tag:blogger.com,1999:blog-5713178645208582139.post1767871046986185731..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: The Great Liquidity Demand ShockDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-5713178645208582139.post-87860651081087276122011-01-03T09:45:09.725-06:002011-01-03T09:45:09.725-06:00Have you estimated the size of QE necessary to get...Have you estimated the size of QE necessary to get these ratios back to pre-crisis levels? I will be doing this soon just to get an idea of what might happen in the markets. <br /><br />Ralph, <br /><br />I agree, MMT does beat QE. It just will not be implemented anytime soon, so I go with the best we have now, which is guys like DBTChttp://www.traderscrucible.comnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-15354921119593055112011-01-02T11:40:34.988-06:002011-01-02T11:40:34.988-06:00Since we don't even have agreement 75 years la...Since we don't even have agreement 75 years later on what caused the Great Depression, I think we can confidently assert this will run and run. As JK Galbraith said, "Economics is very useful as it provides employment for economists."<br />One good thing about the last 3 years is that the pretensions of economics as any kind of scientific endeavor have been exploded.<br />Better by ecbnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-41201425444925616812011-01-01T12:08:23.415-06:002011-01-01T12:08:23.415-06:00Unless an increase in liquidity demand spills over...Unless an increase in liquidity demand spills over into an increase in money demand, and the money supply does not increase in proportion to prevent a fall in total spending, an increase in liquidity demand should merely alter the composition of total spending and not its aggregate.<br /><br />The purchase of financial assets, highly liquid or not, reallocates resources from one use to another. Lee Kellynoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-90165294807500887112011-01-01T12:06:15.566-06:002011-01-01T12:06:15.566-06:00Musgrave claims MMT beats QE in a fair fight.
ht...Musgrave claims MMT beats QE in a fair fight. <br /><br />http://ralphanomics.blogspot.com/2011/01/mmt-beats-qe.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-35227740735892171072010-12-31T00:09:19.895-06:002010-12-31T00:09:19.895-06:00David Pearson:
On your first question, click on t...David Pearson:<br /><br />On your first question, click on the source links and it will put on the FRED pages where I made the graphs. You can manipulate the figures for yourself, but what I found is that for households it was more the denominator that changed while for the business sectors it was both. With that said, I am not sure that it makes that much difference. For example, if a household&David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-58809468604385359542010-12-30T23:46:47.348-06:002010-12-30T23:46:47.348-06:00JP Koning:
The fact that the liquidity demand is ...JP Koning:<br /><br />The fact that the liquidity demand is still elevated tells me the Fed has not done an adequate job. The Fed could have done better on two, related fronts. <br /><br />First, it should have provided even more monetary base (via purchases of long-term and other assets not typically used in monetary policy) such that housheholds and firms liquidity demand would get satiated David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-72181272754989634912010-12-30T23:26:02.559-06:002010-12-30T23:26:02.559-06:00Did the increase in the household liquidity ratio ...Did the increase in the household liquidity ratio come mostly from the numerator or denominator? If the latter, what implications does it have for gauging the "liquidity demand shock"? <br /><br />Another question: what level of the ratio is sufficient to prevent a spike in the ratio during recessions? In other words, if households feel they have sufficient liquidity, they will not David Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-30019399789186282532010-12-30T22:54:35.730-06:002010-12-30T22:54:35.730-06:00"My takeaway from these figures is that (1) t..."My takeaway from these figures is that (1) there was a great liquidity demand shock and (2) the Fed failed to sufficiently offset it."<br /><br />I can see how your figures demonstrate (1). <br /><br />But how do you get (2) from the figures? ie. use your charts to prove that the increase in demand for liquidity was not satisfied. I think you've taken a leap of chart-logic. <br />JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-64795441206460540062010-12-30T20:29:36.153-06:002010-12-30T20:29:36.153-06:00Very interesting.
Any guess as to what caused the...Very interesting.<br /><br />Any guess as to what caused the shock?<br /><br />Cheers!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.com