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In fact I agree with the post-keynesians (or neo-chartalists or MMTers or whatever) that the money multiplier is not only time-varying but a generally useless concept and undergrads around the world would probably be better off if they never heard the phrase. But most mainstream economists would secretly agree with this, too; there's just a lot of inertia in textbooks and teaching models when people don't have any better ideas.

Tangentially, I agree here. I also can't, and don't have the patience for, keeping the
names of all the various schools and their axioms straight. Anyway, moving on to more
interesting stuff.

It may seem like the a money multiplier is implicit in MyCo because of the appearance of base money, but it isn't except in the most literal sense. Base money is in the story not because it bears some critical, fixed relationship to broad money or anything else, but because it historically has been the proximate way the Fed has exercised its unique dominion over the definition of the medium of account. And I think the first-best abstraction of monetary policy is an expectations equilibrium between a government with unique power over the ultimately arbitrary (in a fiat system) nominal anchor and the market. Anyone who gets overly ensconced in any particular hydraulics within that equilibrium, whether it's some false sense of one-way causation through broad money like in the multiplier or meandering aimlessly through the mechanics of the banking system like the endogenous money camp, ends up losing the plot. Whenever you have an arbitrary nominal yardstick, then sure, M3 is endogenous and so is every other nominal variable. Welcome to the soup. The thing that's exogenous is the Fed/Government's ultimate, credible power to enforce its nominal will and its nominal target, and you cannot find the keys to that exogenous factor hidden in the gears.

You address this (partly) next, but it might be worthwhile for me to comment/query anyway. I
am going to paraphrase (in keeping with how I think about it), so do quibble if you find the
take discordant.

I agree that as far as the govt.'s ultimate power to enforce its targets (say Fed funds for
something specific and concrete) is concerned, the specifics of the machinations with
reserves, treasury purchases, high powered vs broad, etc. is more or less irrelevant (albeit
interesting if you are into these kind of things - I am). So why not just get rid of thinking
about all of that and simplify the whole situation down to say the Fed Funds target?

The problem I can see with that is the issue of expectations in the real world, as you state:

But there's also such a thing as too much abstraction, especially when it comes to these cute little intuition pumps. I think some kind of hyper-abstract model that focuses only on the game theory equilibria and ignores all details like base money altogether also isn't very useful (or at least runs a lot of risk in missing how the expectations equilibrium is actually set in the real world), and leads you to really weird results like the recently popular "neo-fisherite" camp who have convinced themselves that the Fed raising rates is inflationary by surfing the equilibrium plane for too long.

But now we get into this funny business that as far as expectations go, it doesn't matter how
the world works, but rather how everyone (or most) thinks it works. I am not
making that statement in a disparaging way - there are plenty of self-fulfilling prophecies
and I think it is problematic to ignore them just because "that's not how things work". Effectively,
as you say (later) there are aspects of a Schelling point dance here.

After all, one of the two things we would all love to know about the future is what bloody discount
rates to use from now to infinity and beyond.

The above is just commentary, I am not saying anything particularly useful. This is an arena
where I would like to have multiple Dennett pumps, but it isn't ever clear to me which ones,
of those that I have, are appropriate depending on the situation. It doesn't help that the
ones that I often think are appropriate frequently lead to contradictory conclusions - but
maybe that is a good thing.

Hidden in the recesses of every fed action, lurking even beneath even what seem to be the legal and operational limits on fed power, are all the strange and unpredictable things the Fed might actually find a way to do when it is desperate to make its nominal voice heard. We saw some of those things not too long ago. Less radically, many central banks (and now the Fed, too), conduct policy with a floor or corridor IOR system that blurs the line on whether it is using its conventional monopoly or covert fiscal levers to conduct policy.

Yeah, but this is partly why I come back to thinking that all the machinations and operational
details seem to end up being irrelevant - something like the Fed funds rate will be what the
Fed wants it to be, end of story.

Where things get nebulous for me are along the lines of: why the hell does the Fed wan't the
Fed funds rate (say) to be what it is, presumably this has to do with with the "natural rate
of inflation" and things of that nature, but a lot of these seem to be pretty mystical notions. A
part of me has sympathy for the guy (Jim Grant?) on the soapbox yelling that the Fed needs to find
religion and just get out of the business of messing with interest rates (flood the system
with reserves so that banks, in aggregate, have no problems clearing payments, no IOR, no corridor
mechanism, no open market operations, nothing,let the Fed funds/interbank rate drop to zero, and let
everyone figure out rates based on actual risks and utility).

To some extent, I don't think that the Fed has much control on something like inflation. Short term
interest rates - yes; inflation/price level - too much mysticism.

It might seem that I am making some sort of artificial distinction between the Fed and the govt. To
be clear, I am not. Just emphasizing that I am not necessarily convinced by the seemingly well
accepted connection between interest rates and price levels (there obviously is some connection,
even the most naive can see that).

To me the nominal anchor in a fiat system is like a special case of a Schelling point dance with a uniquely powerful but still limited communicator. Anything that takes you too far from understanding the context of that coordination game and its limits is probably a red herring.

Well, that's just the usual game with models - the only model that captures all the features of
reality is reality itself. Different models elucidate different aspects, trick seems to be figuring
out what's appropriate when. I don't know whether I should smack or hug the guy who presents Japan
as their "model".

I am messing the order of your statements up (you can't stop me!):

more often than not it leads to making prescriptive or normative assumptions about money and prices that are actually not at all implicit in the normal equilibrium factors that determine the endogenous banking quantities like bank deposits and loans.

I think I may have originally come across as being overly focused on the operational details - I
probably was, since I am way too accustomed to people getting them (and the implicit motivations
behind them) wrong.

More or less, what I am trying to get a handle on with your MyCo parable is as to what sort of
features it clarifies and, importantly, what rabbit holes one should not go down with it.

Certainly, I am skeptical that the model has clarifying features that outweigh the pitfalls.* This
has to mainly do with framing issues - too many knee jerk reactions associated with "shares", "P&L",
etc., and if one does get to the point of being very careful about not treating issues with MyCo as
any old firm, well than at that point the cute little intuition pump that could stops being one and
actually starts taxing System 2.

* - my default reaction (which doesn't make many friends) to most things is "No, it doesn't work".
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