From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Nov 21 2004 - 20:33:21 EST
> > >Rakesh, > >Precisely how does the MELT follow? > >Determined by the ratio MV / L, or otherwise? > >Fred Fred, Let's say your theory of how MELT is determined is correct, that my previous attempts to explain how it is determined in a commodity index system fails. But in terms of your interpretation we still do have to know what regulates Greenspan's determination of the quantity of money in circulation. If you treat the quantity of money as an exogeneous or independent variable, I don't see how you have broken with the quantity theory of money! Do you think I am correct that Greenspan attempts to regulate the level of liquidity such that "value of dollar" is constant over the medium terms in terms of some composite commodity (xCommodityA, ycommodity B and z commodityC)? If so, then we can see that implicit in your theory of how the MELT is determined is some linkage between money and commodities. I can see why Allin and Jerry don't want to call this commodity money or a modified gold standard. But whatever we call it we do still have to some theory of what determines the quantity of money put in circulation by the Fed. Yours, Rakesh
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