Nick Rowe asks me three questions in his Worthwhile Canadian Initiative: If cows were money (a response to Brad DeLong):
Nick: If cows were money, an increased demand for milk would cause a recession. People would stop spending their cows to buy goods and services, because if you spend your cows you don't have as much milk. Was the recession caused by an excess demand for milk, or an excess demand for money?
Me: If the Federal Cow Reserve conducted expansionary monetary policy by selling cows in exchange for promises to deliver milk, then its open market operations in cows would have no stimulative effect on the economy: the cows it sold would not enter the circulating medium but would instead be kept in reserve to replace the milk that the Federal Reserve had bought. Since open-market operations that boost the money stock are ineffective, it is clear that the recession was not caused by an excess demand for money but by an excess demand for milk.
Nick: If gold bars were money, an increased demand for bling would cause a recession. People would stop spending their gold bars to buy goods and services, because if you spend your gold bars you don't have as much bling. Was the recession caused by an excess demand for bling, or an excess demand for money?
Me: If the Federal Jewelry Reserve conducted expansionary monetary policy by selling gold in exchange for other forms of bling, then its open market operations in gold would have no stimulative effect on the economy: the gold it sold would not enter the circulating medium but would instead be used as bling replace the bling that the Federal Reserve had bought. Since open-market operations that boost the money stock are ineffective, it is clear that the recession was not caused by an excess demand for money but by an excess demand for bling.
Nick: If dollars were money, an increased demand for savings would cause a recession. People would stop spending their dollars to buy goods and services, because if you spend your dollars you don't have as much savings. Was the recession caused by an excess demand for savings, or an excess demand for money?
Me: If the Federal Reserve conducted expansionary monetary policy by selling dollars in exchange for other savings vehicles like bonds, then its open market operations in dollars and bonds would have no stimulative effect on the economy: the dollars it sold would not enter the circulating medium but would instead be used as savings vehicles to replace the bonds that the Federal Reserve had bought. Since open-market operations that boost the money stock are ineffective, it is clear that the recession was not caused by an excess demand for money but by an excess demand for savings vehicles.
Now that that is clear, let me say that Nick's post is very good. He goes on:
It has almost come down to a semantic dispute.... e are arguing about the referential opacity of demand functions. If I demand milk, can I be said to demand the medium of exchange, if, as a contingent fact, the medium of exchange just happens to provide milk, and I want the medium of exchange only for its milk?
But it matters. Because the way you frame the cause of the recession may influence where you look for a cure.
If you say that the recession is caused by an excess demand for milk, you start looking for ways to either increase the supply of milk or reduce the demand. Can the government breed some goats, and increase the supply of milk that way? But if you see the recession as being caused by an excess demand for cows, you also start to think of other solutions. Perhaps the government could tax ownership of cows? Even, as a last ditch policy, make the cows stop giving milk? If you think of the recession as being caused by a shortage of milk, then taxing cows, or making the cows stop giving milk, look like totally daft solutions. They wouldn't cure the shortage of milk. But they would cure the recession. With a tax on cows, or if cows stopped giving milk, people would start spending their cows again.
But I also see the point of looking at it from Brad's perspective. An open market operation of cows for goats, where the government imports cows, uses them buy goats, and exports the goats, may not work. The total supply of milk is the same, and if cow's milk and goat's milk are perfect substitutes, people have no additional incentive to get rid of their cows to buy the goods and services that are in excess supply. If, at the margin, the demand for cows is a demand for milk only, the demand for cows will increase one-for-one with the increased supply of cows, if that increased supply of cows is the result of an open market purchase of goats. But why did the demand for cow's milk increase in the first place? Was it that all the goats went dry? Or might the increased demand for milk be a consequence of the recession, and so a consequence of the excess demand for cows? "I had better hang on to my cows, because I won't be able to sell my labour to buy milk in this recession!"
