Re: Equilibrium, rest and nonergodic systems.

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> Date: Wed, 02 Nov 1994 10:53:40 -0700
> From: Paul Davidson <PB108928%UTKVM1.BITNET@xxxxxxxxxxxxxxxxx>
> Subject: Re: Equilibrium, rest and nonergodic systems.
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> FROM:  Paul Davidson
> "      Economics Department
> "      523 Stokely Management Center  (615) 974-4221
> Basil: I think Alan Isaac has asked the correct question. If the agent receives
>  money from income activities and does not want this "excess supply" then eithe
> r
>       (a) if she has an overdraft she repays the overdraft -- and unless someon
> e else if increasing their loans the money supply shrinks (your case)
>
>                      OR
>
>       (b) she gets rid of the money by buying a financial asset --adding to the
>
> aggregate demand for financial assets thereby raising their price (lowering
> the rate of interest) until someone who formerly held the other financial
> asset bcomes bearish enough to take her capital gain and hold her wealth in
> the form of "money". This is the portfolio effect!
>
> Have a good day!____Paul Davidson
> ))))_ fax # (615) 974-1686
 Paul   If she has more money than she wants, and she does not have
an overedraft, she will spend it. If some business firm receives the
check, it will certainly have an overdraft, and will repay it. It is
not necessary for all economic units to have overdrafts, as Vicky
argues. It is merely necessary for all business firms to have
overdrafts, and they do.  This way of looking at it is due to the
Circuitists. I believe they are correct.   Basil