Tag Archives: fiscal policy

Money, prices, assets and evasions of responsibility

Understanding the equation of exchange can help see what a massive evasion of institutional responsibility lies behind the Great Recession and the Eurozone crisis. Economist Irving Fisher developed the original algebraic formulation of the equation of exchange, in his The Purchasing Power of Money (1911): MV = PT Money x Velocity = Prices x Transactions. Fisher’s use of […]

States as coordination problems

Economist David Friedman’s theory about the size and shape of nations leads him to postulate that the increased importance of labour income–a result of the Industrial Revolution: one of the ironies of history is that greatly increased propensity to produce capital increases both the scale (through increased demand) and then the average income (through increased relative scarcity) […]