Re: (OPE-L) recent references on 'problem' of money commodity?

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Nov 21 2004 - 20:33:21 EST

>Precisely how does the MELT follow?
>Determined by the ratio MV / L, or otherwise?

Let's say your theory of how MELT is determined is correct, that my
previous attempts to explain how it is determined in a commodity
index system fails. But in terms of your interpretation we still do
have to know what regulates Greenspan's determination of the quantity
of money in circulation. If you treat the quantity of money as an
exogeneous or independent variable, I don't see how you have broken
with the quantity theory of money!
  Do you think I am correct that Greenspan attempts to regulate the
level of liquidity such that "value of dollar" is constant over the
medium terms in terms of some composite commodity (xCommodityA,
ycommodity B and z commodityC)? If so, then we can see that implicit
in your theory of how the MELT is determined is some linkage between
money and commodities. I can see why Allin and Jerry don't want to
call this commodity money or a modified gold standard. But whatever
we call it we do still have to some theory of what determines the
quantity of money put in circulation by the Fed.
Yours, Rakesh

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