014/02/when-money-ceases-to-be-iou.html?showComment=1393618345304#c9093549087201029511

David Glasner's concrete plan as head of the Fed (or CB):
http://uneasymoney.com/2013/05/14/wherein-i-try-to-help-robert-waldmann-calm-down/#comment-19008

27 comments:

  1. Tom: thanks, but that's not quite right. Under inflation targeting the quantity of money is endogenous in both the short run and the long run. It's the nominal rate of interest that is exogenous in the very short run (6 weeks or less, for the Bank of Canada anyway), but endogenous in the long run.

    ReplyDelete
    Replies
    1. Thanks Nick... I'll think about that. That makes sense on first thought... but I swear I've seen Sumner and Glasner say what I wrote above. Difference in opinion (between you and them), or was I not reading them right? I think Beckworth has also said similar (to Glasner)... in fact just this month (see my MMist Please Explain! post).

      Delete
    2. Here's what I mean Nick. This from Beckworth a week or two ago:

      "I suspect you view all changes in the monetary base as endogenous. I only view short-run changes for a given interest rate target as endogenous. Over longer horizons the Fed is changing interest rates according to something like a Taylor Rule. These policy changes in target interest rates mean exogenous changes in the monetary base."

      http://macromarketmusings.blogspot.com/2013/08/a-permanent-expansion-of-monetary-base.html?showComment=1375901514604#c7523207141783165074

      Glasner here:

      "So while I think that bank money is endogenous, I don’t believe that the quantity of base money or currency is endogenous in the sense that the central bank is powerless to control the price level."

      http://uneasymoney.com/2012/04/11/endogenous-money/

      And Scott Sumner here:

      "In the long run banks are constrained, as the Fed will adjust the monetary base to prevent economic overheating. The endogenous money folks, who are right about the period between Fed meetings, overlook this longer run problem with their theory. Six weeks is not a long enough period to have major macroeconomic consequences. But in the very short run the banks are not constrained by a lack of reserves, if the Fed is targeting the short term interest rate. The base is endogenous during that period."

      http://www.themoneyillusion.com/?p=21786

      Delete
    3. David Glasner is explicitly using "endogenous" in a different sense than normal. I agree with David there, once we take that into account.

      I disagree with David Beckworth on this bit: " These policy changes in target interest rates mean exogenous changes in the monetary base." (Unless he too is using "endogenous" in a different sense that normal.)

      I don't disagree with anything Scott actually says there, but he maybe implies something about the long run I might disagree with.

      Delete
    4. Ah... now how do you know **I** wasn't using "endogenous" in Glasner's sense? (other than the fact that it's clear to anyone that I barely know what it means in any sense) :D

      But seriously, what are these two senses?

      Delete
    5. ... and how can I tell them apart?

      Delete
    6. Nick, on a slightly different topic, what do you make of this interchange I had w/ Sumner:

      TB:
      "OK, so if you agree with David [Beckworth] here, and HPE is “very weak” when we’re at “zero rates” then why not ditch the QE and the ER > 0, and just promise that base money will be made available when needed. And then… if we do that, how is that different than what we have been doing prior to 2008? Except that now there’s an explicit NGDPLT?"

      http://www.themoneyillusion.com/?p=22948#comment-267056

      (The above was my "last point" BTW)


      SS:
      "And I certainly agree with your last point [above]. In a sensible system the base money is endogenous. You set the NGDP target, and the public tells you how much base money they want to hold. I’m all for that. But we don’t have a sensible system, the Fed uses QE to signal its target. That’s why it’s such a mess."

      http://www.themoneyillusion.com/?p=22948#comment-267116

      So... in a "sensible system" just have the Fed do what it's always been doing: providing exactly whatever "base money" the system required: no need for a "very weak" HPE at the ZLB... just carry on as it has prior to 2008, no need for extra asset purchases to push base money stocks (reserves) past their required levels... just set an NGDPLT, and that's all you need. Correct? I don't know how much more explicit I could have gotten. My only question here... the one caveat is ... what do we need to do to get a "sensible system?" Anything other than what I've laid out here? Is there something else preventing it from being "sensible?"

      Delete
    7. Have you read Woodford's "Methods of Policy Accommodation at the Interest-Rate Lower Bound" paper (http://www.columbia.edu/~mw2230/JHole2012final.pdf)? It's long and wordy but pretty easy to follow.

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    8. Max, no I haven't. I've looked at it before ... like at some of the charts, but I haven't tried to read it. He talks about "expectations" in there, right? Plus looking through it now I see a Sumneresque plot: NGDP taking a step below trend line. There was some thought this paper may have inspired the last "open ended" QE announcement, correct?

      What do you like best about it? Does it shed light on some of Sumner's statements (like I've quoted above)?... How about distinguishing between senses of the word "endogenous" vs exogenous like Nick brings up here?

      Thanks.

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    9. "What do you like best about it?"

      The discussion of QE. It's consistent with what you're saying; Woodford doesn't think QE, especially "pure" QE, does much.

      Basically if the central bank can lower interest rates, then it doesn't need to perform OMOs. And if it puts a floor on interest rates, then OMOs won't work.

      Delete
    10. Really? Wow... I guess that will teach me to read for myself. From the way that paper was discussed by Sumner et al, they sure made it sound like it inspired QE3 or QE4-ever or whatever they called it.

      They definitely weren't 100% on the paper or what the Fed did, but they called it a "useful half measure" ... something like that.

      But it sounds like your interpretation is that it (the paper) could hardly be said to have inspired more QE.

      OK, well thanks for that.

      Delete
    11. Wow! So Nick would have sided with me in the debate with Beckworth in regards to the endogeneity of the base? I'm really surprised by that.

      And I bet Beckworth would be too!

      Delete
    12. Jared... I'm not sure... he sprung a new one on me there: I didn't know that "endogeneity" had two senses. (see above)

      Delete
    13. Oh well, I guess you're right! Nick says so pretty explicitly there doesn't he?

      Delete
  2. "New Keynesians believe that the economy has zero self-equilibrating tendencies. But they want the central bank to make it look like the economy has powerful self-equilibrating tendencies."

    It sounds a little like using feedback to control an unstable system.

    Here's the theoretical classical economy (first 12 seconds) left on its own. Here's the actual economy with no central bank. Here's the economy with a theoretically perfectly run central bank. Now instead of the computer deciding how much voltage to apply to accelerate that little cart, imagine that the Board of Governors of the Federal Reserve System (or any other CB leadership) do that instead: that's the real economy with a real central bank. :D ... I'm joking!... kind of.

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