Interpreting the Money Supply: Human and Institutional Factors

Interpreting the Money Supply: Human and Institutional Factors

Interpreting the Money Supply: Human and Institutional Factors

Interpreting the Money Supply: Human and Institutional Factors

Synopsis

Preface: On the Prevalence of Rain Gods and Money Supply Data in Human Societies Part One: Introduction Money: From Liquid to Gaseous Part Two: How Decoders Extract Information from Data or, Who's Monitoring the Monitor? Cognitive Pitfall 1: Reification of Symbol Cognitive Pitfall 2: Reification of Structure Cognitive Pitfall 3: Motivation of Search Cognitive Pitfall 4: Resistance to Revision Part Three: How Encoders Transform Events into Data How the Economics Profession Transforms Events into Data How Political Actors Transform Events into Data How the Press Transforms Events into Data The Money Supply and Interest Rates The Money Supply and Inflation Bibliography

Excerpt

Human existence has always been punctuated by periods of relative abundance and relative scarcity. From the prehistoric to the postmodern, man has always tried to make sense out of these ups and downs We do the best we can to build available information into a plausible explanation of where it all comes from, where it all went, and how to get more of it. The less information we have, the more difficult it becomes to construct such a theory. The human mind never gives up however; it just uses whatever it has.

The famous cargo cults of the South Pacific are an excellent example. The islanders' stock of experience held nothing to explain the origin of the manufactured goods that suddenly appeared on their shores. They filled in the gap by weaving together swatches and patterns from existing knowledge. This included experience with missionaries who possessed "cargo" of their own and who preached of a second coming. Putting this together with their earlier animist beliefs, the islanders concluded that Western manufactured goods come from deities, who will come again if satisfied by ritual worship at airstrips and loading docks. It is easy for us to sit smugly at our terminals and laugh at this primitive interpretation of the data. In fact, the logic behind the cargo cults is parallel to the logic behind modern thought, particularly modern economic thought: something unknown is explained by comparing to what is known and by observing its correlates. Anthropologist Marvin Harris goes one step further: with intertemporal and interpersonal extremes of wealth and poverty so poorly explained by existing economic models, the cargo cults fairly reflect the mystery surrounding the origin of wealth.

In agricultural societies, wealth and poverty depend largely on rainfall. Man has found himself totally dependent on the rains for survival, but with little information on why rain does and does not fall, or what . . .

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