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The ACTUAL definition of Monetary Policy

Jifpop09
Posts: 2,243
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4/27/2014 6:21:52 AM
Posted: 2 years ago
It has upset me greatly, that I had three different people try to debate the definition , or just say something unintelligent about what monetary policy actually is.....

"An action taken by a third party to influence a economic output"

Yes, this is the simplified and base form of monetary policy.So please stop defining it strictly to interest control, merging it with fiscal policy, and doing whatever else that annoys me.

Ex: The USDA has proposed a bill that will give tax breaks for farmers who use more productive technology (Presumably more expensive).

^Explanation.... The government will incentive the use of technology, in a effort to produce long term results to the economy. A third party action that influenced a economic output.
Leader of the DDO Revolution Party
Jifpop09
Posts: 2,243
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4/27/2014 7:05:59 AM
Posted: 2 years ago
At 4/27/2014 6:23:04 AM, XLAV wrote:
I thought you're going to leave DDO?

I decided against it, due to three factors....

- The seniors backed off of me a bit.

- Three days a go, I refound the niche in debating that I enjoy in DDO, which I haven't felt for a month. Its probably a result of the more active rolle Juggle is having in changing the site.

- Encouragement of others.

I have lowered my activity though. I've been posting once every 10 hours or so, so you wont find me on for two hours at a time anymore. Actually, I lost my intrest for the polls (Where I debated most), almost entirely
Leader of the DDO Revolution Party
oguerreyes
Posts: 2
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6/5/2014 3:20:10 PM
Posted: 2 years ago
At 4/27/2014 6:21:52 AM, Jifpop09 wrote:
It has upset me greatly, that I had three different people try to debate the definition , or just say something unintelligent about what monetary policy actually is.....

"An action taken by a third party to influence a economic output"

Yes, this is the simplified and base form of monetary policy.So please stop defining it strictly to interest control, merging it with fiscal policy, and doing whatever else that annoys me.

Ex: The USDA has proposed a bill that will give tax breaks for farmers who use more productive technology (Presumably more expensive).

^Explanation.... The government will incentive the use of technology, in a effort to produce long term results to the economy. A third party action that influenced a economic output.

What's about the debt level in the US? US is in risk of default and this can provoke a monetary disaster in the world. How can we fin a solution?
progressivedem22
Posts: 1,304
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6/5/2014 5:37:51 PM
Posted: 2 years ago
At 6/5/2014 3:20:10 PM, oguerreyes wrote:
At 4/27/2014 6:21:52 AM, Jifpop09 wrote:
It has upset me greatly, that I had three different people try to debate the definition , or just say something unintelligent about what monetary policy actually is.....

"An action taken by a third party to influence a economic output"

Yes, this is the simplified and base form of monetary policy.So please stop defining it strictly to interest control, merging it with fiscal policy, and doing whatever else that annoys me.

Ex: The USDA has proposed a bill that will give tax breaks for farmers who use more productive technology (Presumably more expensive).

^Explanation.... The government will incentive the use of technology, in a effort to produce long term results to the economy. A third party action that influenced a economic output.

What's about the debt level in the US? US is in risk of default and this can provoke a monetary disaster in the world. How can we fin a solution?

At risk of default? No, not even a chance.

There are a few reasons for this:

1. We can borrow at negative real interest rates because other countries are still purchasing dollars (treasury bonds).

2. Short-term rates are controlled by the Fed, and long-term rates are influenced indirectly, so they're already either at or near zero -- between about 0 and 25 basis points.

3. Countries with debts nominally denominated in their own currencies -- U.S., Switzerland, Britain, etc. -- have never had a problem borrowing. Why? Because they're the sole creator of their currency and their central bank could, if need be, "print money" to monetize the debt. And it would only need to if other countries for some reason didn't want dollars, which isn't the case.

4. The deficit is falling and is projected to fall. The CBO only places the deficit on an upward trajectory around FY 2016 -- and not even by much, mind you -- because it anticipates that the economy will recover around that point and interest rates will spike. Obviously that may not be the case -- even if it were the case, we'd expect a higher growth forecast, anyway, so deficit should plunge as a percentage of G.D.P., inflation should rise reducing nominally denominated debt burdens, AND that would actually be a time for a modest amount of fiscal austerity, anyway -- as some economists, e.g., Krugman and Summers, have written extensively about "secular stagnation": a.k.a, virtually permanent low-interest rate liquidity trap.

