Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
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
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