2 - Yeah, you’re right, I was misremembering. We weren’t able to come up with a concrete description of discoordination (which is a new concept that is unknown in the academic literature including austrian as far as we know) that made sense to me, and I lacked the intuition about it you have. IIRC I was able to convince you that ignoring discoordination effects, minimizing monetary disequilibrium is the thing to do, and NGDP targeting does a decent job of that. You also convinced me there was a case where it wont (when there’s a big shift in market to non-market activities or vice versa). Is that right?
1 - Given our disagreement in 2, I think you should still agree with me here since you haven’t brought up any discoordination related arguments as far as I can tell.
To get pareto optimality you have to ignore any monetary externalities (i.e when I buy buy something, I increase the quantity of money you have and my decision does not take this into account) or assume the quantity of money is optimal. And if we’re doing this then: given the quantity of money, we’re going to get pareto optimality no matter what. In other words, the trades in the no-monetary-change and monetary-change case are going to have the same pareto optimality. All trade in both scenarios is voluntary, so given the quantity of money each trade is welfare improving in the same sense in both cases. So our basis for concluding the trades are positive sum is unaffected.
The effects of a monetary change occur through an externality.
2 - Yeah, you’re right, I was misremembering. We weren’t able to come up with a concrete description of discoordination (which is a new concept that is unknown in the academic literature including austrian as far as we know) that made sense to me, and I lacked the intuition about it you have. IIRC I was able to convince you that ignoring discoordination effects, minimizing monetary disequilibrium is the thing to do, and NGDP targeting does a decent job of that. You also convinced me there was a case where it wont (when there’s a big shift in market to non-market activities or vice versa). Is that right?
1 - Given our disagreement in 2, I think you should still agree with me here since you haven’t brought up any discoordination related arguments as far as I can tell.
To get pareto optimality you have to ignore any monetary externalities (i.e when I buy buy something, I increase the quantity of money you have and my decision does not take this into account) or assume the quantity of money is optimal. And if we’re doing this then: given the quantity of money, we’re going to get pareto optimality no matter what. In other words, the trades in the no-monetary-change and monetary-change case are going to have the same pareto optimality. All trade in both scenarios is voluntary, so given the quantity of money each trade is welfare improving in the same sense in both cases. So our basis for concluding the trades are positive sum is unaffected.
The effects of a monetary change occur through an externality.