tag:blogger.com,1999:blog-5154389358831836369.post4012157915076116257..comments2024-03-29T06:09:37.749-04:00Comments on The Slack Wire: Quasi-Monetarism: A Second OpinionJW Masonhttp://www.blogger.com/profile/10664452827447313845noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5154389358831836369.post-19660206072657860552011-10-04T22:31:15.014-04:002011-10-04T22:31:15.014-04:00JW: "I agree with particular enthusiasm with ...JW: "I agree with particular enthusiasm with the points that we should be talking about liquidity, not money;...."<br /><br />Line up all the goods from the most liquid at one end, to the least liquid at the other end. It seems to be just a difference of degree along a spectrum, right?<br /><br />I think that's wrong. There is something very special about the good at the most liquid end of the spectrum, even if it is only slightly more liquid than the goods second and third in line. We will use the most liquid good to be the medium of exchange. We will buy and sell all other goods for that good. We buy and sell even very liquid bonds for money. The winner of the liquidity race takes all. A difference in degree becomes a difference in kind. (Yeager).<br /><br />Also, how much money does it take to pay down $1 trillion in debt? $1. If it circulates quickly enough. Remember the joke/story about the rich tourist who walks into town, puts a $100 bill on the counter of the hotel, which gets "borrowed" to pay off a circle of debts, and then returned to the tourist before he notices it's missing?Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-69549007735177143872011-10-01T16:14:19.795-04:002011-10-01T16:14:19.795-04:00"Yet in sectoral terms, its only households t...<b>"Yet in sectoral terms, its only households that are truly overleveraged: government is only political so and business are relatively okay. The problem is to get the big balance sheet with the spare capacity online again; of course, that is a political problem. Boosting liquidity qua "the money supply" will simply pass through to paying down debts before it starts to affect consumption and thereby investment."</b><br /><br />Anush Kapadia seems to be saying that "the problem" is to "affect consumption and thereby investment" in order to boost economic growth.<br /><br />To do this, he wants to get government ("the big balance sheet") borrowing and spending more.<br /><br />The problem can't be solved, he says, by boosting the quantity of money, because the new money "will simply pass through to paying down debts." But surely, that depends upon how the boosting is done.<br /><br />Anush Kapadia identifies the problem -- "its only households that are truly overleveraged" -- and then proceeds to ignore that problem in his otherwise fascinating analysis.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com