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Money
A Category Archive (36 entries)
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January 30, 2012
Last quarter, I received the following "riddle" from a student in my class: It's a slow day in some little town........ The sun is hot....the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.... MORE
December 11, 2011
Macroeconomics
David Henderson
I've been busy in the last week with end-of-quarter classes and two speeches, the latter of which I'll report on today or tomorrow. Which is why I hadn't replied to Jeff Sommer's criticism of me in the New York Times.... MORE
November 28, 2011
Monetary Policy
David Henderson
In an editorial in yesterday's New York Times, Bill Keller decries the competition that newspapers get from independent sources on the web. That's not how he poses it, of course. No. What he sees is a lot of loud, outlandish... MORE
October 9, 2011
Economic History
Arnold Kling
Worth a listen. In fact, he almost endorses my most wrong view!! He says that currency and markets emerged from plunder. However, he does say that there were early trading nations that were not plundering empires. He also has provocative... MORE
October 3, 2011
David Graeber writes, Anthropology is full of examples of societies without markets or money, but with elaborate systems of penalties for various forms of injuries or slights. And it is when someone has killed your brother, or severed your finger,... MORE
February 25, 2011
San Jose State University economist Warren Gibson has an excellent article, "Gold and Money," in the latest Freeman. He lists a number of claims about gold, both positive and negative, and proceeds to do a "True, False, Uncertain, with explanation"... MORE
December 14, 2010
I've read through Perry Mehrling's The New Lombard Street, and I need to read it again. Meanwhile, some thoughts. 1. Mehrling is an outstanding and engaging intellectual historian, but he fails to appreciate financial crisis porn. I'll explain below. 2.Tyler... MORE
December 9, 2010
I don't get to see $100 bills very often and so I've never paid attention to the picture of Ben Franklin on it. But the controversy about the U.S. government messing up on $100 bills got me looking more closely.... MORE
September 16, 2010
Here's an entertaining criticism of the penny. In 2006, I supervised a thesis in which my student made the case for eliminating the penny. The author, Stephanie King, was at the time a Major in the U.S. Marine Corps. A... MORE
August 29, 2010
Macroeconomics
Arnold Kling
Bryan asks how I think that the Fed can make big changes in inflation regime but not make small changes within a regime. Again, my thinking is based almost entirely on my reading of postwar U.S. monetary history, which went... MORE
August 26, 2010
There has been a lot of drama among monetary theorists in the blogosphere, and I have been waiting for Scott Sumner to join the fray. He writes, Thus the question is never whether low rates unfairly subsidize borrowers, or whether... MORE
July 13, 2010
Macroeconomics
Arnold Kling
Bryan writes, Out of all of Arnold's macroeconomic views, only one strikes me as truly absurd: His skepticism about the ability of central banks to affect nominal GDP and other nominal variables. Here is my problem. Nominal GDP is measured... MORE
July 11, 2010
Macroeconomics
Arnold Kling
Stephen Williamson writes, From a New Monetarist point of view, a key element of the financial crisis relates to the scarcity of liquid assets. There is one type of liquid asset, which is outside money. Currency and bank reserves play... MORE
July 9, 2010
Here is the long-awaited section on monetary theory. If you ask me the question, what will happen if the Fed stops paying interest on reserves, my answer would differ from Scott Sumner's. I would say, "Not much will happen in... MORE
April 29, 2010
Martin Feldstein writes, In the end, Greece, the eurozone's other members, and Greece's creditors will have to accept that the country is insolvent and cannot service its existing debt. At that point, Greece will default. Feldstein points out that there... MORE
January 10, 2010
Monetary Policy
David Henderson
One of my favorite parts of Milton Friedman's and Anna J. Schwartz's modern classic, A Monetary History of the United States, 1867-1960, is a lengthy footnote on pp. 463-64. It's their explanation of why they think the reported amount of... MORE
November 16, 2009
A key feature of the financial crisis was a massive fall in the velocity of money. But what exactly is "money velocity"? By definition, V=PY/M. In English: Velocity=Nominal Income divided by the Money Supply. When asked for some intuition, economists... MORE
November 6, 2009
