tag:blogger.com,1999:blog-8897997766931633186.post2085121413517329530..comments2024-02-14T03:21:37.506-05:00Comments on Monetary Freedom: The Money MultiplierBill Woolseyhttp://www.blogger.com/profile/06330232724290161369noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-8897997766931633186.post-74825570583320377592015-12-03T23:08:00.405-05:002015-12-03T23:08:00.405-05:00We should always be careful with this type of appr...We should always be careful with this type of approach, it can be extremely dangerous if things go wrong, I always trade with careful approach and that’s where I am extremely lucky to work in Forex market where I get endless benefits courtesy to OctaFX broker with their 50% bonus on deposit over, it’s so good due to been completely use able, so that’s why I love it so very much and always able to make easy profits without any trouble.Kasoornoreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-91438977866284906712010-02-22T13:45:26.203-05:002010-02-22T13:45:26.203-05:00Bill:
I was thinking not about the capital regula...Bill: <br />I was thinking not about the capital regulations, but the impact of the market valuation of bank capital. When market value of bank capital is above the replacement value of bank capital, stock market is sending the signal that ratio of bank reserves and bank deposits is near the optimal ratio, and monetary equilibrium certainly can be maintained by manipulating short term interest rates. But when value of bank capital crashes market is sending the signal that banks should desire to hold more reserves. Scott Sumner often repeats that the value of equity of banks crashed only because Fed did not target nominal GDP or other similar indicator, and with such targeting the only needed policy instrument is short term rates. But I am afraid that value of bank capital has fallen at least to some extent because of their mistakes, so monetary equilibrium cannot quickly be attained even by promising to hold short term rates at zero for an extended period.themoneydemand.blogspot.comhttps://www.blogger.com/profile/13082972557599397165noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-6398977339463762412010-02-21T20:38:46.003-05:002010-02-21T20:38:46.003-05:00Thank you for your comment, 123.
I agree that the...Thank you for your comment, 123.<br /><br />I agree that the capital constraints on banks will impact the level of the interbank loan rate consistent with maintaining monetary equilibrium. I am not so sure that it will impact the relationship between bank reserves and the quantity of bank deposits. Government bonds have no capital requirements, and the short ones probably should.Bill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-79046988169779100772010-02-21T10:00:08.975-05:002010-02-21T10:00:08.975-05:00"Instead of all of the complications of a var..."Instead of all of the complications of a variety of deposits, loans, other assets, liabilities, and bank capital, the two items of interest to the monetary theorist--monetary liabilities of the banks and the central bank, are at center stage, with only commercial lending as a complication. And bank lending is not of special interest--it is just an afterthought."<br />The market price of bank capital has very strong effects on how these two items of interest to the monetary theorist interact. If we have a nominal expenditure target, we can ignore this. But since we have interest rate targeting, central banks that ignore the market price of bank capital have mismanaged monetary policy during the latest crisis.themoneydemand.blogspot.comhttps://www.blogger.com/profile/13082972557599397165noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-73696113033358456622010-02-19T18:58:25.432-05:002010-02-19T18:58:25.432-05:00Nick:
Yes, thanks!Nick:<br /><br />Yes, thanks!Bill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-9599191738491965472010-02-19T18:10:39.808-05:002010-02-19T18:10:39.808-05:00Bill: I'm slowly working through it.
I think t...Bill: I'm slowly working through it.<br />I think there's a typo in the paragraph beginning:<br /><br />"In particular, the point of the money multiplier process...."<br /><br />3rd line from the bottom: "excess demand" should be "excess supply"?Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.com