Comments on: Helicopter Ben and Monetary Policy: the cartoon version! http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/ for students and teachers of Economics Wed, 23 May 2012 04:39:58 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Manuel A. http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-10596 Manuel A. Tue, 20 Apr 2010 10:35:03 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-10596 It's true. If the money supply were to increase, then interest rates would go down, and if too much is printed then inflation is likely to follow. Again the demand for money would raise interest rates, which is good. It's true. If the money supply were to increase, then interest rates would go down, and if too much is printed then inflation is likely to follow. Again the demand for money would raise interest rates, which is good.

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]]> By: Oliver T http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-10193 Oliver T Thu, 11 Feb 2010 07:52:12 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-10193 I'm interested in this idea of overnight loans. Do they simply phone up another random bank and demand a million dollars 15 minutes before the business day ends? or maybe they previously agreed to check on each other after each day and and see who has excess money and who doesn't and then go from there. What happens if no bank receives any excess reserves and they are all below the required reserve rate at the end of the business day? I'm interested in this idea of overnight loans. Do they simply phone up another random bank and demand a million dollars 15 minutes before the business day ends? or maybe they previously agreed to check on each other after each day and and see who has excess money and who doesn't and then go from there.

What happens if no bank receives any excess reserves and they are all below the required reserve rate at the end of the business day?

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]]> By: Bjorn Kvaale http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-10169 Bjorn Kvaale Tue, 09 Feb 2010 22:02:42 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-10169 Monetary policy is very important in economics because it can change the amount of aggregate demand, depending on expansionary or contractionary monetary policies. If the Fed wishes to increase AD due to a recession, it can increase the supply of money by buying bonds from the people, which leads to a decrease in interest rates, which increases the investment and consumption, leading to an increase in AD. Otherwise, the Fed can also decrease the money by selling bonds to the people to increase the interest rate, lowering the AD. Monetary policy is very important in economics because it can change the amount of aggregate demand, depending on expansionary or contractionary monetary policies. If the Fed wishes to increase AD due to a recession, it can increase the supply of money by buying bonds from the people, which leads to a decrease in interest rates, which increases the investment and consumption, leading to an increase in AD. Otherwise, the Fed can also decrease the money by selling bonds to the people to increase the interest rate, lowering the AD.

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]]> By: Bjorn B http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-10154 Bjorn B Tue, 09 Feb 2010 01:47:52 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-10154 Interestingly, the diagram illustrates Bernanke throwing away a lot more money than bonds (while it is the Fed's role to both buy and sell bonds), which supports the common misoconception of him throwing away all of the tax-payer's money. In the long run however, (at least in theory) the amount of bonds that the Fed has issued should equal the amount of bonds it buys off of the people. This however cannot be the case in todays financial situation, when the USA's debt is greater than ever, and the economy is only slowly coming out of a recession. In the USA's current situation, it may even have been more accurate if Bernanke was only throwing out bonds to finance the USA's growing debt :) P.S: I like your answer to antijap Mr. Welker ;) Interestingly, the diagram illustrates Bernanke throwing away a lot more money than bonds (while it is the Fed's role to both buy and sell bonds), which supports the common misoconception of him throwing away all of the tax-payer's money. In the long run however, (at least in theory) the amount of bonds that the Fed has issued should equal the amount of bonds it buys off of the people. This however cannot be the case in todays financial situation, when the USA's debt is greater than ever, and the economy is only slowly coming out of a recession. In the USA's current situation, it may even have been more accurate if Bernanke was only throwing out bonds to finance the USA's growing debt :)

P.S: I like your answer to antijap Mr. Welker ;)

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]]> By: ArthP Danny http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-7796 ArthP Danny Wed, 01 Apr 2009 20:37:48 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-7796 Our opinion is that if the government keeps spending, a monetary policy will help in the short-run but, correct us if we are wrong, in the long-run, even with a combination of afiscal and monetary policy, the economy will gradually fall. Our opinion is that if the government keeps spending, a monetary policy will help in the short-run but, correct us if we are wrong, in the long-run, even with a combination of afiscal and monetary policy, the economy will gradually fall.

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]]> By: Jason http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-5417 Jason Fri, 15 Aug 2008 05:11:47 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-5417 Nice. We need to get Bernanke and Greenspan to make <a href="http://make-a-cartoon.com/make-a-cartoon-you" rel="nofollow">a cartoon version of you</a>. Then the circle of anima-nomics will be complete. And, anima-nomics will finally be a word! Nice. We need to get Bernanke and Greenspan to make a cartoon version of you. Then the circle of anima-nomics will be complete. And, anima-nomics will finally be a word!

