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July 30, 2007


Bob B

But does M4 lending really count as real money??

I am joking, of course. What is amusing for me is that in the regard for an array of close substitutes for money, we have now reverted back in some respects to the analysis of the Radcliffe Report on the Working of the Monetary System, Cmnd.827, published in 1959, which is about where I came in to all this. Sadly, I have been unable to find an accessible online link to the complete text:

However, we don't now also follow Radcliffe that “'…. there can be no reliance on this weapon [interest rate policy] as a major short-term stabiliser of demand'. It is now accepted that monetary policy lies at the heart of any attempt to stabilise the economy." - to quote from Mervyn King's Mais lecture of 2005: Monetary Policy - Practice ahead of theory:

But note, the chosen policy instrument is interest rates, not the stock of money, however defined.

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