Comments on Knowing and Making: The Roger Farmer paradox

Thanks for your thoughtful posts. Historically cen...

2009-11-07T06:19:05.564Z

Thanks for your thoughtful posts. Historically central banks have targeted one price (an overnight interest rate) to hit two targets -- inflation and unemployment. According to received wisdom, the real economy moves around independently of monetary policy, and there is nothing the Central Bank can do about long-term unemployment. I disagree with received wisdom.

Long bonds and

Hi Rob You're absolutely right - I'm a regular re...

2009-10-23T00:41:01.319+01:00

Hi Rob

You're absolutely right - I'm a regular reader of Scott's and I was thinking of him while writing this.

Therefore, my "crudely speaking" prefix should probably have been even more qualified. What I should have said is "a larger money supply correlates with lower interest rates" - other things being equal.

When Scott refers to

Crudely speaking: if money is tight, interest rate...

2009-10-23T00:19:43.409+01:00

Crudely speaking: if money is tight, interest rates are high. If money is loose, interest rates are low.

I'm even less of a monetary economist than you are (in fact, I'm not an economist at all), but I've read the argument that this does not always hold true. Scott Sumner: <