*Crunch*, by Jared Bernstein

The book is the latest attempt to write a populist, Progressive economics tract.

There is a chapter called "Why do economists seem to fear inflation?  And why do prices always go up, never down?"

Imagine trying to answer those questions without ever writing the two words: "money supply."  Yes, there is talk of the Fed changing interest rates to affect the price level.  But in an odd converse to the famous joke about Milton Friedman, Bernstein just can’t bring himself to utter the "M word."  At first I thought it was a semantic oversight but when I came to the passage describing "the wage-price spiral" as "economists’ biggest inflationary nightmare" I realized I was wrong.

The chapter on the Fed does mention the money supply but in the context of describing the views of others and even then only in passing.

Yes I know that the broader monetary aggregates are endogenous and yes I know that it is somewhat of a mystery, in theoretical terms, exactly why open market operations are effective.  It is fine to acknowledge those complexities.  But still, it is no answer to give your readers Hamlet without the Prince or even any mention of his absence.

I would like to see Jared Bernstein called up on The Colbert Show and asked to do nothing but utter those two little words: "money supply."


I have griped before about _Nickel and Dimed_ writing its section about housing and rents without mentioning zoning. ("The problem of rents is easy for a noneconomist, even a sparsely educated low-wage worker, to grasp; it's the market, stupid." "When the market fails to distribute some vital commodity such as housing, to all who require it, the usual liberal-to-moderate expectation is that the government will step in and help.") I thought the example of the lucrative Key West trailer park which somehow doesn't get upgraded to higher-density housing was particularly telling.

I have also griped before about Samuelson's 1976 _Economics_ writing a chapter about relative success in planned economies, especially outright Communist ones, without mentioning migration-related phenonoma like the Berlin Wall. ("It is a vulgar mistake to think that most people in Eastern Europe are miserable.") Revealed preferences, anyone?

_Crunch_ sounds like a worthy addition to the genre. I wonder whether it will be as successful.

I guess I will have to pull my old Samuelson down from the shelf. I took Econ 101 in 1974. I seem to remember that Samuelson went on and on and on about inflation and all sorts of reasons therefore without much mentioning money supply.

Oh he did mention it, but I got the impression that only fools and cranks thought it had anything to do with inflation.

John Henry

Higher money supply is a necessity for inflation.

Oh really, what if Fed actions reduce the demand for money, and the Fed keeps the money supply the same.

Real prices per unit of value come down over time for almost everything. Nominal prices do creep up on some goods, but so what?

It's a problem if your monetary policy creates permanent inflation winners and losers.

Economics always has upward sloping supply curves -- higher supply equals higher prices .

But in a long run deflationary environment couldn't the supply curve be downward sloping?

the standard answer is that you are shifting to another supply curve, not moving along one curve. But isn't that really cheating?

"I would like to see Jared Bernstein called up on The Colbert Show and asked to do nothing but utter those two little words: "money supply.""

And I would like to hear Tyler utter the words "Real Bills Doctrine".

Mike, I read about Real Bills Doctrine. Maybe I've read too much Austrian Economics to be able to misunderstand the issue the way you want to, but my understanding of the quantity theory of money is that when you issue more money than is reflected by the total value of the economy, you get inflation. I don't think ANYBODY thinks that when you lend your house (collateral) to a bank, and the bank issues a receipt in the form of money, that the quantity of money has changed.

thank you for this information.sis jarMy local telecom is a monopoly, and it is out-of-control as far as wiretapping, eavesdropping, hacking, controling e-mail programs, phishing, spoof websites, etc.
No company should be immune from law suits and especially companies that control our communications.To give telecoms immunity will make "big brother"free nokia 6600 games"In this paper, we compare the incidence and extent of formal coauthorship observed in economics against that observed in biology and discuss the causes and consequences of formal coauthorship in both disciplines. We then investigate the economic value (to authors) of informal comments offered by colleagues. This investigation leads us naturally into a discussion of the degree to which formal collaboration through coauthorship serves as a substitute for informal collaboration through collegial commentary. Data on manuscript submissions to the Journal of PolzticalEconomy permit us to shed additional empirical light on this subject. Finally, we demonstrate that while the incidence and extent of formal intellectual collaboration through coauthorship are greater in biology than in economics, the incidence and extent of informal intellectual collaboration are greater in economics than in biology. This leads us to search for evidence (which we find) of quids pro quo offered by authors to suppliers of free nokia n70 games

Comments for this post are closed