“He also writes: “Keynesian fiscal stimulus works by transferring idle money balances in exchange for bonds at liquidity trap interest rate and using the proceeds to finance expenditure that goes into the pockets of people with finite (rather than infinite) money demand.””
He’s saying fiscal stimulus makes velocity rise, if it works. That’s true.
Regarding the battle between fiscal and monetary policy; the fiscal authorities can move V by a few percentage points. the Fed can move M by a billion percent. Guess who controls M*V?
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TheMoneyIllusion » Saving isn’t “setting money aside,” it’s BUILDING CAPITAL GOODSrevenue. Grapes dumped into the ocean out of inventory is depreciation, which makes net investment smaller than gross investment. (And net saving smaller than gross saving.) You quoted Glasner: <span>“He also writes: “Keynesian fiscal stimulus works by transferring idle money balances in exchange for bonds at liquidity trap interest rate and using the proceeds to finance expenditure that goes into the pockets of people with finite (rather than infinite) money demand.”” He’s saying fiscal stimulus makes velocity rise, if it works. That’s true. Regarding the battle between fiscal and monetary policy; the fiscal authorities can move V by a few percentage points. the Fed can move M by a billion percent. Guess who controls M*V? q, I don’t think people were saving more in aggregate. But that covered up the fact that people privately saved more and the Federal government saved way less, so national saving fell, Summary
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