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Rediscovering Minsky's wheel, one pundit at a time | 77 comments (77 topical, editorial, 0 hidden)
Re: But isn't that (none / 0)
Jake:
ARG asked a question about how my recommended policy would influence [the effects of the money multiplier, as discussed in the wiki article]. Which is an unanswerable question, because [the idea of a money multiplier] is arrant nonsense.

I think we need to keep in mind that all of these concepts are constructs, some more useful than others. The "money multiplier" is a further elaboration of "the velocity of circulation" which was used to attempt to explain why available money could appear to increase or decrease while there was no change in base money. Both versions have been used by various economic textbooks to attempt to educate freshmen over the last half century, in part because the underlying phenomenon is important, and they were of some use in that respect. After all, there was, presumably, a need for Tobin to publish Commercial Banks as Creators of "Money" a half century ago. So describing them as "arrant nonsense" is a bit flippant and off-putting, even if substantially true, considering that this was what was taught to 90% of everyone who has ever taken ANY economics course. So your comment became unintelligible because you were "geeking out" and dismissed the implicit question rather than answering it in an understandable context.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 13th, 2011 at 11:31:09 AM EST
[ Parent ]
Re: But isn't that (none / 1)
The "money multiplier" is a further elaboration of "the velocity of circulation" which was used to attempt to explain why available money could appear to increase or decrease while there was no change in base money. Both versions have been used by various economic textbooks to attempt to educate freshmen over the last half century

Well, yes, the money multiplier mythology is very useful in the context of schooling people in the neoclassical view of banking.

For understanding the how the actual institutions of modern economies... not so much.

So describing them as "arrant nonsense" is a bit flippant and off-putting, even if substantially true, considering that this was what was taught to 90% of everyone who has ever taken ANY economics course.

True. In my defence, when I wrote that I was in the middle of a Macro 202 assignment that was particularly stuffed with other, but similar, forms arrant nonsense. I may have been letting off a little steam that I could not well permit to enter into a liturgical work.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri May 13th, 2011 at 04:01:56 PM EST
[ Parent ]
Re: But isn't that (none / 0)
So it seemed. No problem. Just saying.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 13th, 2011 at 05:08:00 PM EST
[ Parent ]

Rediscovering Minsky's wheel, one pundit at a time | 77 comments (77 topical, 0 editorial, 0 hidden)
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