tag:blogger.com,1999:blog-648884752216444797.post8238731187783701370..comments2024-03-28T09:59:13.754-07:00Comments on bionic mosquito: Another Combatant Enters the Keiser – Woods Arenabionic mosquitohttp://www.blogger.com/profile/12002548958078731031noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-648884752216444797.post-2339358100726751932012-09-05T11:28:55.009-07:002012-09-05T11:28:55.009-07:00gpond, I apologize for not posting your comment so...gpond, I apologize for not posting your comment sooner - it was hung up in a folder I rarely check...don't ask me why.bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-25179723803880936392012-08-29T08:07:07.166-07:002012-08-29T08:07:07.166-07:00Thanks for your clarifying, bm.
Maybe I have list...Thanks for your clarifying, bm.<br /><br />Maybe I have listened to too much Guido Hulsman at Mises. LOL.<br /><br />gpondAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-20547769484224143462012-08-29T07:45:43.458-07:002012-08-29T07:45:43.458-07:00gpond
I always welcome both the possibility of se...gpond<br /><br />I always welcome both the possibility of seeing a mistake in my thinking as well as the possibility of understanding when my writing is not clear through feedback such as this, so I thank you.<br /><br />I will begin with your last statement, which is more accurate and precise toward my meaning: “If you mean there was a fall in demand for credit (borrowing that money), then I parse your argument correctly and I agree with you.”<br /><br />Whether for lack of qualified borrowers, or because the banks have been directed or otherwise motivated not to lend in order to keep price inflation in check, the result as regards to the Fed’s money creation causing significant price inflation would be the same. The created money has not entered the economy to the extent banks hold it as reserves, therefore has no CPI price effect.<br /><br />I would like to touch on another of your comments: “there was an increased supply of money to the banks, however, by offering to pay interest on deposits at the Fed, the Federal Reserve has created demand for that same money. The banks demand it - they keep it as 'cash' at the Fed.”<br /><br />The demand of the money by the banks is not equivalent to the demand by the market for money (or more clearly, credit), when it comes to being a driver toward price inflation. This is where I was headed with my thoughts, as it was the lack of price inflation being commented on by Aziz. So I wasn’t thinking at all about bank “demand” in this context, other than it is bank holding of excess reserves that is disallowing Fed money creation to cause price inflation.<br /><br />But had I used the term credit instead of money in this context, or at least made the connection, this would have come across better in the post.<br /><br />Again, thank you.<br />bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-16667975888185768652012-08-29T06:53:48.291-07:002012-08-29T06:53:48.291-07:00"The significant monetary inflation actions t..."The significant monetary inflation actions taken by the Fed have certainly increased the supply of money; however the demand for money has fallen as well. Therefor the impact of prices as measured in dollars has stayed reasonably calm..."<br /><br />There is something confusing to me in this passage, but I'm not sure I can put my finger on it completely. The "Therefore" clause indicates causality of stable prices due to some kind of balance between the increase of the supply of money and the decrease of demand for money. But, to me, for prices to be stable, the increase in money must be countered with an INCREASED demand for money. These would more likely tend to balance than an increased supply of money and a decreased demand for money. With a decreased demand for money, I would expect dishoarding of money (aka spending).<br /><br />Still, I think I recognize what you are meaning. There is a decreased demand for 'credit' from consumers and other borrowers.<br /><br />The way I'm thinking of this, there was an increased supply of money to the banks, however, by offering to pay interest on deposits at the Fed, the Federal Reserve has created demand for that same money. The banks demand it - they keep it as 'cash' at the Fed. The Fed has in effect sterilized it (temporarily) by causing the banks to 'demand' the money kept as cash. <br /><br />If you mean there was a fall in demand for credit (borrowing that money), then I parse your argument correctly and I agree with you. <br /><br />Keep up the good work,<br />gpondAnonymousnoreply@blogger.com