tag:blogger.com,1999:blog-2098432983500045934.post6100610956050582074..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: What does it mean? -- "If you lower interest rates, people will choose to hold more cash."The Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-2098432983500045934.post-29266282474550664762016-02-22T13:39:32.853-05:002016-02-22T13:39:32.853-05:00Art
So Scott is saying that Currency Component of...Art<br /><br />So Scott is saying that Currency Component of MI/GDP is the demand for currency. But that calculation is the inverse of the Velocity of Currency Component of MI (GDP/ Currency Component of MI). <br /><br />I do not think Scott would argue that the Demand for Currency is the inverse of its Velocity. Although he might. <br /><br />But more important to me is as the Fed creates more monetary base, short-term interest rates fall in a fairly smooth way.<br /><br />https://research.stlouisfed.org/fred2/graph/?graph_id=283942&category_id=<br /><br />Having hit zero interest rates some $1.5 trillion ago, further increases in the monetary base have simply pushed us further and further to the left, and velocity has simply declined in direct proportion to base money.<br /><br />Currently further monetary easing (more base) will do nothing but cause velocity to decline, which gives everyone the idea that monetary policy is too tight.<br /> <br />Of course if you use NIRP the theory is that it removes the constraint of the lower bound and you can pump more base in without causing a drop in velocity. But then again cash hording is an issue and the troubles it brings.<br /><br />I wonder when demand for 1000 franc notes exceed the supply will it become exchangeable above it par value, which means all other notes are deflating. HMMM something to think about. <br /><br />http://www.zerohedge.com/news/2016-02-22/safes-sell-out-japan-1000-franc-note-demand-soars-nirp-triggers-cash-hoarding<br />Oilfield Trashhttps://www.blogger.com/profile/16151172995826850192noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-36969381128372076782016-02-22T06:06:56.948-05:002016-02-22T06:06:56.948-05:00Jazz: "And why wouldn't Sumner be interes...Jazz: "And why wouldn't Sumner be interested? He has an agenda, and your facts don't fit."<br /><br />I can re-state <i>this</i> argument of Sumner's in a way that makes sense to me. And I can find graphs that provide <i>some</i> support for his argument. I would be willing to accept the view that "interest rates influence the desire to hold cash" is at least a part of the whole truth.<br /><br />What bothers me is that, having become part of the conversation, Sumner now seems to think he can provide bogus evidence for his claims, and no one will challenge his evidence.<br /><br />What bothers me even more is that apparently he is right. Why are there not 30 people pointing out that <a href="http://www.themoneyillusion.com/?p=31387" rel="nofollow">in this particular case</a> his evidence is bogus?<br /><br />I went back and looked thru the comments on Sumner's post. Why are there not 30 people pointing out bogus evidence? Maybe because Sumner tends to bully people who challenge him.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-14544981808097572502016-02-20T22:20:02.174-05:002016-02-20T22:20:02.174-05:00Now i'm really confused, 'cuz M2 and MZM a...Now i'm really confused, 'cuz M2 and MZM aren't THAT different.<br /><br /><br />https://research.stlouisfed.org/fred2/graph/?g=3wEI<br /><br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-75588572963290378312016-02-20T22:15:12.400-05:002016-02-20T22:15:12.400-05:00And why wouldn't Sumner be interested? He has...And why wouldn't Sumner be interested? He has an agenda, and your facts don't fit.<br /><br />I looked at the currency series as fraction of both M2 and MZM. They are weirdly different.<br /><br />What do you make of it?<br /><br />https://research.stlouisfed.org/fred2/graph/?g=3wEC<br /><br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-28749708057093748762016-02-20T17:17:52.010-05:002016-02-20T17:17:52.010-05:00I think your reasoning is sound but as Sumner poin...I think your reasoning is sound but as Sumner pointed out he is not interested. <br /><br />Sumner thinks that for some reason* GDP is the result of how well the Fed controls Currency in circulation. "monetary policy mostly consists of Federal Reserve changes in the currency stock"<br /><br /><br />* I say some reason because I have yet to figure out what that reason is (or at least how it works). Sumner wrote one article where he claimed that the Fed making $100 bills (Benjamins) less available was a major cause of the great recession. <br /><br />http://www.themoneyillusion.com/?p=18300jimnoreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-71789558353427695542016-02-20T16:26:39.678-05:002016-02-20T16:26:39.678-05:001. Sumner says "people will choose to hold mo...1. Sumner says "people will choose to hold more cash" as if the statement stands on its own. It does. <i>People hold more of their money as cash</i> is the meaning. But Sumner never states this clearly.<br /><br />2. After being unclear about <i>cash relative to money</i>, Sumner provides a graph showing <i>cash relative to GDP</i>. The graph is unrelated to the discussion. But the irrelevance of the graph is not obvious, because Sumner was not clear on "cash relative to money".<br /><br />3. Sumner uses the irrelevant graph as evidence of his "hold more cash" claim. No one seems to object to this.<br /><br />4. Am I the only one who sees that Sumner's argument is flawed?<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com