On the whole I mostly agree. Bitcoiners like Bunney really need to increase their economics understanding. Two things tho:
" But at the same time, “No matter how much governments intervene or central banks print money, they cannot create value, such as energy, food, and commodities, out of thin air.” Jumping between** real and nominal effectslike this does nothing but confuse the reader. Capital and money are distinct economic/praxeological concepts, and blurring them benefits nobody "
I disagree, didn't read Bunney's book but in general this is a very important distinction to make. There's no gaping chasm between money and capital that makes them incomaparable. New money can easily become existing capital very quickly. The point is money creation doesn't create value, it redistributes it, and that's very important to point out.
" real money somehow consists of boththe notes in people’s wallets — even though they are anonymous, outside-type bearer instruments and direct liabilities of the Fed — andthe bank money in people’s bank accounts, which are none of those things. "
When analyzing the macroeconomic effects of money supply, I think it makes complete sense to include both cash and deposits in your monetary aggregate. At the end of the day, who is liable for that money and whether or not it's self bearing are insignificant compared to what markets they are accepted in as transactions settlement medium and their turnover rates. Cash and bank deposits operate in largely the same market, the nonbank market (meaning they can be used to settle payments among nonbanks for pretty much and good (with slight differences)), or if you want to be more accurate, a specific countries nonbank market (foreign currencies are assets not money in the domestic market). If the supply of dollars vs supply of dollar deposits increases by 20 trillion it wouldn't really make too much of a difference on prices / macroeconomy in general (assuming in both cases the supply of reserves increases by a significant portion, enough to support the new deposits in the second case), as opposed to an increase in Fed reserves vs dollar deposits or Franc deposits vs Dollar deposits
On the whole I mostly agree. Bitcoiners like Bunney really need to increase their economics understanding. Two things tho:
"
But at the same time, “No matter how much governments intervene or central banks print money, they cannot create value, such as energy, food, and commodities, out of thin air.” Jumping between** real and nominal effects like this does nothing but confuse the reader. Capital and money are distinct economic/praxeological concepts, and blurring them benefits nobody
"
I disagree, didn't read Bunney's book but in general this is a very important distinction to make. There's no gaping chasm between money and capital that makes them incomaparable. New money can easily become existing capital very quickly. The point is money creation doesn't create value, it redistributes it, and that's very important to point out.
"
real money somehow consists of boththe notes in people’s wallets — even though they are anonymous, outside-type bearer instruments and direct liabilities of the Fed — andthe bank money in people’s bank accounts, which are none of those things.
"
When analyzing the macroeconomic effects of money supply, I think it makes complete sense to include both cash and deposits in your monetary aggregate. At the end of the day, who is liable for that money and whether or not it's self bearing are insignificant compared to what markets they are accepted in as transactions settlement medium and their turnover rates. Cash and bank deposits operate in largely the same market, the nonbank market (meaning they can be used to settle payments among nonbanks for pretty much and good (with slight differences)), or if you want to be more accurate, a specific countries nonbank market (foreign currencies are assets not money in the domestic market). If the supply of dollars vs supply of dollar deposits increases by 20 trillion it wouldn't really make too much of a difference on prices / macroeconomy in general (assuming in both cases the supply of reserves increases by a significant portion, enough to support the new deposits in the second case), as opposed to an increase in Fed reserves vs dollar deposits or Franc deposits vs Dollar deposits