mark
i admire your bold and naked explorations in this post

i wish you had time for more such
none of the usual clever loop holing and off setting words

more like ...well delong at his most boorish
(and most useful )

take the straight off implications of this line:

"... I wonder if monetary policy will slowly run out of rigidities to exploit .."

my take
monetary theory has exploited price stickiness way too long

and its in fact its ten million
modeling " place holders "
simulative of realistic results
but empty of plausibly motivated actions

sticky quantities exist too at the phenomenal level
and at least some degree
of "less then perfectly swift and accurate"
adjustments
in either and or both
the p and q dimensions
can't really be avoided

and yet my deeper sense of the 'ting ooon sack'
keynes grabbed at in his GT
wasn't about kinematics per se
but conflicting property interests

as much
about the sudden clench
the sudden paralizing action
of the hand of the creditor class
on the mommentum of the limited liability
for profit firms
thru the precise but now hopelessly crunched
mechanisms of an existing
but post train wrecked
and thus essentially irrelevent
credit structure

as irrelevent
going forward
to the best operation of "the system "
---like all sunk costs---
as it is the non plus ultra
of its individual agents

the contradiction embedded in the system
emerges from the workings of the system itself

the non optimal by the book guidance
at these points where the system needs to toss out all the books
declare a jubilee
" burn the records"
ie the cob wed chests of numbers
we must worship only because
this is what motivates
incentivizes the systems agents

improve info on
the balance sheets
the accounts r and p
debt structures
the whole panjamdrone
of paper choke effects
and my gut sez the system seizes up even faster
not out of panic and uncertainty
but the profound awareness of insolvency ... bankrupcy

purvasive
loses realized ...big time

a sudden wave of
"stop the music folks
i just took a huge beating here "

the after math
means
the slow output reducing
"work out phase "

sorting out
who owes what to who
since who did what to who
all the sunken treasure diving
who has and who hasn't ...the means of payment
where is that means of payment
who goes under who to jail etc etc

more and better info more and better forecasts
more and better trans[arency
more and better and faster adjusting
of prices purchases and outputs .....
simply builds the speed of the system
while increasing the cataclysmic effect
of the self inflicted next crisis

face it

the systems dominant players
are faustian folk
they push beyond safety
even as safety offers more
risk always offers
even more still

...
bw gets my point
and in spades

what i don't see
in doc bruce's institutional vision
is
where the on going system's
stage by stage self sublation is heading

to wax 1848 ish

the step by step from crisis to crisis
abolition
by means of various new forms
of social expropriation
of all privately held
socially productive property
If all prices are perfectly flexible so that all markets clear at all points in time..."

assume the can openner and damn it
suddenly the cans disappear

"best possible markets"
in this nth best
of all possible market worlds
never clear

job markets and credit markets
are not marshall markets "If the Fed has ever worked on the part of its mandate to help full employment, I'm not aware of it."

certainly true figuratively

at least
since the truman "give back "

ie

in and of themselves
the strategic interests of the wage earning class
count for zero among the members of ...
"the governing board "

"It is an undemocratic organization run for the benefit of banks, and perhaps it is time that its organizational structure be reformed"

bravo
...

"... the asymmetrical information problem is intractable for unique products and long-term relationships"

i prefer the simpler
clear as a bell ringing at mid nite
indispensible motivational visions
in a zillion job toiling bill paying heads
of joining the ravenous hords
of the job lessly idled
and credit wise nyet ed

the shut out class

...
"this is true in virtually all
reasonable models
of
the economy "

reasonable models of spot market exchange

but not of production or of ...money

...
mark's little tease

question:
"Should we worry that monetary policy may lose effectiveness over time?"

answer :

" Not if our models are correct. In fact, this would be desirable"

reason:

" If all prices are perfectly flexible,
markets will behave optimally on their own"

result :

" there would be no need for the Fed to intervene to stabilize the economy"
no secret

i attempt to attack social policy
from the lower middle left

is this below quote
in concert ???

"inflation"
on inflation:

"vulnerable agents are unable to protect themselves adequately, creating real pain. These effects are generally ignored as trivial, but they are not "

nope

it ain't just SSI indexing
even if we go naked unto
the hydra headed monster of inflation

on the whole

--ie putting aside
the zero sum intra stratum shifts---

the prole bottom does better
in inflationary periods
then the silk hat top

relatively speaking of course

and in the royalists'
dream stage
deflation...the bottom does...well
watch any sob series
on the GREAT DEP

the wind that calls itself
by its hereditary enermy "inflation"
blows at us
--intentionally or not--
from the upper right
hey hedge

price system relies on relative prices not absolute prices

if there's some spooky moving floor
under present absolute prices
then to allow max flex
the de facto ceiling must rise enough
to allow for fairly efficient and swift
relative price adjustments eh ??

price shocks like crude oil presents from time to time
ned a certain temporary acceleration
in the ceiling rise rate

wanna insure the system don't touch off
a wage profit spiral ??
implement a big firm MAP

a market anti inflation program
for firms
large enough to influence
market wide prices

"Bidding up prices to hedge inflation
is a non productive activity "

this is at best a very x ray telescopic
view of the involved agents actions

a sudden reinforcing craze
to buy ever pricier house lot
with borrowed money
is not really about
a better store of wealth
ie a pure inflation hedge
in fact a hedge is an off set
ie
not betting on the level change
in the purchasing power of a buck
calls for an indexed security

sure" the equity "
such as it was
out performed an idexed t bond these last ten years

in fact who's to say
it still won't over the next ten years ???

then again a ten year
real lot value stag
looks more likely
so the t bond with index
is more likely to appreciate faster
over the next n periods

so where does this lead us ???
then the rate of general lot values

"A healthy economy
has both upward and downward
price flexibility.
We don't live in one"

who ever did flow-chart ??

err a healthy economy sure
but
an up/down full flexer ???

no way

and so your omni flex capacity
is not necessary for "health "

thank god

...
bruce w
your very fine
long post above
fairly anchors u
as a guy
having more fun focusing
clearly and with insight
on the whole damn
self morphing social process
and the amazing light show
of zigs and zags
of deluded aims and unintended ends
bereft of any hope
but thru a placebo effect

for u there is no careful if mysterious workings
of a plan
no higher guidance of our acts
carrying us forward ....and surely not upward

there's an older school of course
a school of prophetic ministry
---like rev j wright---
from time to time
judgement days arrive in this genre

i find that notion

---even as it remains
only a figurative gig---

very comforting

----------
btw
i'm most
entertained by the unobserved
class based constraining factors
that betray
class neutral
"best for us all"
plans and intentions

example :

my favorite part
of the c manifesto
the catalogue
of
class by class specified
false socialisms

...
"the plutocrats have had their uses for inflation"

case in point

the great war inflation of 1915- to 1919

...

" The economics of the op-ed page, financed by the plutocracy, with its simple-minded "smaller government" and "lower taxes spur growth" is completely ass-backwards for our moment: progress from here requires higher, more progressive taxes, more social insurance, more public investment, new institutions to manage every thing."

it occurs to me
how similar you are bruce
to the minds inside fdr's
original brains trust

but this time
its
a national pira we need
not a national ira

a national post industrial recovery act

i see tattoo shouting

" it's the plan boss ...the plan "