But: Interest Paid relative to the money we use to pay for things.
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I've been hearing the phrase "late capitalism" for so long that I'm forced to conclude that the very concept of late cap...
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It is surely true that the price level cannot rise without a corresponding increase in the quantity of money or velocity or use of credit. ...
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As I write this it is mid-October in an even-numbered year. Elections are weeks away. Yesterday, I saw Republican candidates heavily adver...
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Went to Harbor Freight the other day. When I left, there was so much traffic I had to fight my way out of the parking lot -- at one p.m. on ... -
I'm not a fan of "diagrams" in economics, but sometimes... This is a screen capture of slide 36 from a SlideShare presentatio...
1 comment:
Q: Why use the quantity of money, rather than income?
A: If you count income, you are depending on people to spend money (so that there can be income). When people are not spending, there is no income.
If you count money, you are looking at a number established (or at least guided) by policy. Now you are doing macro. And now you are counting something that people can spend without going more in debt to do it.
It is still true that people have to spend the money to generate income. But at least they don't have to get more in debt to do it.
Income relative to the quantity of money is velocity. Velocity is unstable. And I would argue that changes in velocity arise in response to changes in confidence, which arise largely from monetary conditions: how people are doing, how much money people have, whether it is increasing, etc.
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