Re: Euro Rates Slashed

[wfhummel@xxxxxxxxxxxx (William F. Hummel)]

S R Larsson wrote:

>The critical piece is, I think, the credit system, and this is why it would
>be more interesting (from a Post Keynesian perspective) to study the
>relation between the interest rate and private consumption, than its
>(in-)significance for investment. Also, it would be interesting to see (in
>Minsky's tradition) how large a part of the last ten years' stock market
>investment has been credit driven; if credit money floods the stock market,
>then credit money helps creating the good state of affairs that the rest of
>the economy is benefitting from.
>
It is certainly true that credit money is employed in stock
market speculation.  But bank credit has for decades far exceeded
the monetary base.  How you would determine the fraction of the
1990s stock market performance that can be attributed to credit
money?

William F. Hummel