A Complex System View on the Financial and Economic Crisis
A Complex System View on the Financial and Economic Crisis
A Complex System View on the Financial and Economic Crisis
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M O N D AY, J A N U A RY 0 5 , 2 0 0 9<br />
The Disappearing M<strong>on</strong>ey Multiplier<br />
Ec<strong>on</strong> prof Bill Seyfried of Rollins College:<br />
The M1 m<strong>on</strong>ey multiplier just slipped below 1. So each $1 increase in reserves (m<strong>on</strong>etary base) results in <strong>the</strong> m<strong>on</strong>ey supply<br />
increasing by $0.95 (OK, so banks have substantially increased <strong>the</strong>ir holding of excess reserves while <strong>the</strong> M1 m<strong>on</strong>ey supply<br />
5<br />
hasn't changed by much).
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