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  • Re: Expansion of Credit On Interest Rates Clarification

    I look at it different way. In the beginning interest rate is determined mainly by pure interest (time preference), investment opportunities (returns on investments known to enterpreneurs) and risk factors. While pure interest rates and willingness to take risk constitute supply side, investment opportunities (expected yield and risk involved) constitute
    Posted to Economics Questions (Forum) by Kilmore on Sat, Oct 11 2008
  • Re: If gold is so good...

    Gresham's law certainly does not apply here because one very important condition is missing. There is no enforced exchange ratio between gold and fiat paper, therefore bad fiat cannot drive good gold out of market. Legal tender certainly has its impact but it is far from being sufficient explanation. Though you might be forced by anyone to accept
    Posted to Economics Questions (Forum) by Kilmore on Sat, Oct 11 2008
  • Re: Question about the regression theorem

    That's true, under such conditions prazdnou would eventually become general mean of payment. But those conditions are far from materializing any time any place. First, people would try to use something else. No government would be able to stop them, they never did. Enforcing agency would have to be all-seeing and all-knowing to do so. It would have
    Posted to Economics Questions (Forum) by Kilmore on Sat, Oct 11 2008
  • Re: If gold is so good...

    I doubt possibility of gold circulation under present conditions. Any government would certainly try to stop it. In my country there are several laws hampering usage of gold, even threatening anyone who would like not to accept fiat paper. Banking law denies possibility to accept deposits against notes. I am pretty sure it is not much different in USA
    Posted to Economics Questions (Forum) by Kilmore on Sat, Oct 11 2008
  • Re: Expansion of Credit On Interest Rates Clarification

    Lets suppose you wish to deposit money somewhere. If you expect general rise of prices (decrease of money purchasing power), then you ask for higher interest (price premium). Otherwise you could even loose in real terms, your money would purchase less "after" than "now". You just ask for compensation. Central bankings always lowers
    Posted to Economics Questions (Forum) by Kilmore on Sat, Oct 11 2008
  • Re: If gold is so good...

    What do you mean by word "superior"? In fact both full reserve banking and free banking are inferior to central banking, at least in certain sense. Subsidised and monopolised central banking must win over any alternative once it is established. There are laws preventing free competition, preventing you from running your own bank the way you
    Posted to Economics Questions (Forum) by Kilmore on Sat, Oct 11 2008
  • Re: Question about the regression theorem

    It is impossible. If government gave people such notes, it would either enforce their usage or not. In first case people would not use them. Lets imagine someone gave you paper with an inscription on it "This is one hundred prazdno". How could you possibly use prazdno to pay for anything? Only if goverment exchanged its prazdno for something
    Posted to Economics Questions (Forum) by Kilmore on Sat, Oct 11 2008
  • Re: Where does AD = C+I+G come from?

    Answer is quite simple as I have observed few years ago when I proposed the same thing (usage of S instead of I) to my professor during some seminar. If you really replace I by S, then this equation is obviously mere accounting principle as you said in the post above. Then there is nothing interesting about it and such AD cannot be boosted or depressed
    Posted to History (Forum) by Kilmore on Sat, Oct 11 2008
  • Re: Bad money still driving good money out of market

    It is not fractional reserve banking thread, fractional reserves only had to be mentioned to explain nature of central bank meddling into monetary affairs from slightly different point of view. Usual explanations points out mostly the act of printing new money though in fact something completely different from real money is created. Once goverment imposes
    Posted to Economics Questions (Forum) by Kilmore on Fri, Oct 10 2008
  • Bad money still driving good money out of market

    Few weeks ago I stumbled upon short article in some encyclopedia concerning Gresham's law. Those few sentences were ended by statement that there is little application of this law in modern time because we left metal standard. It seemed to me very peculiar. Either the law is valid in all times and at all places or it is not a law at all. So, is
    Posted to Economics Questions (Forum) by Kilmore on Fri, Oct 10 2008
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