Money Really Does Matter

A very good discussion on why money matters: “Fed’s policies expose mainstream fallacies”

Dr Frank Shostak, at:

http://www.cobdencentre.org/2013/01/feds-policies-expose-mainstream-fallacies/.

The conclusion:

Contrary to mainstream thinking the aggressive policies of the Fed have highlighted the destructive nature of loose monetary policy – hence money supply matters more than ever.

Comments

  1. Dr. Shostak quotes Harvard economics professor Benjamin Friedman:

    “The standard models we teach… simply have no room in them for what most of the world’s central banks have done in response to the crisis.”

    Then:

    “If the model you are teaching has an “M” in it, it is a waste of students’ time. Delete. it.”

    Professor Friedman’s comments are as important to Austrian economists as they are to mainstream demand economists. Too much of Austrian economics is based on QTM and monetarism. It is vitally important that we do not forget that money only impacts the economy as it influences asset allocation. Asset allocation is the most critical element not the supply of money.

    Both QTM and monetarism stand apart from asset allocation. This is one of many critical errors of Keynesian and monetarist demand theory, and why mainstream economics has no room for what the world’s central banks have done. Austrians have the truth; we must not miss it.

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