tag:blogger.com,1999:blog-6173938205311541890.post704633489278063509..comments2023-06-13T08:34:06.278-03:00Comments on Econo-Mía [y Tuya]: Sraffallacies: A Misesian Defense of ABCT (II)Guillermo Sánchezhttp://www.blogger.com/profile/01174951675530372120noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6173938205311541890.post-1050523539426114792018-02-04T07:19:10.663-03:002018-02-04T07:19:10.663-03:00Este comentario ha sido eliminado por un administrador del blog.Mohamed Alihttps://www.blogger.com/profile/13110714870720006179noreply@blogger.comtag:blogger.com,1999:blog-6173938205311541890.post-58416284593856110682013-08-04T15:22:40.789-03:002013-08-04T15:22:40.789-03:00Hi Adrian! Thanks for the comment. Good question, ...Hi Adrian! Thanks for the comment. Good question, I didn’t notice that. But I don’t think it is contradictory.<br /><br />It is perfectly possible that changes in money relation change distribution of income (non-neutrality) in an unknown way that alters the saving-consumption of so many individuals that it changes the market interest rate. But this is an indirect and long run effect (“**lasting** changes in the **final** rate of originary interest”).<br /><br />Mises said that the change in (market factors determining) originary interest rate is *indirect* i.e. via a change in an unknown direction in distribution. But in the second quotation he is talking about **short run** effects of credit expansion. As he assumes that money enters in credit market first (just before it starts to create its distributional effects), the process of redistribution is starting, but it is not yet completed. In the very beginning of credit expansion, money interest goes down, but distribution of income and time preference has not changed **yet**. And **in the very beginning** they will not change even if you inject $100 billion or $100.000 billion in credit markets, only in the after moment they can change as this credit money is spent.<br /><br />Thanks for the insightful question.Guillermo Sánchezhttps://www.blogger.com/profile/01174951675530372120noreply@blogger.comtag:blogger.com,1999:blog-6173938205311541890.post-3586503061717649382013-08-04T08:45:27.650-03:002013-08-04T08:45:27.650-03:00Guillermo,
I read your parts I and II of Sraffall...Guillermo,<br /><br />I read your parts I and II of Sraffallacies: A Misesian Defense of ABCT.<br />They were fantastic. <br /><br />I just have one question. I'm trying to figure out if it's a contradiction or not. Please clarify if you could:<br /><br />In part I you quote Agnés Festré's article: “Knut Wicksell and Ludwig von Mises on Money, Interest, and Price Dynamics” (2006) and “Knowledge and Individual Behaviour in the Austrian Tradition of Business Cycles: von Mises vs. Hayek” (2003), saying this about credit expansion and originary interest (among other things):<br /><br />“In every situation where the ‘money relation’ i.e., the ratio between the demand for and the supply of money for cash holdings is changed, the resulting modifications in the wealth and the income of individuals alter the height of originary interest. Thus, the driving force of money has the power to bring about lasting changes in the final rate of originary interest”.<br /><br />But then later quoting Mises' book Interventionism (1940) pages 42-43, you directly quote Mises writing:<br /><br />“At the beginning, the additional supply of credit forces the interest rate for money loans below the point which it would have in an unmanipulated market. But it is equally clear that even the greatest expansion of credit cannot change the difference in the valuation of future and present goods. The interest rate must ultimately return to the point at which it corresponds to this difference in the valuation of goods”.<br /><br />I'm not completely sure but this seems like the beginning of a contradiction. I'm probably wrong that's why I would love if you could clarify.<br /><br />Thanks,<br /><br />Adrian Fiorito<br />Anonymousnoreply@blogger.com