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Actually, only the commercial banking sector is in the "money supply" box, and the money supply box involves pretending that the money supply is exogenous, so it is "money supply including the banking system assuming that the banking system acts as a passive transmitter of Central Bank policy.

And while FIRE transactions are heavily involve in determining "rental prices of capital" ... in a model like the above, that's a functional model of price, so there's no actual FIRE sector representation ... their place is taken by falsified black box models acting as proxies.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jul 12th, 2009 at 07:10:59 PM EST
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