I just stumbled over this clip of Archie Bunker on inflation...

[newwurldmn]

That does not make them the same nor follow the same dynamics and does not require identical policies to manage.

absolutely it does.

You can affect demand of real goods through other means; but changing the demand for money changes the demand for real goods.

 

[M.W.]

We are talking in circles. I never claimed the demand for money does not impact the demand for goods. But they are not one and the same. For example, in times of strong risk aversion the demand for US dollar vastly increases even though it may not impact the demand for goods right away at all. The delayed effect for goods priced in US dollar is undebatable but the two are entirely different concepts and not the same nor directly proportional. In fact the relationship and hence correlation is unstable.

absolutely it does.

You can affect demand of real goods through other means; but changing the demand for money changes the demand for real goods.

 

[newwurldmn]

I’m not a central banker but the example you give I would reckon has little impact on monetary or fiscal policy as during times of aversion, the demand destruction of real goods would be 100x whatever the interest rate change is derived from a change in fx rates would suggest.

We are talking in circles. I never claimed the demand for money does not impact the demand for goods. But they are not one and the same. For example, in times of strong risk aversion the demand for US dollar vastly increases even though it may not impact the demand for goods right away at all. The delayed effect for goods priced in US dollar is undebatable but the two are entirely different concepts and not the same nor directly proportional. In fact the relationship and hence correlation is unstable.

 

[M.W.]

It still does not change the fact that interest rates, and hence the price of money which directly impacts the supply of and demand for money is set in accordance with goals of price stability and maximum employment. The former is a tool, the control of the supply of and demand for money. The supply of and demand for goods is impacted but is by far not even remotely the same as the demand for and supply of money. Get those irrelevant macro economic graphs out of your head that we learned in econ class. They are great to depicture an economy but are very misleading when it comes to explain cause and effect.

I’m not a central banker but the example you give I would reckon has little impact on monetary or fiscal policy as during times of aversion, the demand destruction of real goods would be 100x whatever the interest rate change is derived from a change in fx rates would suggest.

 

[murray t turtle]

Isn't what he says about inflation exactly what the Fed is kinda' doing right now?

Get the production higher, get less people working, so there is more supply than demand?

%%
Something like that.
but Fed is in better shape, no free loading meat head raid a refrigerator.LOL