3 Comments

Bravo! As a reader who somewhat empathises with the Austrians this provides some really clear insight. However, should we expect that as interest rates rise, although Vd will fall, there might be a natural increase in D as banks are incentivised to lend more? Bank loan-to-deposit ratios are the lowest they've been since the '70s, wasn't inflation then also partly driven by increased lending? Pardon if you've already debunked that one!

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Thank you for broadening my understanding of these things, and for the paper by Xing, Xiaoyun et al.

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Well done JK for distilling what would have been hours of lectures for econ students into a single blogpost. As Shakespeare said "brevity is the soul of finance".

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