tag:blogger.com,1999:blog-8897997766931633186.post5438174431532347861..comments2024-02-14T03:21:37.506-05:00Comments on Monetary Freedom: Caton on Nominal GDP Level TargetingBill Woolseyhttp://www.blogger.com/profile/06330232724290161369noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8897997766931633186.post-75616981751206283502016-07-10T16:46:39.587-04:002016-07-10T16:46:39.587-04:00It will be interesting to see how things goes with...It will be interesting to see how things goes with this, but I always keep eye on it to make sure I am able to work out better and thanks to OctaFX broker, I am able to do just that with their highly qualified team of experts providing me with daily market news and analysis updates, it’s ever easy yet highly effective too, so that’s why I am able to work it out so nicely and often leads me to great rewards.Wahabnoreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-81934211929609063802014-10-10T12:05:40.506-04:002014-10-10T12:05:40.506-04:00Apologies for the long and delayed response. I'...Apologies for the long and delayed response. I'm just now catching up on a lot of my blog readings (as Jim can attest to!)Scott Burnshttps://www.blogger.com/profile/05797813066054598429noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-22737268587099851702014-10-10T11:52:27.103-04:002014-10-10T11:52:27.103-04:00I think there is a subtle but important distinctio...I think there is a subtle but important distinction between Jim's "cost worth accepting" (which implies some deviation from the ideal of neutral money) and Bill's "what's the difference?".<br /><br />Under a (ideal) Free Banking system, a rise in the demand for money 'transfers credit' to the banking system, which uses the voluntary savings to issue new loans. NGDP is in effect stabilized through endogenous market forces. <br /><br />Under NGDP targeting in our current monetary and banking framework, the banking system's ability to accommodate this increase in money demand is constrained (due to RR and, especially if the increased demand manifest itself in an increased demand for currency, restrictions on note issue). The public's voluntary savings are in large part transferred to central banks, who expand their balance sheets to accommodate the shift in demand by buying treasuries and letting the newly created money filter through the banking system. NGDP is in effect stabilized through an endogenous NON-market force -- namely, the central bank expanding the money supply. <br /><br />In either case, monetary equilibrium is ultimately preserved at the aggregate level. But if you think private banks are better suited to allocate transfer credit than central banks, there is a cost in terms of efficiency. The Fed collects the float rather than the banking system. That cost, Jim points out (I think), is worth accepting so long as it maintains M.E. But it's still a suboptimal transfer of voluntary savings. <br /><br />Of course, this problem almost entirely vanishes if you remove existing restrictions on banks while moving to an explicit NGDP level targeting rule. Banks could then fully accommodate changes in money demand. Central Banks could limit themselves to simply increasing the monetary base to accommodate extensive growth in real factor inputs. I say let's root for that.Scott Burnshttps://www.blogger.com/profile/05797813066054598429noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-51837332684371883722014-09-15T18:17:18.249-04:002014-09-15T18:17:18.249-04:00Haha. There does not seem to be :)
No worries abo...Haha. There does not seem to be :)<br /><br />No worries about my name. Many people mistake my name for a city in China.James Catonhttps://www.blogger.com/profile/14807595180565488334noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-72792512790646818982014-09-15T06:56:35.806-04:002014-09-15T06:56:35.806-04:00thanksthanksBill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-38407998170426337612014-09-15T06:52:02.642-04:002014-09-15T06:52:02.642-04:00Sorry about getting your name wrong. Well, "...Sorry about getting your name wrong. Well, "worth accepting?" Maybe there is no significant difference between that and "what's the problem?"Bill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-51839628899757010022014-09-14T22:54:44.337-04:002014-09-14T22:54:44.337-04:00Caton not Canton.Caton not Canton.Lorenzohttps://www.blogger.com/profile/00305933404442191098noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-80791735687676291642014-09-14T16:10:49.458-04:002014-09-14T16:10:49.458-04:00Bill,
I'm not exactly sure what you are argui...Bill,<br /><br />I'm not exactly sure what you are arguing about distortionary effects of money expansion. There are always injection effects. They may be worth accepting. Did you think I was arguing differently?<br /><br />Best,<br /><br />JimJames Catonhttps://www.blogger.com/profile/14807595180565488334noreply@blogger.com