I don't know whether Brad is right about the shortage of other safe savings vehicles being the cause of the increased demand for money qua second best savings vehicle. But, even if he is wrong, this is something that might happen.... orrectly diagnosing the proximate cause of the recession as an excess demand for the good that happens to be the medium of exchange, even if that excess demand is not a demand for that good qua medium of exchange, lets us start thinking about radical solutions.
And we need to start thinking about radical solutions, because as history teaches us, and as this recession reminds us (and judging by the Eurozone we are going to be reminded again) stuff happens. Things go wrong. Safe assets become unsafe. Goats stop giving milk. And we need a monetary system that is robust in the face of human stuff-ups. A shortage of milk is a problem, but it didn't ought to cause a recession too. A shortage of safe assets is a problem, but it didn't ought to cause a recession too. And if it didn't cause an excess demand for the medium of exchange, as a contingent side-effect, it wouldn't cause a recession to compound the original problem. And it's just because those side-effects are contingent, and don't follow of necessity, that I insist on my way of framing the problem. A shortage of safe assets may cause an excess demand for money. An excess demand for money will cause a recession. We can break that first link in the causal chain, because it's only a contingent link. The second link follows of metaphysical necessity, unless we switch to barter.
What's the solution that could prevent an excess demand for the medium of exchange, and so prevent general gluts? Silvio Gessell? Barter on Ebay? Funny money systems where you can't hold a positive balance? God only knows. But we ought to start thinking about it. Quasi-monetarism (which is really Keynesianism too, if you are the sort of Keynesian that recognises that Keynesian economics doesn't make any sense in a barter economy) can be a radical approach.
The one thing this left out, I think, is that "money" becomes a first-rate savings vehicle and store of safe value only when nominal interest rates hit their zero lower bound.
Actually, it left out something else: in comments to Nick, Andrew Harless starts musing about money not just as a medium of exchange and a store of value but a unit of account...
There's already a company trying to plant solar panels in highway cloverleafs.
-----------------------
http://republicpropertiescorp.com/about/solar
http://www.cloverleafsolarhighways.com/
Introducing Solar Highways
Republic Cloverleaf Solar is proud to announce its plans to bring a new approach to solar energy in Santa Clara County. Called the Solar Highways, this exciting project will bring solar farms to currently vacant Caltrans land along US Highway 101.
Proposed for seven Caltrans interchanges, the Solar Highways would intermittently stretch 20 miles from Gilroy to San Jose. The solar installations will consist of a 15-megawatt system located on 65 acres of property that will offset over 15,500 metric tons of carbon per year.
The first project of its kind, the Solar Highways will contribute numerous benefits to the community including a new viable renewable energy source, green jobs, revenue for the State of California and significant carbon emission offsets. In fact, this project will offset over two million car miles traveled per year.
The Solar Highways project will become a model for solar energy collection upon its completion. With solar energy a high priority for many key local and state agencies, this project has broad based support from many elected leaders and community organizations.
Reply
free bench craft company scam program
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
bench craft company scam fact or fiction
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
www.bench craft company scam .com/
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
safe bench craft company scam
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
free bench craft company scam enlargement
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
free bench craft company scam
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
bench craft company scam system
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
free bench craft company scam enlargement exercises
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
homebench craft company scam
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
bench craft company scam drugs
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
bench craft company scam magazine
Climate Questions and Fox <b>News</b> - NYTimes.com
The media watchdog Media Matters cites an e-mail from an editor cautioning reporters not to say that the planet has warmed without adding that the relevant data has been called into question.
Captain Beefheart Dead at Age 69 | Rolling Stone Music
Don Van Vliet, who became a rock legend as Captain Beefheart, died today from complications from multiple sclerosis in California. His passing was ann.
Fox <b>News</b> Viewers Are The Most Misinformed: Study
UPDATE: Fox News senior vice president for news Michael Clemente has responded to the study which found that his network's viewers are more misinformed about American political issues than any other channel. In a statement to the New ...
bench craft company scam pictures
No comments:
Post a Comment