Posted on 04/27/2008 3:01:19 PM PDT by shrinkermd
Funny that Volker says one thing on this subject (something that the FED readily admits and claims as a positive program, in fact) while Toddster would tell us that the FED books are clean as a whistle. I keep getting these enormous headaches trying to figure out who to believe, Ol' Baghdad Todd or highly regarded economists, former federal reserve chairmen and present policy and economic statements of the Federal Reserve Bank. It is so tough, I have migraine's all the time. I wanna go with Toddster, he is so smart, he keeps telling me so, and he must be since he keeps telling me all these things that are so difficult I can understand them while these simpletons like Milton and Volker and Von Mises say things that any idiot can believe.
I am not the one hanging with a bunch of folks who think the Federal reserve has no real control over the quantity of money in the economy.
I thought we were debating how much the Fed adjusts monetary policy. That would be a presumption that the Fed does have some control.
Oh? And just who are you “hanging” with? Are you incapable of posting without backup?
You really like to use labels and group identities don't you?
Where are all the statements that the Fed doesn't control monetary policy?
You go count your own flea bites.
I agree with JasonC that selling a mutual fund doesn't change MZM. I disagree with you when you say a CD maturing does not change MZM.
It's amazing that you don't understand the difference between influence and control.
From a long history of wrangling with you I think my difference with you has to do with whether or not the FED should do what it does, which is a legitimate debate.
Toddster and JasonC have taken up a very different postition, that the FED doesn't even do what the FED says it does and what every credible economist of any stripe says it does and what its enabling legislation empowers it to do. That position is indefensible and I would not associate myself with folks who take that position. You quite apparently choose to do so. Unfortunately, every time you leap in to take Toddster's side of the argument you are joining the side that says that the FED does not actually control the things it says it controls. I don't think you seriously believe that the FED cannot set with a fair degree of precision short term interest rates, or set with a fair degree of precision the quantity of money in circulation. Can they do the two together - of course not. Can they figure out how these will affect economic growth - of course not. Can they set both M1 and M2 and M3 (discontinued) separately and independently - of course not. But no one seriously ever argued that the FED cannot control one or the other of these things, that is until these two came along.
Oh, the FED can pick a monetary quantity, M1, M2, or M3 or FFR or some such and exercise an incredible degree of control over it. When Volker chose to set interest rates at a very high level, he did so without any problem. When Bernanke just decided to lower short term rates he did so without any problem. What they cannot then control is the consequences on everything else, but that is quite a different matter altogether. Can they both set the interest rate and say M2 and say the exchange rate of the US$ at the same time. No because it is overdetermined. Could they collapse MZM by $3T over the next 6 months if they chose to do so. Absolutely. Would a catastrophe ensue - almost certainly. Could the FED grow the economy by 20% over the next 3 years. That is not something they control. At most, monetary policy might influence that for better or worse.
At about 13:30, they talk about a new bank with only a reserve deposit of $1111.12 conjuring $10,000 to loan to their first customer. Maybe you can explain how that works?
They claim that a bank with only $1111.12 in reserves can collect interest on $100,000 the bank never had. Maybe you can explain how that works?
You mean they don't exercise total control over it? LOL!
Thanks for playing.
Yes, the Fed can raise or lower the Fed Funds rate.
Can they both set the interest rate and say M2
No, they cannot control the price and quantity of money at the same time.
I already answered my own question.
No, you are not putting those words in my mouth. The FED can control the money supply if they so choose, just as I said. Doing so will probably cause adverse interest rate impacts, but the FED can pick a monetary aggregate measure and control it within about the same degree of precision with which it can be measured in the first place. MZM did not grow by $2T in the last 12 months without the FED taking active measures to make it grow by $2T in the last 12 months.
If I borrow money from the bank, I've increased the money supply. The Fed has no control over my borrowing. Sorry you can't understand that.
MZM did not grow by $2T in the last 12 months without the FED taking active measures to make it grow by $2T in the last 12 months.
Precisely what did they do?
Exactly what they said they did. You can look it up on their own website.
You have not altered MZM one wit. You already claimed to have agreed to that point eons ago in this thread. You are welcome to retract the position, but it is really 6th grade math.
They said they did something? Did they announce 6 months ago what MZM would be? Did they explain how they would boost it to their announced desired level? Why not?
You can look it up on their own website.
If you think it proves your point, you could post it.
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