Re: More money or better distribution?

["John M. Legge" <jlegge@xxxxxxxxxxxxx>]

Confirming Paul's point in practice:

In Indonesia the ghouls of the IMF have demanded that dM be large and
negative.  The effect is that dQ is also large and negative.  It may be
comforting having the Pacific Ocean between you and this exemplar of
monetarist lunacy, but note that the collapse in output and living standards
in Indonesia over the last few months EQUALS or EXCEEDS that in the depths
of the depression in the US, with a 30 per cent drop in Q and a 50 per cent
drop in real incomes for the lower 60 per cent of the population.

This list, and this question, is examining matters that are literally of
life and death importance.

JML

-----Original Message-----
From: Paul Davidson <pdavidson@xxxxxxx>
To: POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
Date: Monday, 17 August 1998 10:06
Subject: Re: More money or better distribution?


>
>Correcting my typos:
>
>>The trouble with your illustration is that it attempts to be a "when did
>>you stop beating your wife?" question.  Even worse, however, since you
>>ASSUME PNEQ --then you are dropping this money into the economy from a
>>helicopter, i.e., an exogenous money supply which has no effect on either
>>interest rates of the marginal efficiency of capital.  In fact you are
>>implicitly assuming all spending is consumption and is strictly a function
>>of wealth
>>
>>W hen you understand the concept of an endogeneous oney expanding to meet
>>the increased needs of trade you will understand why dQ/dN does not equal
>ZERO
> -- and why if the banking system does not expand to meet the
>>increased needs of trade , that is if dM=0 by some constraint on the
>banking system, then dQ will be constrained to
>>zero.
>>
>>Case closed.
>>
>>Paul Davidson
>>Holly Chair of Excellence in Political Economy
>>Economics Department -- 523 SMC
>>University of Tennessee
>>Knoxville, Tennesseee 37996-0550
>>email: Pdavidson@xxxxxxx;   phone: (423)974-4221;    fax: (423) 974-1686
>>
>>
>Paul Davidson
>Holly Chair of Excellence in Political Economy
>Economics Department -- 523 SMC
>University of Tennessee
>Knoxville, Tennesseee 37996-0550
>email: Pdavidson@xxxxxxx;   phone: (423)974-4221;    fax: (423) 974-1686