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Chas has it right--but reveals the issue: When do we know there is "an
excessive amount of money circulating in the economy"? The issue is not
theoretical--we can always construct a model that generates the outcome we
want to generate--but empirical. He also reveals a critical insight into
the importance of monetization--namely the importance of liquidity to
commercial health. He notes the need for "balance." Ah, yes. But again
that is not a theoretical question, but an empirical one.
My original question arose from the apparent inflexibility of some
theoretical prescriptions being floated in the discussion. They don't help
in practice; theory can and should inform policy choices, that is, framing
policy, but within the frame there is still a lot of latitude.
Fred Carstensen
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