tag:blogger.com,1999:blog-5713178645208582139.post2037252969565366482..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Market Monetarism and Endogenous Money?David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-5713178645208582139.post-25243879936501579792014-04-15T19:58:25.259-05:002014-04-15T19:58:25.259-05:00I admit to not understanding market monetarism (I ...I admit to not understanding market monetarism (I promise to read up), and being totally confused by the diagram. (Maybe everybody was.... not as much as myself.)<br />The actual diagram that comes to mind when I hear market monetarism is the one you come to when you are driving on the stem portion of a “T” intersection.<br />You cannot proceed without changing direction. You are free to go leftjoebhedhttps://www.blogger.com/profile/17113967013126217266noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-78921051955271952672014-04-12T22:30:31.755-05:002014-04-12T22:30:31.755-05:00Mark, you mostly got it right. Here is where I dif...Mark, you mostly got it right. Here is where I differ. First, the real developments like TFP ultimately drive real (i.e. inflation-adjusted) level of bank lending in the long run. That is why in the figure I above I have the 'structural' part in the 'expected future economy' box. The Fed can influence real lending in the short-run, the cyclical dimension. Second, if the Fed David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-30709595972362283542014-04-12T22:21:11.395-05:002014-04-12T22:21:11.395-05:00Thanks JKH. Yes, I do think there is much more ove...Thanks JKH. Yes, I do think there is much more overlap that many of us initially imagined.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-1263760877263283602014-04-12T17:18:35.977-05:002014-04-12T17:18:35.977-05:00If I extrapolate your argument into the current en...If I extrapolate your argument into the current environment, I would interpret what you are saying as follows: consumers, banks, and firms believe the large monetary base at present is temporary. Today's NGDP growth is basically the maximum that is supportable by the amount of reserves that people believe will stay in the banking system permanently--the portion the Federal Reserve won't Mark Summershttps://www.blogger.com/profile/05024695611563928703noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-13353079662082481532014-04-07T08:12:15.038-05:002014-04-07T08:12:15.038-05:00"All variables other than the target variable..."All variables other than the target variable are ultimately endogenously determined."<br /><br />That would make for a great recap post.<br /><br />Too much thinking on this issue is from the trees to the forest.<br /><br />A top down, robust connection between the two views is needed.<br /><br />It's an opportunity - in that endogenous money could be a subset of the exogenous viewJKHhttps://www.blogger.com/profile/06322177539880818556noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-56492599762676125112014-04-02T06:59:21.760-05:002014-04-02T06:59:21.760-05:00Money was created as a good which is easy to store...Money was created as a good which is easy to store and which was valuable to everyone regardless of the consumer basket. Money appeared because the market needed it very much to evaluate. Now money are referred to banks, <a href="http://britainloan.co.uk/" rel="nofollow">Britain Loan</a>, insurance but this is not the primary function of it. Anonymoushttps://www.blogger.com/profile/12584349191773124897noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-35069679736721560992014-03-31T14:55:44.742-05:002014-03-31T14:55:44.742-05:00Steve, I should explain the figure more but yes if...Steve, I should explain the figure more but yes if you consider your list structural then it should be in there too. The idea is that forward looking households and firms see both the cyclical and structural forces--or at least their manifestation in terms of jobs, incomes, etc--that will affect where the economy goes. They make their plans accordingly. The Fed plays an important part over the David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-37653261576459058092014-03-31T13:51:55.598-05:002014-03-31T13:51:55.598-05:00David, do you think it would make sense to include...David, do you think it would make sense to include any of the following in the box at right, maybe even in the structural box therein?<br /><br />• Labor share of income<br />• (Real) wage trajectory<br />• Dispersion of wealth<br /><br />If we assume that many/most people's expectations are based largely on the present and recent past, and income/wages are extremely salient (people see and Steve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-72532162886963860232014-03-31T08:05:27.089-05:002014-03-31T08:05:27.089-05:00Thanks Nick. The diagram does need more explanatio...Thanks Nick. The diagram does need more explanation and for the purposes of this post it could have been simpler. Point was to show via the flow of arrows (1) CB sets path of monetary policy, (2) this path shapes expectations about future economy, and (3) these expectations influence current endogenous money creation. David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-42089382075700686452014-03-31T07:32:44.705-05:002014-03-31T07:32:44.705-05:00Good post David. We are on the same page. But I...Good post David. We are on the same page. But I'm afraid you lost me in the diagram!Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-36960031903030282942014-03-28T22:25:05.159-05:002014-03-28T22:25:05.159-05:00I took a look and made a clarifying update above. ...I took a look and made a clarifying update above. Also, that was a typo in the figure you pointed out. Suppose to show increased loans from financial intermediaries and increased credit instruments or bonds from financial markets. It has now been fixed.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-37451841433982032122014-03-28T21:06:56.516-05:002014-03-28T21:06:56.516-05:00David, can you explain what the difference is betw...David, can you explain what the difference is between the two arrows (in your chart), both going up to "FIRMS": one labeled "Increase loans" and the other called "Increase loans equity." Thanks.Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-5164184758357626032014-03-28T18:40:57.401-05:002014-03-28T18:40:57.401-05:00Dear David,
Quite an interesting interview. I ju...Dear David, <br /><br />Quite an interesting interview. I just had a small problem understanding the optimal amount of money, the system needed. I though, according to my understanding any financial system requires an inflated monetary base. Thus, interest rates would be the leading indicator, to any monetary easing. But under the same senario, NGDPLT would be the legging one ... as nominal Bahaa Monirhttp://orcaforex.com/author/bahaa-monir/noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-84012548382677536612014-03-28T18:26:18.083-05:002014-03-28T18:26:18.083-05:00David, I respond to Cullen here about your post (n...David, I respond to Cullen here about your post (nice post BTW). I'm focusing on your use of the term "exogenous." I tell him about my previous conversation with Nick Rowe on this, and what I think is a slight difference between you and Nic. I quote Nick's comments to me regarding a previous post of yours. Could you take a look? Thanks:<br />http://pragcap.com/crickets/Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.com