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Showing posts with label Frosty the Snowman endogenous versus exogenous money. Show all posts
Showing posts with label Frosty the Snowman endogenous versus exogenous money. Show all posts

Friday, December 6, 2013

Frosty The Snowman Exemplifies Exogenous Money

Frosty the Snowman was on TV tonight.  So of course I watched it.   One of my favorite lines in this Christmas classic is in the following clip:


Frosty's logic is as follows:
1. I see the thermometer rising and getting red
2. That causes me to get all hot and sweaty
3  The thermometer is my demise

Similarly, neoclassical misconception of how money works goes something like this:
1. I see the Fed adding reserves to the banking system
2. That causes the economy to lend and borrow
3. The Fed is the economy's demise (or savior)