Friday, November 28, 2008

A Spot Of Bother

I'm not that happy with Willem Buiter and Nick Rowe right now. I feel like my old college chum Bertie Wooster ( Oh yes, I spent many a college evening with Bertie and his manservant Jeeves, who was decidedly helpful if I had a hangover ) must have felt when he was drawn into some spot of bother by Freddie Meadowes or Bingo Little ( I'm probably more like him ).

You see, I'm terribly backed up right now, and, so, I don't need another assignment, so, I didn't need Nick getting me off track with this comment on Buiter's Blog:

"JKH: Thanks. I think I understand you now. I think we are re-visiting the 1960’s debate on “Is money net wealth?” (Pesek & Saving vs, Gurley and Shaw for example). Funnily enough, I just Googled “Is Money net Wealth?” to jog my memory and found a 2004 paper “Helicopter Money” on that very subject (answering “yes”) by our esteemed blogger."

Funnily enough,eh? You're probably thinking that I'm fascinated with the issue of money net wealth. Not really. I mean, yes, it's interesting, but that's not what's got me hooked. No. It's the fact that I want to be able to meaningfully use the phrase "Helicopter Money". That's too good a phrase not to include in my prose style, dully attributed, of course.

So, I had to go looking for this paper by Buiter, hoping that by "paper" Nick meant a post of about a page's length. Truly, I hoped I couldn't find the thing. I was feeling lucky, because, for a time, I couldn't get at it. Then, just as I was about to quit, I found the PDF.

The PDF is about 32 pages long. Damned and damned again. But wait? As I scrolled through, I noticed a number of equation filled pages. That's good news. You see, when I read a language, I have to carefully examine every detail of the sentence that I possibly can. But with equations, and with math in general, I have an amazing ability to scan the page for a few seconds, and then pronounce judgment, which usually ends with my saying, " Yes, that looks right. Let's move on". It's extraordinary, I admit it. I've always had this peculiar ability.

This helps explain the fact that my prose style, seriously, is mightily influenced by E.C. Titchmarsh and G.H. Hardy. I don't have a clue about what the two fools are talking about generally, but I love their writing style. And style, as Stevens says, is inherent in our way of being. It's peculiar to each of us. It's like a fingerprint. Except in my case, where it's more like a curse.

If you don't believe me about Titchmarsh and Hardy, let me tell you what they think about me. Just last week, in Heaven, they were speaking, coincidentally, given one of my more recent posts, to Gauss ( Who I'm sure is extremely please to have the Gaussian Copula and its effects added posthumously to his resume ), in Hebrew ( That's the language in Heaven, in case you didn't know. A word to the wise. You might want to begin learning Hebrew here on earth, lest you be put into the remedial education classes when you get to Heaven. A little Aramaic wouldn't hurt either. ).

"Say, you two old farts", Gauss began, "what would you say was your greatest accomplishment on earth?.

At that point Hardy and Titchmarsh exchanged knowing nods between themselves, and Hardy, being the senior man, replied for the both of them, saying, "Gauss, you old bugger, we both agree that it would have to be our influence on Don's prose style".

So there. Thanks old friends. It would be a bit more of a help to my writing career if you two dashed off a post to the FT confirming your opinions. Still, much appreciated.

So, I'm going to tackle this paper by Buiter on another post, because, well, this one got silly.

2 comments:

Anonymous said...

"Helicopter money":

Originally Milton Friedman's parable.
The Fed prints dollar bills, loads them into a helicopter, and drops them out, where people pick them up.

Formally, helicopter money is a money-financed transfer. Which equals a money financed tax cut.

"Ricardian Equivalence" says that a bond-financed tax cut has no effects, because people save 100% of the transfer to pay the increased future taxes to pay the interest on the higher national debt.

If Ricardian equivalence is true, then an open market operation (Fed prints money and buys bonds) is also equivalent to helicopter money.

Assume that government expenditure is a perfect substitute for private expenditure (the government buys us the goods that we would have bought for ourselves anyway). If that is true, then a tax-financed increase in government expenditure has no effects. If that is true, then a money-financed increase in government expenditure is also equivalent to helicopter money.

The one key bit you ought to read in Willem's paper is where he says that a liquidity trap is impossible if the Fed does NOT redeem the money in future. Sort of goes against his recommendation in the "Obama" post. No big deal though.

Is that "How to do things with words" Austin's picture top right?

NR

Donald Pretari said...

Hey Nick. Yes, that is Austin's photo. Originally, I was going to study his books on this blog. Maybe I still will.

Thanks for the comments. Unfortunately for me, I just spent two hours almost, with several necessary breaks, to read that damned paper and post a lot of rubbish about it. I make Bingo Little look like Godel.

Anyway, as always, thanks for the comments. I'll study them some more when I come back from my walk, assuming that I don't kill myself while I'm on it. I have no idea why that damned paper interested me so much. I was being, well, trying to be humorous, before. I decided to scan Buiter's paper all on my own. Try and remember to tell me not to do that in the future.

Take care,
Don