Take the “Marshmallow Test”: (1) banks create new money (macro-economics), and incongruously (2) banks loan out the savings that are placed with them (micro-economics).
As Luca Pacioli, a Renaissance man, "The Father of Accounting and Bookkeeping” famously quipped: “debits on the left and credits on the right, don’t go to sleep with an imbalance”.
You have to retain cognitive dissonance capacity, like Walter Isaacson described Albert Einstein’s ability: to hold two thoughts in your mind simultaneously – “to be puzzled when they conflicted, and to marvel when he could smell an underlying unity”.
It’s also like Athenian philosopher Plato -- whose "first fruits of his youth infused with hard work and love of study" said:
"We seem to find that the ideal of knowledge is irreconcilable with experience”.
In "The General Theory of Employment, Interest and Money", pg. 81 (New York: Harcourt, Brace and Co.): John Maynard Keynes gives the impression that a commercial bank is an intermediary type of financial institution (non-bank), serving to join the saver with the borrower when he states that it is an:
“optical illusion” to assume that “a depositor and his bank can somehow contrive between them to perform an operation by which savings can disappear into the banking system so that they are lost to investment, or, contrariwise, that the banking system can make it possible for investment to occur, to which no savings corresponds.”
In almost every instance in which Keynes wrote the term "bank" in his General Theory, it is necessary to substitute the term non-bank in order to make Keynes’ statement correct.
This is the source of the pervasive error that characterizes the Keynesian economics, the Gurley-Shaw thesis, the elimination of Reg Q ceilings, the DIDMCA of March 31st, 1980, the Garn-St. Germain Depository Institutions Act of 1982, the Financial Services Regulatory Relief Act of 2006, the Emergency Economic Stabilization Act of 2008, sec. 128. “acceleration of the effective date for payment of interest on reserves”, etc.
This is both the source of stagflation and Secular Strangulation, not robotics, not demographics, not globalization.
As Dr. Philip George’s: “The Riddle of Money Finally Solved”. To wit: “For nearly a century the progress of macroeconomics has been stalled by a single error, an error so silly that generations to come will scarcely believe that it could have persisted for as long as it has done.”
George: “The logic was that such precautionary holdings are not intended to be spent and hence do not qualify as money.”
Savings are not synonymous with the money supply.
As Dr. Philip George puts it: “Changes in velocity have nothing to do with the speed at which money moves from hand to hand but are entirely the result of movements between demand deposits and other kinds of deposits.”
As Dr. Philip George says: “When interest rates go up, flows into savings and time deposits increase.”
I.e., it increases the demand for money, the desire to hold money. The paradox of thrift. An unrecognized leakage in Keynesian National Income Accounting. An increase in the demand for money decreases the velocity of money.
Dr. Daniel Thornton: "Because the concept of velocity stems directly from the theory of the demand for money, anything that affects velocity can be related to some aspect of the demand for money."
Banks don't lend deposits. Deposits are the result of lending.
Revisit Richard Werner:
https://www.youtube.com/watch?v=EC0G7pY4wRE
Take the “Marshmallow Test”: (1) banks create new money (macro-economics), and incongruously (2) banks loan out the savings that are placed with them (micro-economics).
As Luca Pacioli, a Renaissance man, "The Father of Accounting and Bookkeeping” famously quipped: “debits on the left and credits on the right, don’t go to sleep with an imbalance”.
You have to retain cognitive dissonance capacity, like Walter Isaacson described Albert Einstein’s ability: to hold two thoughts in your mind simultaneously – “to be puzzled when they conflicted, and to marvel when he could smell an underlying unity”.
It’s also like Athenian philosopher Plato -- whose "first fruits of his youth infused with hard work and love of study" said:
"We seem to find that the ideal of knowledge is irreconcilable with experience”.
In "The General Theory of Employment, Interest and Money", pg. 81 (New York: Harcourt, Brace and Co.): John Maynard Keynes gives the impression that a commercial bank is an intermediary type of financial institution (non-bank), serving to join the saver with the borrower when he states that it is an:
“optical illusion” to assume that “a depositor and his bank can somehow contrive between them to perform an operation by which savings can disappear into the banking system so that they are lost to investment, or, contrariwise, that the banking system can make it possible for investment to occur, to which no savings corresponds.”
In almost every instance in which Keynes wrote the term "bank" in his General Theory, it is necessary to substitute the term non-bank in order to make Keynes’ statement correct.
This is the source of the pervasive error that characterizes the Keynesian economics, the Gurley-Shaw thesis, the elimination of Reg Q ceilings, the DIDMCA of March 31st, 1980, the Garn-St. Germain Depository Institutions Act of 1982, the Financial Services Regulatory Relief Act of 2006, the Emergency Economic Stabilization Act of 2008, sec. 128. “acceleration of the effective date for payment of interest on reserves”, etc.
This is both the source of stagflation and Secular Strangulation, not robotics, not demographics, not globalization.
As Dr. Philip George’s: “The Riddle of Money Finally Solved”. To wit: “For nearly a century the progress of macroeconomics has been stalled by a single error, an error so silly that generations to come will scarcely believe that it could have persisted for as long as it has done.”
George: “The logic was that such precautionary holdings are not intended to be spent and hence do not qualify as money.”
Savings are not synonymous with the money supply.
As Dr. Philip George puts it: “Changes in velocity have nothing to do with the speed at which money moves from hand to hand but are entirely the result of movements between demand deposits and other kinds of deposits.”
As Dr. Philip George says: “When interest rates go up, flows into savings and time deposits increase.”
I.e., it increases the demand for money, the desire to hold money. The paradox of thrift. An unrecognized leakage in Keynesian National Income Accounting. An increase in the demand for money decreases the velocity of money.
Dr. Daniel Thornton: "Because the concept of velocity stems directly from the theory of the demand for money, anything that affects velocity can be related to some aspect of the demand for money."
https://files.stlouisfed.org/files/htdocs/publications/review/87/08/Solving_Aug_Sep1987.pdf
N-gDp targeting is doable. It's old school.