5. Since you're probably going to argue, as many people with your position do, that inflation is this massive threat that we need to worry about, there are a few things to point out: one, where is it? Not here is the answer. Two, every time demand for a good rises, prices go out -- that's inflation. Yet you don't hear libertarians complaining about it, because they accept intuitively that as prices rise, wages adjust. As I understand it, their argument when it comes to a simple demand function is that, as prices rise, people go to lower-priced substitutes. That's all well and good except...not all goods are infinitely substitutable, not all markets are perfectly competitive (actually, almost all of them aren't), people aren't rational actors, more factors into decisions than simply quantitative variables like price, etc. etc.

So, no, we're not bankrupt. And when you say "monetary disaster," I have to say it: this is a massive farce. The only conceivably risk of disaster we could ever have is if we listened to many libertarians and either didn't nominally denominate our debt in dollars (the Weimar Republic and Zimbabwe had debts denominated in other currencies), removed either the Fed or the dual mandate (hello Europe, how are you this evening), or continued their BS deregulation that got us into this mess.

So, long story short, again...

1. Government is generally good, though it can screw it, and where it does, we should do stuff.
2. Inflation isn't a threat.
3. I didn't even mention that we have plenty of room to raise taxes. For goodness' sake, how did I leave that out?

Etc.
DanT
Posts: 5,693
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6/6/2014 8:06:20 AM
Posted: 2 years ago
At 4/27/2014 6:21:52 AM, Jifpop09 wrote:
It has upset me greatly, that I had three different people try to debate the definition , or just say something unintelligent about what monetary policy actually is.....

"An action taken by a third party to influence a economic output"

That would include stimulus spending, which is not monetary policy.
Monetary policy is a policy set by a central monetary authority, such as a central bank, which regulates the size of the monetary supply, and the rate at which it grows. The monetary supply is independent of economic output.
Yes, this is the simplified and base form of monetary policy.So please stop defining it strictly to interest control, merging it with fiscal policy, and doing whatever else that annoys me.

I'm sorry but your definition is wrong. Monetary policy has nothing to do with output, and does not include stimulus spending.
Ex: The USDA has proposed a bill that will give tax breaks for farmers who use more productive technology (Presumably more expensive).

^Explanation.... The government will incentive the use of technology, in a effort to produce long term results to the economy. A third party action that influenced a economic output.
That is not monetary policy, that is fiscal policy. Fiscal policy is a government policy designed to influence the economy either through receipts (taxes & tax breaks) or outlays (Government spending).
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Diqiucun_Cunmin
Posts: 2,710
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6/17/2014 8:37:40 AM
Posted: 2 years ago
At 4/27/2014 6:21:52 AM, Jifpop09 wrote:
It has upset me greatly, that I had three different people try to debate the definition , or just say something unintelligent about what monetary policy actually is.....

"An action taken by a third party to influence a economic output"
Eh? An increase in salaries tax rate would lower output; an increase in tax allowance would raise output; an increase in current or capital expenditure would raise output; a minimum wage law would lower output; a general sales tax would... you get the idea. None of these are monetary policies.

Yes, this is the simplified and base form of monetary policy.So please stop defining it strictly to interest control, merging it with fiscal policy, and doing whatever else that annoys me.

Ex: The USDA has proposed a bill that will give tax breaks for farmers who use more productive technology (Presumably more expensive).

^Explanation.... The government will incentive the use of technology, in a effort to produce long term results to the economy. A third party action that influenced a economic output.

How is that monetary policy...?
The thing is, I hate relativism. I hate relativism more than I hate everything else, excepting, maybe, fibreglass powerboats... What it overlooks, to put it briefly and crudely, is the fixed structure of human nature. - Jerry Fodor

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oguerreyes
Posts: 2
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9/18/2014 9:50:12 AM
Posted: 2 years ago
Ok, I understand your position, but the inflation is not affecting the US Economy, not yet, In this case, the US is exporting the inflation into others countries like Latin America and other zones of the world. In those countries the increase of US monetary base (printing dollars) is increasing the cost of production and affecting the real economics development or expansion.