You're forgetting that the government doesn't _control_ the whole money supply. The government only controls how much it itself creates or deletes on net.
Most money is created by commercial banks. As the demand for credit expands the money supply expands, and as credit is repaid, the money supply decreases. This is going on all the time.
Assuming that the fall in aggregate demand will last for several time periods, in the absence of intervention, the companies lay off part of their workforce, since now they don't need to produce as much per time period. So now unemployment is up and overall output is lower. By cutting output, the companies don't necessarily have to cut prices. In short: the lack of intervention doesn't necessarily lead to a fall in the price level.
The point of saying that the Treasury bond accounts aren't counted as part of the monetary base while the reserve accounts are is that it doesn't really matter which account your money is in at the Fed. My original comment was pointing out that QE just moves reserves from one account to the other and that this has little effect on overall economic activity because lending by private banks isn't reserve constrained (MMT people do a good job explaining this as well).
> Inflation is caused by additional dollars chasing the same number of goods.
But if there's a fall in aggregate demand at a given price level, there are _fewer_ dollars chasing the same number of goods for a period of time. So if government spending is greater than taxation for that given period, it doesn't necessarily cause inflation.
> the bank exchanges an asset (like a treasury) in exchange for reserves (base money)
The "monetary base" increases because of the way they define the monetary base. In the old days, the money in reserve accounts was convertible into gold, and the money in the Treasury bond accounts wasn't, so they count the money in the reserve accounts as part of the "monetary base" but not the money in the Treasury bond accounts.
One of the biggest things confusing people about how public finance works is that everyone is focused on the Fed rather than the Treasury.
A good aspect of MMT is that it explains how the Treasury spending more than it takes in in taxes means more money is created into the economy than is deleted out of the economy. This is the more important thing to focus on.
Some of the MMT professors also do a good job explaining how QE (quantitative easing) doesn't create new net financial assets into the system, it just shifts around assets in accounts at the Fed.
All this focus on the Fed seems counterproductive.
The Bakshi movie's Lothlórien was absolutely beautiful though. I also liked all the voice actors in that movie better than the actors in the Jackson trilogy (except I guess Samwise, who was a little silly in the Bakshi film). It also didn't have much comic relief, which I appreciated.
Totally agree, glad you brought this up. The actor was good but the script and the direction didn't fit with the original character at all. It felt like a modern take on the role.
It's only a debt for the business who receives the loan.
When a business receives a loan it shows up as an asset to them in the form of a bank deposit. The business then usually uses that demand deposit to purchase goods and services, so people who don't owe debt to the bank get those deposits in their accounts, and spend the deposits, etc., etc. So effectively, private banks create money.
I don't see how reading manga on an E-ink ereader, with one page filling the screen and "turning" pages by pressing the right side, is fundamentally different from reading it in "analog" (paper) form.
I wouldn't want to read it on a non E-ink screen, or have to scroll within a single page though.
> So the demand for USD is only indirectly due to demand for goods and services; after all, there must be some reason why merchants are pricing their wares in USD. The direct driver of demand is the law itself, hence "fiat" currency.
That's exactly what I was saying: the goods and services are priced in USD because the legal structures require USD. I just used taxes as the most simple example.
But the whole point of the legal structures requiring USD is to get people to offer goods and services for sale in exchange for it. That way the government can purchase goods and services from the private sector to use as public goods, without having to first "get the money" from somewhere else.
The "demand for USD" is really demand for goods and services that are priced in USD. Because everyone living in the U.S. uses USD because that's what we pay taxes in in the U.S., most people in the U.S. offer their goods and services in exchange for it.
Yes it does. You have to pay your taxes in U.S. dollars, so people have to use it. That's one of the purposes of taxes: so that the government-issued currency is used.
Yes, I'm working through a few books that way. I didn't see his 24h challenge so I'm not sure what it is, but what has been effective for me is blocking off a few hours every day to work on this stuff. I haven't gotten to the really difficult material he's talking about yet, but I'm looking forward to seeing how this goes. Good luck to both of us!
I have been inspired by some of your past posts suggesting a path for studying mathematics and doing graduate level work, and have changed my direction to try and follow what you suggest. Is there any way I can get in touch with you privately? (I'm not looking for help with specific technical questions if you're concerned about that.)
Most money is created by commercial banks. As the demand for credit expands the money supply expands, and as credit is repaid, the money supply decreases. This is going on all the time.