tag:blogger.com,1999:blog-8897997766931633186.post8053090164025038129..comments2024-02-14T03:21:37.506-05:00Comments on Monetary Freedom: Rowe on Kling's Mackerel VelocityBill Woolseyhttp://www.blogger.com/profile/06330232724290161369noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8897997766931633186.post-36322608005924178462009-09-26T13:11:30.092-04:002009-09-26T13:11:30.092-04:00Nick--
I don't think I understand your segue ...Nick--<br /><br />I don't think I understand your segue to rent control in this context, given that rent is not the medium of account. If it were, everything would be priced in units of rent -- store prices would read "1 month" or "eighteen minutes." If rent were both the medium of exchange (rent certificates -- presumably using an average due to heterogeneity) and unit of account, rent control would create a general glut as the demand for rent increased. People would refuse to sell their rent certificates (money) for everything else as the demand for rent at the capped price rose and rent-denominated expenditures would decline.<br /><br />If bank IOUs denominated in rent units were the medium of exchange (i.e. you'd write checks denominated as "eighteen minutes") and there were no rent certificates, you'd isolate rent as solely the unit of account. In that case, you'd imagine the demand for Bank IOUs increasing upon rent controls because they are denominated in rent, causing the same general glut. This might ultimately cause problems for the entire monetary system. But the rent control case still seems to go against your initial claim that the difference between excess demand for mackerel and excess demand for money has nothing to do with money's use as the unit of account.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-29943804926989604982009-09-26T06:50:32.289-04:002009-09-26T06:50:32.289-04:00Bill: Yes, if mackerel were the medium of account,...Bill: Yes, if mackerel were the medium of account, the price level and nominal income (measured in mackerel) would depend (very strongly) on the demand and supply of mackerel.<br /><br />Why would an excess demand for mackerel cause a general glut? Does an excess demand for rent controlled apartments in New York cause a general glut? Nope. Unable to buy (i.e. rent) as many rent controlled NY apartments as they want, people buy something else instead. They don't stop buying other things because they want to buy (rent) a NY apartment.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.com