Friday, December 24, 2010

Merry Christmas!

Happy Holidays to all winterspeak readers!

2 Comments:

Blogger Bernard Guerrero said...

Wow, the top of that post got botched big-time. Meant to say, I just saw something on your foray to EconLog back in 9/2009: http://econlog.econlib.org/archives/2009/09/i_deny_the_sign.html

I was led there by a recent post on Econbrowser: http://www.econbrowser.com/archives/2010/12/velocity_of_mon.html

Anyway, Happy New Year!

9:55 AM  
Blogger Bernard Guerrero said...

Just saw something on your foray to EconLog back in September of 2009. (I was led there by a recent post at Econbrowser concerning MV=PY.) Anyway, I think I spotted a small error in your math in the comments. To wit:

At 10%, bank A is short reserves (needs $10.1, and it has $9) while bank B is long reserves (needs $10, has $11).

Overnight, bank B will lend bank A it's extra $1 in reserves, so bank B is back at its target, and bank A is now short just $0.1 instead of $1.1 as it was initially.


Bank A should be short only $1.00, no? Where'd the extra penny come from? With a reserve requirement of 10% and $100 in deposits, Bank A is still on the hook for only $10.00 in reserves, not $10.01.

10:03 AM  

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