tag:blogger.com,1999:blog-2098432983500045934.post8222211079094137883..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Judging a Book by its CoverThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2098432983500045934.post-31392891350233451762010-09-25T10:46:30.724-04:002010-09-25T10:46:30.724-04:00Hello again, Gene. I replied to your comment in ou...Hello again, Gene. I replied to your comment in <a href="http://haywardeconblog.blogspot.com/2010/09/dollar-depreciates-as-federal-reserve.html#comments" rel="nofollow">our exchange</a> on your blog. I have just a little more. <br /><br />Since your comment of <a href="http://newarthurianeconomics.blogspot.com/2010/09/everybody-thinks.html#comments" rel="nofollow">the 20th</a>, I've been trying to figure out why other people don't distinguish between money and credit the way I do. Above, you write: "Now assume this $1.00 (or $10) causes enough inflation that the Fed decides to decrease the money supply..."<br /><br />That's it, I think: I think your first instinct was to talk about the $1.00. And maybe you added "(or $10)" to allow for my way of thinking.<br /><br />Since the Fed is in charge, I suppose it is standard practice to think in terms of the Fed's dollar. Left to my own devices, trying to understand the world, I see private lending/borrowing...<br /><br />[ We need a word to indicate that borrowing and lending are the same act. How about <b>blending</b>?? ]<br /><br />...I see private blending as <i>competition</i> for money-creation by the central bank. (See Item 3 <a href="http://newarthurianeconomics.blogspot.com/2010/02/we-are-all-kosh.html" rel="nofollow">here</a> or pages 2 & 3 of my <a href="http://2227470919845355308-a-1802744773732722657-s-sites.googlegroups.com/site/arthurianeconomics/off-line/NAE.pdf?attachauth=ANoY7cpKY61bypTP4o4mHm2iUCZ4xhDq7N-T8-gV65j_FuQ5dm8VOzBzLEkjsNpNDWMTeRDuPaN9gJs7Kz-okGO3x5bbQWnCZ9K4lLive8EV4PfmlkNSVki8MhGTK3hWhSBtMrwx3poXIW4hijPjaBaIyqu6WK3-9NzdF27Y6J82O2SDkxl_zdxW1sG_jR2-IEzAhXs_gY_uU54axws13X2PTLMzcN4ozQ%3D%3D&attredirects=1" rel="nofollow">12-page PDF</a>.<br /><br />My view is simple, Gene. I consider that the cost of interest is a significant difference between money and credit. And all of my ideas originate in an examination of the ratio between money-in-circulation and credit-in-use. It is beyond my understanding why economics ignores the factor cost of money.<br /><br />ArtThe Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-72632771251669687792010-09-24T20:23:37.250-04:002010-09-24T20:23:37.250-04:00Art...Be patient with me as i use a simple example...Art...Be patient with me as i use a simple example to illustrate what I think you are tying to say (I concede I may not be drawing the correct conclusion)..When I teach the fractional banking system I teach it as follows. The Fed buys a bond for $1.00. A bank now has one real, phisical, dollar. Assume the Res. Req is 10%, hence the money multiplier is 10 and the potential increase in the money supply is $10if the banks dont withold any of the excess reserves. Of this $10 only $1.00 is "real money" and $9.00 is credit. Now assume this $1.00 (or $10) causes enough inflation that the Fed decides to decrease the money supply by $1.00 by sellng a bond and taking the original $1.00 out of circulation. If they do that then there is still $9.00, not in money, but in "credit" that has been created and presumably cannot be retrieved by the Fed. At this point there is no real money to pay back the debt. This assumes you are sayng the money multiplier does not work in reverse, as the textbook suggests. Before I go off on any additional tangent, is this the crux of your argument on the money vs debt/credit issue? Thank you in advance for your reply...<br />Gene HaywardGene Haywardhttp://www.haywardeconblog.blogspot.comnoreply@blogger.com