Money Matters: There is No Such Thing as a Money 'Supply'
Monetary literature remains plagued by references to money “supply” at a time when the endogeneity of money is becoming generally accepted. Money endogeneity is not a hypothesis; it is a fact, and one that has existed since a goldsmith-banker wrote out the first receipt (bank note) and handed it to a borrower (as opposed to a depositor of gold coins). The creation of money has always been endogenous, even under the Friedman-Schwartzian Monetarist fixed-money-rule model. Once this is accepted, then it is logical to refer to the quantity or stock of money, and to the supply of bank credit. The household, corporate and government sectors borrow from banks to consume (C) or invest (I), which are the major components of nominal GDP [C + I + net exports (= aggregate demand, AD)]. Domestic credit extension (DCE) thus represents the link between the monetary and real economies. Money creation is the outcome of the change in DCE; the latter, not the change in M, approximates the change in AD (there are other influences). The essence of monetary policy is that the central bank controls the (reference) prime lending rate (PR) of banks via its policy interest rate (PIR), and thereby the demand for bank credit. It controls PR in normal (ie non-QE) times by manipulating the liquidity of banks to a borrowed reserves condition (actual, close to, or threat of), in order to make the PIR effective. The causation path is clear.
Money Creation: Misconceptions: It Begins with a New Deposit
Founded on the money multiplier, the imminent demise of which is not overstated, there exists a profound misconception: that money creation begins with a new deposit. In many cases the source of the new deposit is not specified, and somehow the recipient bank acquires reserves. In other cases the source is specified: cash (ie bank notes and/or coins), which does provide reserves, but the subsequent process is mistreated. The worst offense is to base one of the most significant issues in economics on a supply of bank notes and coins (which is limited because it is a non-interest-bearing asset, and which makes up 2-5% of M3). The analyses presented are partly correct: that new bank loans concurrently create new deposits (money), but the starting point is disingenuous. They also obscure the significant reserves-accommodating role of the central bank as well as the role of its policy interest rate in monetary policy, the essence of which is influencing the demand for bank loans through bank lending rates.
Household economy and gendered labor in the 17th centurya.d. on Guam
Abstract The gendered division of labor in household economies is well known in documentary accounts of many societies, although archaeological evidence for it is often elusive. Our study compares ethnohistorical accounts of household organization with archaeological patterns at a 17th-century village on the island of Guam in the Marianas archipelago to determine if these different sources of evidence provide similar insights. We investigated archaeological assemblages from two latte (megalithic) buildings to document their economic activities. Unexpected differences in their assemblages revealed that economic activities varied between the two latte buildings. They were domiciles of a single economically integrated household, but their disparate functions likely signaled a gendered division of labor. This study reveals aspects of gendered labor that documentary accounts do not fully describe. Our findings suggest that the assumption that domestic buildings were functionally redundant in traditional societies must be tested on a case-by-case basis.