Re: A public letter to a learned friend.

["W. Curtiss Priest" <bmslib@xxxxxxx>]

Domainmail wrote:
>
> My learned Friend William B. Ryan,

>. Why are you talking about science related to
> money, while any decent economist has by now most certainly discovered
> that the last thing that is related to our money system and our
> economic way of thinking related to money is SCIENCE?

Mr. Monrobey,

I quite agree with your point about money.  As an
economist I have always been much more comfortable
with the "science" of microeconomics.

Microeconomics, by definition, is about small things
you can study, model and understand.

Macroeconomics, in contrast, is frightening.

I spent some time attempting to write a paper about
the "money supply."  I read and re-read Samuelson, I
looked at Ritter and Silber's book "Money" and then
I did, somewhat like you did, turned back to my copy
of "Wealth of Nations."

Adam Smith was a very bright fellow.  And the book is
a trove of insight -- but it is not about a science --
but rather a delicate mechanism by which barter could
be eliminated, and an establishment of  fragile banks that
loaned money.

That the system is fragile is clear by the booms and
crashes -- what I have attempted to address in recent
years -- from, mainly, two angles -- key indicators
of greater fragility -- "Debt Exposure" (the table you
no doubt have seen) and the psychological aspects of
the mania.  I'll place a copy below, too.

This is not about science at all.  This is about people
gone beserk.

And, the supply of money, if we look at the "velocity"
equation in macroeconomics, is infinite, if the velocity
keeps rising.  I.E., given a "fixed" money supply, but
allowing it to exchange hands with greater frequency,
is, in effect, a greater supply of money.

But my attempts to polish a piece on this in interactions
with Prof. Roper of the Univ. of Colorado, did not reach
a conclusion.

Peace.  And you are welcome to forward this reply as you
wish.  I'm not on PKT so you might forward there.

Regards,

Dr. W. Curtiss Priest
Member, American Economics Association
Editor, CITS DEBT WATCH

Prior issues:

(if this next line wraps, copy both pieces, with no space to the
URL box)

http://groups.google.com/groups?q=%22CITS+DEBT+WATCH%22&lr=&safe=off&sa=G&scoring=date

(best viewed in fixed point Courier)

   $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
   $$                 CITS DEBT WATCH INDICES                    $$
   $$============================================================$$
   $$     3.410 trillion -- Federal Government Debt              $$
   $$     1.759 trillion -- Federal Government Obligations(*)    $$
   $$     7.933 trillion -- Federal Government Liabilities(*)    $$
   $$     7.024 trillion -- Household Debt                       $$
   $$     6.356 trillion -- Business Debt                        $$
   $$     1.263 trillion -- State, local government, and other   $$
   $$     -----                                                  $$
   $$    27.745 trillion -- TOTAL "Non-financial" U.S. Exposure  $$
   $$     8.159 trillion -- Loans between Financial Institutions $$
   $$     -----                                                  $$
   $$    35.904 trillion -- TOTAL U.S. Exposure, Sept. 30, 2000  $$
   $$                                                            $$
   $$============================================================$$
   $$    Source:  All numbers except (*) Federal Reserve Board   $$
   $$             Series Z.1                                     $$
   $$             (*) "The U.S. National Debt," Hugh Catherwood, $$
   $$             Journal of the Association of                  $$
   $$                  Government Accountants, June, 2000        $$
   $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
   $$                                                            $$
   $$             Summary as of June 30, 1999                    $$
   $$                                                            $$
   $$        Lowest U.S. Debt/GDP Ratio '20-'99  -- 1.4          $$
   $$        1929 U.S. Debt/GDP Ratio            -- 1.8          $$
   $$        Current U.S. Debt/GDP Ratio         -- 1.8          $$
   $$        Current U.S. Exposure/GDP Ratio     -- 3.8          $$
   $$                                                            $$
   $$        Index of Artificial Demand (1929)   -- 6.1%         $$
   $$        Index of Artificial Demand (1998)   -- 15.0%        $$
   $$                                                            $$
   $$  Debt/GDP Ratio based on:                                  $$
   $$    GDP 8.873 trillion (U.S DOC, June 30, 1999)             $$
   $$    U.S. Debt excluding U.S. Obligations, U.S. Liabilities  $$
   $$        and the Financial Sector 16.758 trillion            $$
   $$                                                            $$
   $$  Index of Artificial Demand based on:                      $$
   $$    Percentage of (Consumer Debt+Government Deficit)/GDP    $$
   $$    Source: Batra (1999) and Econ. Rept. of the President   $$
   $$                                                            $$
   $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$


--


           W. Curtiss Priest, Director, CITS
      Center for Information, Technology & Society
         466 Pleasant St., Melrose, MA  02176
         Voice: 781-662-4044  BMSLIB@xxxxxxx
      Fax: 781-662-6882 WWW: http://Cybertrails.org