>>pms wrote:
>>
>>>So slower growth makes money tighter?
>>
>>No, tighter money makes growth slower. But the effect of a higher
>>currency is very similar to that of higher interest rates - a
>>financial factor dragging down the real sector.
>>
>>Doug
>
>I read Marx as saying the opposite, especially in Volume III, where
>he discussed the rise and fall of rate of interest as being
>unrelated to the rise and fall in the rate of profit. If money is a
>commodity which acts as intermediary in the exchange of other
>commodities, the supply of money is roughly dependent on the supply
>of commodities needed to be exchanged. If the amount of commodities
>drops due to slower production caused by excess supply, then less
>money-commodity is needed, and interest rates rise to slow down
>growth in money supply. Slower growth forces the central bank to
>tighten money-supply to accommodate the fewer commodities being
>exchanged.
>
>Similarly, inflation if not too much money chasing too few goods,
>but depreciation of money is faster then the fall in value of
>commodities, resulting in a rise of their prices, because more
>depreciated money-commodity is needed to purchase them.
>
>The vulgar economists at the central banks have everything
>bass-akwards. They have no insight into the basics of their
>profession, because they don't understand the distinction between
>constant and variable capital and how surplus value of produced.
>But then it is their self-interest to remain blind to the real
>relations.
For a bunch of hacks who don't know what they're doing, the central bankers have done fairly well at regulating capitalism. They may not understand the algebra of value, but they understand the class war, and prosecute it skillfully. When Greenspan talked about the dwindling pool of available workers, he didn't have to cite Kalecki - he just lived it.
Spontaneous movements in interest rates are unrelated to fluctuations in profit rates over the short to medium term. But if central bankers push up rates and drive an economy into recession, the profit rate will fall; if that recession disarms the working class, it helps make possible a subsequent rise in the rate of profit.
Doug