Asymmetrical Information

I'm certainly no econonmist, but in the interest of starting a discussion I'll ask you what about the paper you found interesting?

The argument that, long term, monetary policy based on the Taylor Rule is similar to central banking under a gold standard is interesting. The Taylor Rule is new to me but it sounds like a prescription for how to react to measured inflation rates to achieve a desired target rate. However, is it a real theory of how the economy works or is it simply a curve fit for the Fed's actions over the recent past? That is, does it make a useful tool for forecasting future central bank actions?

The notion that we should think of money as a "promise to pay" definitely fits with the gold standard interpretation of money. I think I understand his assertion, that under the Taylor Rule money policy, this "promise to pay" equates to the a commitment from the central bank to to defend the value of the currency in terms of other currencies, but I'll admit that it had my non-economist head spinning for a while. Also, how would you interpet this based on the current slide in the value of the dollar relative to the Euro? If the Fed isn't defending the value of the dollar does this undermine the argument for the similarity to the gold standard?

Also, could somone explain the concept of "inside" and "outside" money? That part of the paper went over my head.

Ha! One comment, and Mel Gibson has 31 at last count. An indication of the direction you should take this site? More Mel, less gobbledy-gook.

"Money as a promise to pay" sounds an awful lot like Hayek's definition of "capital" as not only the actual, but the potential, goods that can be produced using a society's raw material. Hmmm.

If there was "some jargon," how did you understand it. Oh, you have an MBA.

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