[OPE-L:1932] Re: Re: Re: Re: the money supply

Allin Cottrell (cottrell@ricardo.ecn.wfu.edu)
Wed, 15 Dec 1999 21:36:28 -0500 (EST)

On Wed, 15 Dec 1999, Akira MATSUMOTO wrote:

> Bank of Japan argued that it couldn't operate the amount of
> the money supply or the base money directly, because the
> supply of moeny or the base money by the BoJ is always
> passive to the demand of money by the commercial banks.

I don't understand that. If there is government debt
outstanding, the central bank always has the option of buying
some (from the banks or their customers) and hence increasing
the monetary base. As I've said earlier though, this may not be
very effective in raising overall money supply if the banks are
unwilling to lend or their customers unwilling to borrow.

Allin Cottrell.

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