Paul Krugman

@paulkrugman ↗

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Last Checked Dec. 11, 2021

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Tue Oct 26 19:22:14 +0000 2021

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Paul Krugman @paulkrugman

Also, people who talk about the money supply usually mean an aggregate like M1 or M2. Normally the Fed can target those aggregates via its control of M0. But in a liquidity trap those gears are *also* disconnected. Increase bank reserves and they just sit there 11/ — PolitiTweet.org

Posted Oct. 26, 2021

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Paul Krugman @paulkrugman

OK, two complications. The Fed engaged in unconventional open market operations, buying longer-term bonds etc — QE. These may have had some effect. But if so, it wasn't through anything like the normal relationship btwn money supply and GDP 10/ — PolitiTweet.org

Posted Oct. 26, 2021

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Paul Krugman @paulkrugman

So M1 and M2 are no longer policy variables, even potentially; they're determined mainly by demand for deposits, and the Fed can't change that through its operations. As I said, money is endogenous 12/ — PolitiTweet.org

Posted Oct. 26, 2021