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]]> By: Jason Welker http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4776 Jason Welker Fri, 11 Apr 2008 08:45:00 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4776 Dear "antijap", Your proposed boycott of Japanese goods, I'm afraid, would have the exact opposite effect on the yen's value that you hope for. If you had ever taken an econ class, you'd know that the value of a country's currency is determined by the demand for that country's goods. If Americans boycotted Japanese imports, the value of the yen would plummet, making America's products more expensive to Japanese consumers. An American boycott of Japanese products would harm American producers and lead to rising unemployment in the US, since Japanese will be less able to purchase our output after the yen falls in value. I'm afraid "remembering pearl harbor" will do no good for either Japan or the US in today's global economy. Dear "antijap", Your proposed boycott of Japanese goods, I'm afraid, would have the exact opposite effect on the yen's value that you hope for. If you had ever taken an econ class, you'd know that the value of a country's currency is determined by the demand for that country's goods. If Americans boycotted Japanese imports, the value of the yen would plummet, making America's products more expensive to Japanese consumers. An American boycott of Japanese products would harm American producers and lead to rising unemployment in the US, since Japanese will be less able to purchase our output after the yen falls in value.

I'm afraid "remembering pearl harbor" will do no good for either Japan or the US in today's global economy.

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]]> By: antijap http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4775 antijap Fri, 11 Apr 2008 08:06:47 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4775 Dear Sir, Remember Pearl Harbor! Boycott Japanese goods and capitals! Buy American! Raise the Yen value! Very sincerely yours, Dear Sir,

Remember Pearl Harbor!

Boycott Japanese goods and capitals!

Buy American!

Raise the Yen value!

Very sincerely yours,

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]]> By: Dana Y. http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4606 Dana Y. Wed, 19 Mar 2008 23:30:08 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4606 It is fascinating how there are two policies to govern economic stability: that of fiscal policy and the monetary policy. However, I believe monetary policy is more effective as fiscal policies not only require mutual consent but may also come across crowding out effect. It is fascinating how there are two policies to govern economic stability: that of fiscal policy and the monetary policy. However, I believe monetary policy is more effective as fiscal policies not only require mutual consent but may also come across crowding out effect.

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]]> By: jenniferchoi http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4601 jenniferchoi Wed, 19 Mar 2008 06:35:20 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4601 The fed, by changing the monetary policy, will have positive and negative aspects. But as people have said, we need both monetary policy and fiscal policy to achieve economic stability. The fed, by changing the monetary policy, will have positive and negative aspects. But as people have said, we need both monetary policy and fiscal policy to achieve economic stability.

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]]> By: Jessica http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4599 Jessica Tue, 18 Mar 2008 23:49:43 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4599 Its interesting how everything is connected. I think David has a good point that banks probably wouldn't want to lend money if people weren't paying it back. However, I guess they have to lend out at least a certain amount or else the money supply would decrease, which would cause other problems. Its interesting how everything is connected. I think David has a good point that banks probably wouldn't want to lend money if people weren't paying it back. However, I guess they have to lend out at least a certain amount or else the money supply would decrease, which would cause other problems.

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]]> By: julie.lin http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4594 julie.lin Tue, 18 Mar 2008 23:26:59 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4594 "I agree that both monetary policy and fiscal policy are needed in a country to achieve economic stability." i agree with what mond agrees with. "I agree that both monetary policy and fiscal policy are needed in a country to achieve economic stability."

i agree with what mond agrees with.

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]]> By: Drew Venkatraman http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4586 Drew Venkatraman Tue, 18 Mar 2008 21:34:05 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4586 The fed, can increase its money supply and hope for the best but i believe now more than ever, Americans are going to be cautious while spending so their ideas might not work. Now new developments have been made and the fed has decided to cut interest rates which i believe will be truly more effective. The fed, can increase its money supply and hope for the best but i believe now more than ever, Americans are going to be cautious while spending so their ideas might not work. Now new developments have been made and the fed has decided to cut interest rates which i believe will be truly more effective.

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]]> By: Mond http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4579 Mond Tue, 18 Mar 2008 20:39:56 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4579 The drawing of the Fed looks like a hobo. I agree that both monetary policy and fiscal policy are needed in a country to achieve economic stability. The drawing of the Fed looks like a hobo. I agree that both monetary policy and fiscal policy are needed in a country to achieve economic stability.

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]]> By: serenatu http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/comment-page-1/#comment-4571 serenatu Tue, 18 Mar 2008 19:42:07 +0000 http://welkerswikinomics.com/blog/2008/03/12/helicopter-ben-monetary-policy-the-cartoon-version/#comment-4571 Even though monetary policy has its good and bad side, it's still really effective and efficient on fixing the economic problems. Fiscal policy takes a longer time to really be effective. Even though monetary policy has its good and bad side, it's still really effective and efficient on fixing the economic problems. Fiscal policy takes a longer time to really be effective.

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