Category: Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to “Optimum Quantity of Money”

  1. WKWV says:

    So deflation removes the cost of holding cash, thereby encouraging households to keep lots of money under the mattress. This stimulates the economy by causing households to invest less and to wait longer to buy cheaper goods, confident that their source of income will not be run out of business by declining revenue from declining demand? This goes back to the ‘starve the peasants to make them work harder’ thesis. Why is it important to incentivize households to hold just exactly the right amount of cash assets. One would think that would depend entirely on the specific needs of that household, not on the desires of Milton Friedman.

  2. Fred C Dobbs says:

    WKWV says it all. Isn’t good for us and everyone else to make their own decisions and send them up the line, rather than have some theorist sending their decisions down to us from high?

  3. livecultures says:

    This seems like a tidy little summary of the theoretical issue, although if the author intended it to be persuasive I think it falls rather short.
    The problem being solved does seem rather minor (facilitating a few more impulse buys?). I don’t see how a counter about possible side effects of high inflation prove the point that it is substantial. A modicum of empirical evidence might help. Sure, experiments are rare in Econ, but its been more than 40 years, surely there have been relevant scenarios by now.