Agree, these things are becoming increasingly more complex in today's global political economy. There's an interesting article that I remember reading about this which, essentially, suggests that the job of central bank is hopeless, almost by definition. The idea is that according to Ashby's Law (aka Law of Requisite Variety) the regulator of a given system has to be at least as complex as the system itself to achieve control. Needless to say, there's abundant evidence (not obvious) to suggest that, for example, the Fed's mechanism of regulating the economy has nowhere near the complexity of the economy itself. This may account for the problems we find ourselves in now and also might suggest that the Fed's mission is inherently futile. However, these are all theories and there doesn't seem to be an alternative. A bird in hand and all that...
That stagflation concept is the only valuable item here. This happens because the real cost of a particular resource has risen. Many things could cause this to happen. Only resource depletion, reduction in quality and reduction in output pose a real threat to markets and economies. It should be during this times that we would have real economic crisis, not finance (fictitious) crisis. Think of oil.
A textbook he says...........it seems you are only able to crack textbooks.................would you dare to write your own textbook??? Go outside the box if you wanna learn more. I already got plenty of useless textbooks.
See?? You just got ECO-101. I already passed ECO-610. I am now in the proses of learning about more logical economics, like mises and friedman. I am sick of math being called economics and the stupid scientific method.
The world, specially the United States of America, were able to do business and economies grew without the mighty watch of central banks. The macro concept was born out mediocre people like Keynes who wanted to simplified things for themselves. IT IS GOOD TO PLAY "COMMUNIST" WITHOUT BEING ONE" Yet they dont learn. Cuba, USSR, China, Korea..............speak from themselves.
this is whole point i was making. i am fully aware of the basic eco 101 textbook answer but is the textbook correct. if you read my previous posts you will see that i state that there are two different definitions of inflation (probably more) with keynes and the monetarists. my point is that the monetarist explanation of inflation to not allow for full appreciation of the cost of living is not sufficient. it defeats the point of the inflation measurement which was originally used to measure the cost of living in a consistent manner to see whether conditions were adequate. i fully understand that a supply shock is different from a monetary alteration i explained that in some detail if you read pages 2, 3, 4 you will see that. the point i make is that the supply aspects are not taken into consideration in the monetarist inflation figure, which defeats the point as they have an impact on the standard of living of people and the whole point of measurements is to gauge the living standard. an example of how this affects the real world by denying the inflation figures of the supply side aspects the interest rate which is closely linked to inflation is not set at a level of sufficient return. effectively people will not be sufficiently reimbursed through saving in relation to the full devaluation of the currency as not ALL of the aspects that affect the cost and as a result the standard of living are included. i would like to say again i fully understand all economic perspectives of inflation. the point i make is that the monetarist definition fails to meet the need of the society. this is not so much a debate on definition or understanding but on whether the terminology and practices are useful. i would appreciate it if you would read the second page onwards of this thread. where i give a better explanation of debate and monetarist school of thought than you did.
this was my post on page 2. note how i explain what you did and went further by stating that although i appreciate the logic behind the monetarist perspective i feel that it does not meet the requirement of society. my understanding is not limited to eco 101 nor is anyone else here we understand it. the point is, is the monetarist definition actually useful. you have completely missed point of the argument.