Musings on economics and politics, with a special interest in free banking and monetary disequilibrium.
Ans: The "hole" would remain deep!http://thefaintofheart.wordpress.com/2011/02/01/%e2%80%9cfill-the-hole-with-not-by-workers%e2%80%9d-%e2%80%93-spend/
Mayor Bill, I don't understand the distinction Laidler is making between sticky pricing problems and non-sticky but "false" pricing problems in what seems like an attempt to look favorably on Keynes' claim that sticky pricing is unnecessary. In FN 16 he seems to be saying that NK Calvo pricing does not count as sticky, which looks like a distinction without a difference. Does he really save Keynes' argument that sticky pricing of some sort isn't required for nominal coordination problems?
I don´t think so. In my view, he is separating monetary from financial maladjustment, a nuance that I miss both in Friedman & Hayek. I mind that the monetary rule of Friedman (a cosntant rate of money growth, with the exception of demand of money shocks), and the universal Hayek hipothesis that loose money is guilty of all evils, doesn´t fit well with all the crises. So, I don´t see Laidler position as quasi monetarist, but a more complex one, without solution for all problems, so adding the need of regulation. In any case, splendid paper for me. thanks for the gift.
I remember David Laidler flaming me years ago on Coordination problem about time-preference interest. He sounded like a Quasi-Monetarist or FRFBer then.I agree that if you accept Hayek's cause of unsustainable booms the main thought that springs to mind is that Minsky could be right too so we have money driven booms and speculation driven booms. I'll admit I haven't thought about that much.I wrote an article over at the cobden centre about the Murphy vs Quasi-Monetarists controversy...http://www.cobdencentre.org/2011/02/money-is-barren-but-occasionally-covers-us-in-dust/
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