Subtleties, Hayeks Moneyness and Grasping at Smiths Invisible Hand

From the last two posts, don't get us wrong, despite the occasional pomposity, Kramer is an intelligent individual as you will see in today's Natterings....

Steven Saville's missive Economics Myths, spawned some interesting comments, one from Ted Waller: "'I'm not clever enough to understand high concepts like "moneyness.""


We Nattered: "Ted, its not a high concept, you can find some definitions here.


Three different types: HQC=High Quality Collateral; HQLA=High Quality Liquid Asset; Cash money


As for Kramer's comment found below: "The concept of "moneyness" is too important to dismiss so discourteously."


Perhaps, and a lengthy discourse could ensue. However on pg 55 of the TBAC presentation:


"HQC is whatever the Central Bank dictates."


The pawn brokers or Central Bank or Great OZ has spoken.


Further NatteringMore here as to moneyness.


"Other things equal, any increase or decrease of these money substitutes will have exactly the same effects as an increase or decrease of the quantity of money proper, and should therefore, for the purposes of theoretical analysis, be counted as money." Friedrich Hayek, Prices and Production 1931-1935


With QE/ZIRP and the pawn brokers whims, Hayek's theory may be slightly dated.


From Kramer: "Money created by QE often replaces an asset that the holder regarded as "money in the bank" to begin with, whether or not that asset was counted in the "money supply... Low rates and QE throw the reliability of the money supply as a proxy for future activity into a cocked hat.... When that happens, the money supply tells us nothing we want to know about impending economic activity.... We dismiss these subtleties as arcane at our real peril."


And there you have it, with QE/ZIRP the willingness and propensity to spend becomes difficult to accurately fathom. Other side effects can include: the utilization of capital is perverted into financial engineering (money shuffling), rather than productive economic activities for a durable economic base (animal spirits), ADD, drowsiness and insomnia... ask your doctor if QEZIRP is right for you.


And to conclude our Nattering:


Going hand in hand with Hayek's moneyness and Kramers subtleties, while grasping for the invisible hand of Smith...


In this fractional bankers dream, debt = collateral = wealth; and it is the house of finance that profits from the debt, not the public.


In other words, debt is not the public's wealth, it is the house of finances wealth. So this is the public's nightmare as in Something Wicked This Way Comes and one must be careful not join Mr. Darks debt carnival.


From LinkD below: "yet no one seems to learn from the past." Too many freaks, not enough circuses... the redistribution of wealth and income through current monetary policies, as in monetary repression, will not end well for most.


Perhaps the moneyness of Hayek or Kramers subtleties, as in the elusive coefficient of willingness and propensity to spend, can be ascertained by pondering this: Is it better that one person has $100 mln or 1 million people have $100? And what of Adam Smith's invisible hand? We already Nattered on that severed hand, here.


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