In his post today on money, Arnold writes: However, as you know, I prefer to think of money as designed top down, to serve the needs of government. But shouldn't what you "prefer to think" count for literally zero? What... MORE
Economic History
Arnold Kling
George Selgin writes, Economists generally take for granted, if only tacitly, a teleological view of money's historical development, according to which it first takes the "primitive" form of mundane commodities such as cowrie shells and cacao seeds, and then advances... MORE
October 9, 2009
Macroeconomics
Arnold Kling
Here. after July 2008 there were many other indicators that money was far too tight. About this time the dollar began rising sharply against the euro; and commodity prices began a sharp decline. Real interest rates rose from less than... MORE
October 3, 2009
How does monetary policy work? Think of it this way: Fiscal policy adds or subtracts government liabilities. Monetary policy swaps government liabilities.... MORE
September 30, 2009
Macroeconomics
Arnold Kling
A commenter asks how I reconcile my assertion that money is a store of vaue with my view that macroeconomics should not emphasize the role of money as a store of value. It is only the second view--that money is... MORE
September 29, 2009
Macroeconomics
Arnold Kling
Josh Hendrickson and a reader raise interesting questions.... MORE
Macroeconomics
Arnold Kling
Thanks to Mark Thoma for keeping the debate going. In a defense of what Paul Krugman would call Dark Age Macroeconomics, David Beckworth unleashes that most medieval of weapons, the dreaded Vector Autoregression. More on that below the fold. Also... MORE
September 27, 2009
Macroeconomics
Arnold Kling
I have been making the following claims about macro.... MORE
September 25, 2009
Macroeconomics
Arnold Kling
Read the whole thing. He likes the Recalculation story, which he points out he articulated last December. But he doesn't really buy my bizarre monetary theory. He writes, "I see the Fed as controlling nominal gdp but not always real... MORE
September 24, 2009
Macroeconomics
Arnold Kling
Bill Woolsey writes, it is not difficult to see that a large shift in the composition of demand would result in larger shifts in resource utilization, higher structural unemployment, and slower growth in the productive capacity of the economy. For... MORE
September 22, 2009
Macroeconomics
Arnold Kling
Before I respond to Bryan's comments, let me first recommend the two Scott Sumner papers that he mentions. This paper develops a theory that cultural values drive economic policy, which in turn drives economic outcomes. It is an interesting complement... MORE
September 21, 2009
Macroeconomics
Arnold Kling
Jeffrey Rogers Hummel writes, Orthodox monetarists attributed such shocks to declines in the rate of monetary growth, whereas traditional Keynesians blamed declining autonomous expenditures. Both of these sources are captured in the well known equation of exchange: MV = Py,... MORE
August 4, 2009
Monetary Policy
Arnold Kling
I've been away, mostly in Prague (where the big economic question is why so many older buildings have so many fancy details. My answer is that there must have been a very unequal distribution of wealth, so that rich folks... MORE
May 5, 2009
He says in an interview, Free banks compete, as it were, on an even playing field in issuing paper IOUs, which are basically what banknotes are. They have to redeem those IOUs on a regular basis: The competition among different... MORE
January 23, 2009
Monetary Policy
David Henderson
Lots of people lately have been talking about how lousy the dollar is as a store of value. I'll repeat the offer I made in a recent book review in Regulation, in response to an economist's claim that government had... MORE
November 23, 2008
This lecture looks at private monetary instruments and their relationship to government monetary instruments.... MORE
November 21, 2008
Economic History
Arnold Kling
In contrast to my militaristic account, we have Nick Szabo: Local but extremely valuable trade was, this essay argues, made possible among many cultures by the advent of collectibles, by the time of the Upper Paleolithic. Collectibles substituted for otherwise... MORE
November 17, 2008
Finance: stocks, options, etc.
Arnold Kling
He talks with Russ Roberts, who asks skeptical questions. Selgin thinks that one can have sound unregulated, uninsured banking without reserve requirements of 100 percent. He thinks that bank owners need to have significant capital at risk. Once upon a... MORE
November 3, 2008
Austrian Economics
Arnold Kling
Walter Block, arguing against Bryan, says that fractional reserve banking is fraudulent. There is some chance that when you make your deposit you will not get your money back, and instead someone else will have taken title to it. Therefore,... MORE
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