Monday, January 24, 2011

Where is the desire to hoard money?

Let us look at our reluctance to buy oil at a given price.
Price   Quantity (millions of barrels )
$75   13  
$140  14 
$75    11 
$95    12.5 
$90    11

Oil prices are always in deflated dollars. $75 oil got us 13 million barrels in 2006, a fairly stable period.  Today $90 gets us 11 million barrels.  It looks more like we are hoarding oil.  So why is Krugman still telling us we hoard money?

As far as Say's law, I would say that piles of money generally match piles of investments and goods. Say's Law mostly holds. We are currently hoarding most of our valuable goods, in proportion.

What happened was that Reagan and Bush spent trillions of dollars expanding international markets and subsidizing wages and charged the middle class while the wealthy got higher margins. We need to raise progressive rates and get our money returned.  Tea Party, where are you?

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