Re: Keynes and competition

["John O'Donnell" <jackodonnell@xxxxxxxx>]

Bruce McFarling wrote:
>
> On Thu, 24 May 2001 23:24:05 -0700, John O'Donnell
> <jackodonnell@xxxxxxxx> wrote,
>
> >Bruce McFarling wrote:
> ><<SNIP>>
> >> However, it is not surprising of the New Keynesians fall
> >> into logical traps and empirical absurdities under perfect
> >> competition, since the inability to spot fallacies of
> >> composition seems to have spread through the profession
> >> like a slow working flu, while the empirical absurdities
> >> are built in from the start.
>
> >It is not just an error of composition, it is an obvious
> >error of definition. No matter how small the difference from
> >other things, everything that is is uniquely itself. A
> >monopoly exists for each and every item owned or otherwise
> >controlled, however trivial that monopoly may be.
>
> If a wheat producer's wheat is purchased to go into a
> silo, by type and grade, and is sold from the silo by
> type and grade with reference to the original producer,
> then the small differences have no commercial bearing --
> the product has been "standardised".  It is of course
> complete and utter BS to act as if standardised products
> are somehow a normal case, and differentiated products
> are some kind of variant case.  Clearly, without a
> standardisation *process*, all products would be
> differentiated, so differentiated products are the
> normal case, and standardised products are the variant.
> But you can't eliminate standardised products by playing
> word games.

Very true, but there is one "standardized product" that is
truly fungible and never differentiated,. The stuff created
by a central bank, not the substitutes for this stuff
created by commercial banks. When any specific piece of this
product loses or gains value all other items also do so, no
matter where located or by whom owned.  That is true fiat
money except, of course, when it is held by a numismatist in
which case it is no longer "money" but a "collectable."

--
			-- jbod

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