FW: Brazil and the IMF

[Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx>]

> From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
> Date: Fri, 01 Nov 2002 17:34:01 -0500
> To: pkt@xxxxxxxxxxxxxxxx
> Subject: Re: Brazil and the IMF
>
> This is an excerpt of an article I am writing:  The Case Against Central
> Banking.
>
> Central bankers are like librarians who consider a well-run library to be one
> in which all the books are safely stacked on the shelves and properly
> catelogued.  To reduce incidents of late returns or loss, they would proposed
> more strict lending rules, ignoring that the measure of a good libray lies in
> full circulation.  Librarians take pride in the size of their collections
> rather than the velosity of their circulation.
>
> Central bankers take the same attitude toward money. Central bankers view
> their job as preserving the value of money through the restriction of its
> circulation, rather than maximizing the beneficial effect of money on the
> economy through its circulation.  Paul Volcker, the US central banker widely
> credited with ending inflation in the early 1980s by adminstering wholesale
> financial blood letting on the US economy, quipped light-heartedly in a
> Washington party that "central bankers are brought up pullling legs off of
> ants."

The library metaphor is hard to take seriously without an unambiguous
and absolute measure of the supply of money (i.e. the size of the
collection). The belief that there are many valid measures of the money
supply has poisoned the banking system. Another problem is that
many believe only changes in the money supply can be quantified.

The problem should not be dismissed. It is like we are living in an age
before the weight of the earth could be calculated from measurements.

Harry Veeder