The Law of Reflux

The law of reflux is explained using an example of backed money. In the example, government-issued money is backed by the government’s assets (mainly taxes receivable) while bank-issued money is backed by the bank’s assets. The value of both kinds of money is determined by the amount of backing held per unit of money issued. The example shows that reflux maintains money’s value, not by assuring that excessive issues of money reflux to their issuers, but by providing people with access to the assets backing their money. Conventional metallic convertibility is only one channel of many through which money can reflux to its issuer. The suspension of metallic convertibility still leaves many other open channels of reflux, but can create the illusion that money is unbacked fiat money that was somehow forced into circulation. Backed money will hold its value as long as its issuer remains solvent. One way for an issuer to stay solvent is to issue money in exchange for short-term real bills of adequate value, but as long as the bills are of adequate value, it is largely unnecessary for the bills to be real or short-term.reflux real bills doctrine backing theory

The fiscal theory of the price level and the backing theory of money

A numerical example of privately issued money is used to illustrate the fiscal theory of the price level, and to show that the fiscal theory is best understood as a subset of the backing theory of money. Government issuance of money or debt is shown to be potentially inflationary only when the government’s net worth is negative, and when the government’s assets do not rise in step with its liabilities. The backing theory is used to examine whether inflation can be avoided by a sufficiently tough central bank, and to criticize the view that fiscal policies affect inflation through their wealth effects.Money, price level, fiscal, real bills, backing theory

Identifying Drivers of Genetically Modified Seafood Demand: Evidence from a Choice Experiment

The aquaculture industry has expanded to fill the gap between plateauing wild seafood supply and growing consumer seafood demand. The use of genetic modification (GM) technology has been proposed to address sustainability concerns associated with current aquaculture practices, but GM seafood has proved controversial among both industry stakeholders and producers, especially with forthcoming GM disclosure requirements for food products in the United States. We conduct a choice experiment eliciting willingness-to-pay for salmon fillets with varying characteristics, including GM technology and GM feed. We then develop a predictive model of consumer choice using LASSO (least absolute shrinkage and selection operator)-regularization applied to a mixed logit, incorporating risk perception, ambiguity preference, and other behavioral measures as potential predictors. Our findings show that health and environmental risk perceptions, confidence and concern about potential health and environmental risks, subjective knowledge, and ambiguity aversion in the domain of GM foods are all significant predictors of salmon fillet choice. These results have important implications for marketing of foods utilizing novel food technologies. In particular, people familiar with GM technology are more likely to be open to consuming GM seafood or GM-fed seafood, and effective information interventions for consumers will include details about health and environmental risks associated with GM seafood

The Real Meaning of the Real Bills Doctrine (revised Nov., 2018)

The real bills doctrine asserts that money should be issued in exchange for short-term real bills of adequate value. Critics of this doctrine have thought of it as a means to make the money supply move in step with the production of goods, a task at which it supposedly fails. In this essay I explain that the real bills doctrine is actually a means to make the money supply move in step with the money-issuer’s assets. When viewed this way, I find that the real bills doctrine is an effective means to prevent inflation. More importantly, the real bills doctrine is a means to make the quantity of money grow and shrink with the needs of business, thus preventing money shortages and the resulting recessions

The Real Meaning of the real Bills Doctrine

The real bills doctrine asserts that money should be issued in exchange for short-term real bills of adequate value. Critics of this doctrine have thought of it as a means to make the money supply move in step with the production of goods, a task at which it supposedly fails. In this essay I explain that the real bills doctrine is actually a means to make the money supply move in step with the money-issuer’s assets. When viewed this way, I find that the real bills doctrine is an effective means to prevent inflation. More importantly, the real bills doctrine is a means to make the quantity of money grow and shrink with the needs of business, thus preventing money shortages and the resulting recessions

The Shut-down Price, Reconsidered

The textbook assertion that the shut-down price is at the minimum point of average variable cost AVC is shown to be incorrect. Once we properly distinguish between fixed costs and sunk costs, it becomes clear that the shut-down price is at the minimum point of average cost AC

The Real Meaning of the real Bills Doctrine

The real bills doctrine asserts that money should be issued in exchange for short-term real bills of adequate value. Critics of this doctrine have thought of it as a means to make the money supply move in step with the production of goods, a task at which it supposedly fails. In this essay I explain that the real bills doctrine is actually a means to make the money supply move in step with the money-issuer’s assets. When viewed this way, I find that the real bills doctrine is an effective means to prevent inflation. More importantly, the real bills doctrine is a means to make the quantity of money grow and shrink with the needs of business, thus preventing money shortages and the resulting recessions

The Law of Reflux

The law of reflux is explained using an example of backed money. In the example, government-issued money is backed by the government’s assets (mainly taxes receivable) while bank-issued money is backed by the bank’s assets. The value of both kinds of money is determined by the amount of backing held per unit of money issued. The example shows that reflux maintains money’s value, not by assuring that excessive issues of money reflux to their issuers, but by providing people with access to the assets backing their money. Conventional metallic convertibility is only one channel of many through which money can reflux to its issuer. The suspension of metallic convertibility still leaves many other open channels of reflux, but can create the illusion that money is unbacked fiat money that was somehow forced into circulation. Backed money will hold its value as long as its issuer remains solvent. One way for an issuer to stay solvent is to issue money in exchange for short-term real bills of adequate value, but as long as the bills are of adequate value, it is largely unnecessary for the bills to be real or short-term

The Real Meaning of the Real Bills Doctrine (revised Nov., 2018)

The real bills doctrine asserts that money should be issued in exchange for short-term real bills of adequate value. Critics of this doctrine have thought of it as a means to make the money supply move in step with the production of goods, a task at which it supposedly fails. In this essay I explain that the real bills doctrine is actually a means to make the money supply move in step with the money-issuer’s assets. When viewed this way, I find that the real bills doctrine is an effective means to prevent inflation. More importantly, the real bills doctrine is a means to make the quantity of money grow and shrink with the needs of business, thus preventing money shortages and the resulting recessions