Category Archives: The Money Supply

A Merely Theoretical Possibility and Simple-Minded Moralists

(In the basic expansion) … There is the same automatic mechanism as before.  Prices fall.  This has the double effect of increasing the purchasing power of income and bringing about an egalitarian shift in the distribution of monetary income. The increase in purchasing power is obvious.  On the other hand, the egalitarian shift in the distribution of income is, in the main, a merely theoretical possibility.  The fall of prices, unless quantities increase proportionately and with equal rapidity, brings about a great reduction in total rates of payment.  Receipts fall, outlay falls, income falls. [CWL 15, 138-39] Continue reading

The Road Up is The Road Down; The Mechanism of Rising or Falling  Prices

“The road up and the road down is one and the same. (Heraclitus)
ὁδὸς ἄνω κάτω μία καὶ ὡυτή

Archaeologists and scholars have not found the context of this isolated fragment of Heraclitus.  What “road” was he referring to, and was he was speaking literally or figuratively? I simply like the statement as an introduction to the ups and downs of distinct price-quantity flows, whether in a pure cycle of expansion or in a distorted cycle of boom and corrective slump. Continue reading

The Correlation of the Need for Money With the Magnitudes and Frequencies of Turnovers

A first task thereafter will be to correlate the need for more or less money in the productive process with the magnitudes and frequencies of their turnovers.  On that basis it will be possible to distinguish stable and unstable combinations and sequences of rates in the three main areas and so gain some insight into the long-standing recurrence of crises in the modern expanding economy. [CWL 15, 53-4 and 177] Continue reading

Alexander William Salter’s “Fed Tapering Won’t Beat Inflation”

The Wall Street Journal of 10/29/2021 featured Alexander William Salter’s article “Fed Tapering Won’t Beat Inflation”.  Professor Salter is courageously tackling an important issue.  We respectfully suggest that he consider the following: Tapering is not reversing.  It is a negative acceleration but, still, a positive velocity.  Continue reading