Tag Archives: RBA

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 […]

Bubble trouble: all information is not equal

This post is partly prompted by this comment and this paper (pdf) (via) on the US housing price bubbles and busts and (greatly) extends this comment by myself. It is also a response to the work of mathematician-turned-historian Andrew Odlyzko. In a previous post, I argued that easy monetary policy was not to blame for the asset booms […]

Time enough for success

Skepticlawyer’s excellent post on the GFC examines the financial crisis. The post below is concerned with the time period for monetary policy. While, as I note below, the collapse in total spending clearly worsened the GFC, this post is more about how to avoid or minimise recessions and, particularly, events such as the Great Recession. […]

Easy Guide to Monetary Policy

What money is We use money to transact and the money we use is fiat money, money backed only by government decree. In economic terms, money is a transaction good and all that fiat money is, is a transaction good; the only point in holding such money is to be able to engage in transactions—its expected swap […]

Don’t mention the A-word

The Eurozone, the US, Japan and the UK are all suffering prolonged economic stagnation. [You can see how serious it is in the US here.] It is sensible to suggest that they are doing something (or perhaps many things) wrong and need to change policy. What is not sensible is ignoring a developed world economy […]