I dont understand how you can count only dollars as money.
i count dollars as dollars. money has lots of definitions. money is more than just dollars according to various definitions, although nearly everyone is talking about dollars when they say 'money'.
that would be the equivelent of saying that bank savings and demand deposits do not affect prices, which they clearly do.
how do they affect prices? don't show me correlations, because correlation is not causation. explain to me how savings and demand deposits affect prices..
The above site shows us how all of the monetary aggregates performed during the depression years, and it does show increases in currency in circulation, so I agree with your claim that currency in circulation increased during the depression.
i think my only claim was that base money didn't decline, even during the depression. i don't know if it increased or not. i know that over decades base money increased a small percentage, along with long periods when it was relatively flat.
However, as stated above demand deposits and savings deposits and other components of the money supply decreased. The reason they have to be included is that they are dollar equivelents i.e. easily convertible into dollars.
it's irrelevant how convertible something is into dollars. the fact is that you can only own one thing at a time. dollars or what's convertible to dollars. you can't own them both at the same moment. so dollars and convertibles are separate. you can call the convertibles money if you want to, but the convertibles aren't dollars.
You may be right about the stock market but so far as I know stocks are not part of any monetary component.
i believe some economists do count stocks, but it doesn't matter. use another example, like traveler's checks. they are counted as money, but they aren't dollars. they are always exchanged for dollars or what dollars can buy, and they have no effect on base money. if you want to call them 'money', i have no objection, but they aren't dollars. i guess you could say that all dollars are money, but all money isn't dollars.
However, if the stock market were wiped out it is likely that much of the debt would be liquidated and this would reduce the money supply significantly.
M1 and M2, but not MB or the monetary base. the number of dollars in the world would be unaffected. |
