tag:blogger.com,1999:blog-5713178645208582139.post4669069998722559376..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: What is Money?David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-5713178645208582139.post-71993350873008380192012-02-27T15:57:25.104-06:002012-02-27T15:57:25.104-06:00Unfinished sentence correction: "then holders...Unfinished sentence correction: "then holders of the fed's dollars will have a claim to the fed's bonds AND gold."Mike Sproulhttp://www.csun.edu/~hceco008/realbills.htmnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-10292861999132081712012-02-27T14:00:35.156-06:002012-02-27T14:00:35.156-06:00Lee:
1) I'll leave it to you to google "...Lee:<br /><br />1) I'll leave it to you to google "circular definition". It's not the main point of dispute anyway.<br />2) I don't think you'd deny that money issued by private banks, toys r us, etc, is the liability of its issuer. The fed's dollars are a true liability of the fed. The fed will buy them back with bonds, and if the fed were ever 'unwound', Mike Sproulhttp://www.csun.edu/~hceco008/realbills.htmnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-12303906944774042982012-02-27T10:18:36.657-06:002012-02-27T10:18:36.657-06:00By the way, this is exactly the point I was trying...By the way, this is exactly the point I was trying to make in an earlier comment. By conceptualising money as <i>just another liability</i>, distinguished only by its particular liquidity and safety, money, in the traditional sense, is being tacitly left out of the analysis. The things that make money special--it's general acceptance in exchange, and it's lack of a price of its own--are Lee Kellyhttp://ambientchallenge.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-57472512105084771412012-02-27T09:38:12.201-06:002012-02-27T09:38:12.201-06:00Mike,
First, a definition cannot be circular; a d...Mike,<br /><br />First, a definition cannot be circular; a definition is not an argument. Suppose someone defined 'money' as the stuff we use to pay for other stuff. That's not an argument: it's not like the word 'money' is a premise and 'stuff we use to pay for other stuff' is a conclusion. That just wouldn't make any sense.<br /><br />You may not like a Lee Kellyhttp://ambientchallenge.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-71697310235510622092012-02-26T21:33:42.130-06:002012-02-26T21:33:42.130-06:00"What is money?" is a question that only..."What is money?" is a question that only invites circular answers like "It is the stuff we pay with." Let's try a question that has a meaningful answer: "Whose liability is that money?" Now we have a simple accounting problem with a real answer: Green paper dollars are the Fed's liability. Checking account dollars issued by B of A are B of A's liability. Mike Sproulhttp://www.csun.edu/~hceco008/realbills.htmnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-58565819277060293152012-02-26T17:55:46.532-06:002012-02-26T17:55:46.532-06:00You might call it "hyperinflation," or &...You might call it "hyperinflation," or "improving liquidity." I would call it "counterfeiting." <br /><br />The Dreckgeld "issued" by the Financial Sector has done as much, heck, nearly infinitely more, to debase and damage the credibility and good-faith underpinnings of the REAL "money" the rest of us have to use, as all those funny-munny $100s jtmcpheehttps://www.blogger.com/profile/12006271734526011686noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-13713118745224157432012-02-25T21:38:23.296-06:002012-02-25T21:38:23.296-06:00If memory serves, JMK's 1937 summary journal a...If memory serves, JMK's 1937 summary journal article of the GT provides a quip about how foolish it is to talk about money as a store of value. The point being that money is desired for the purpose of liquidity, not as a store of value. In the JSTOR version of the article it was at the top of the page. About 7 pages in. (I went and looked. It's 10 pages in). The QJE article from 1937, p. Dodgy Bagehothttps://www.blogger.com/profile/04905330717836358627noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-80290785346955075992012-02-25T07:21:22.851-06:002012-02-25T07:21:22.851-06:00Just wondering if you've seen Steve Waldman...Just wondering if you've seen Steve Waldman's latest at Interfluidity. (Incredibly cogent, as always.) Proposes a system that would greatly increase the supply of safe assets available to small savers, with darned interesting implications for investment incentives.Steve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-85037349266129634392012-02-24T14:26:17.762-06:002012-02-24T14:26:17.762-06:00David,
You say 'turned into instant purchasin...David,<br /><br />You say 'turned into instant purchasing power', but that's just the question: do they have to be sold for money first? Obviously, the answer is yes for lots of things, like if you wanted to go shopping at Wal-Mart.<br /><br />My guess would be that they really do serve as media of exchange in particular financial markets. In that case, they are, conceptually, a bit Lee Kellyhttp://ambientchallenge.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-90183644902896783142012-02-24T14:13:31.145-06:002012-02-24T14:13:31.145-06:00Jazzbumpa,
Short answer: money supply has yet to...Jazzbumpa, <br /><br />Short answer: money supply has yet to reach level of money demand. We still have excess money demand.<br /><br />Yes, the dollar is a safe asset that can be used as a store of value. But why? Because it is the most liquid asset.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-44723402511714717002012-02-24T14:12:46.106-06:002012-02-24T14:12:46.106-06:00Jazzbumpa,
I don't think Nick is saying that ...Jazzbumpa,<br /><br />I don't think Nick is saying that money is not a store of value. Indeed, money has to be a store of value to be a medium of exchange at all, since there is always some elapse of time between receiving money and spending it. (Nick makes this same point by noting that money velocity cannot be infinite.) However, that money is a store of value is relatively unimportant. Lee Kellyhttp://ambientchallenge.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-76695659938573289042012-02-24T14:08:25.062-06:002012-02-24T14:08:25.062-06:00Lee,
Repos are to institutional investors what ch...Lee,<br /><br />Repos are to institutional investors what checking accounts are to you and me. The both are both highly liquid assets that can be turned into instant purchasing power.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-80439041165509923432012-02-24T13:52:48.964-06:002012-02-24T13:52:48.964-06:00But isn't the dollar itself a safe asset? Doe...But isn't the dollar itself a safe asset? Doesn't that confirm it's store-of-value function?<br /><br />Excess reserves are $1.6 Trillion.<br /><br />http://research.stlouisfed.org/fred2/series/EXCRESNS<br /><br />That's a lot of stored value doing nothing for liquidity, nothing for AD, nothing for GDP growth.<br /><br />From your linked Feb 2 post:<br /><i>All this requires is Jazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-14321982394926850712012-02-24T13:43:08.687-06:002012-02-24T13:43:08.687-06:00It's not clear to me how much the assets you s...It's not clear to me how much the assets you speak of were actually functioning as media of exchange. Were they bought and sold with money or were they used to make purchases directly? If the holders had to sell them before they could purchase something else, then they weren't media of exchange at all, but just highly liquid assets.<br /><br />Economists tend to confuse money and Lee Kellyhttp://ambientchallenge.blogspot.comnoreply@blogger.com