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Austrian economics is all anti-empirical say-so internally-consistent models that aren't tested against reality. Traditional economics is stuff that claims to b

Austrian economics is all anti-empirical say-so internally-consistent models that aren't tested against reality. Traditional economics is stuff that claims to be more empirical but fails to do so and focuses almost entirely on official stats and on its own versions of models that aren't tested against reality. The whole field of economics is overall messed up. It's insular, arrogant, and extremely resistant to outside criticism. And it's dangerous as economics claims are used to justify so much. Random amazing example: In https://www.npr.org/transcripts/980841456 https://www.npr.org/transcripts/980841456 and from "My question is, what is the M1 money supply, and the M2 money supply, for that matter?" last third of it, insanely clear and amazing. In short: Q: more money! does that mean inflation? check with this econ textbook author Author: oh, that's embarrassing, that chapter shouldn't be there Q: so what causes inflation? Author: people buying stuff more, demand going up (unless it's insane money supply like Venezuela or Zimbabwe level insane) Q: so why is the chapter in your textbook? Author: um, publisher said that if we don't say that more money means inflation then econ professors won't use our textbook. They learned that idea in their original studies, so they will only use a textbook that lets them teach it. But it's wrong, and we shouldn't have put it in the book.

kangaroozach 5y ago
More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for inflating a giant bubble based on their politically motivated propaganda. Inflation is not about prices, it’s about simple math. Printing dollars out of thin air, makes the ones in your pocket less powerful. But if you are a the direct beneficiary of the newly printed dollars, (government) who cares! You get to spend it!
- quadrangle 5y ago
  "Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spend it, it will have zero effect on anything. And if people get dollars and never spend them, it's the same effect in practice. Or if someone with a quadrillion-dollar bill gives it as a gift to someone else who then later gifts it, and that's all that ever happens… again, no effect on inflation. Inflation is one thing and one thing only: it's when people who make the decisions about setting prices for things choose to inflate (increase) the prices and that this happens on a noticeable system-wide scale. If the people who set prices chose not to change them, there would be no inflation, period. The interesting thing in studying inflation amounts to studying what patterns correlate with people making the decision to increase prices. And yes, knowledge that buyers have more dollars to spend is a factor that could (and does) influence those decisions on setting prices. The same thing happens with "demand" (so, that professor I summarized above is still not quite right when he asserts that demand and spending is what causes inflation). Sellers can very well (and do often enough) keep prices unchanged even when demand is high and everything just sells out quickly. The result of that isn't inflation, it's shortages — unless the shortages somehow motivate people to just produce more — in which case increased spending just leads to increased production and consumption without inflation or shortages. Shortages don't mathematically cause inflation. Inflation ONLY EVER happens if price-setters choose to increase prices. Nobody is EVER forced to increase prices. You just have the ramifications of doing so or not. Maybe keeping prices the same means less profit. Or maybe it means going bankrupt. And yes, any one decision to change a price has an impact on other people who may choose other prices. That's why all the interacting decisions from all the actors adds up to patterns we can potentially (but always imperfectly) predict. This is human beings making decisions and taking action in a complex game we play around money. Yes, there are mathematical aspects to it. But it's not some pure math abstraction. And relying too heavily on math abstractions is one of the deepest flaws in the whole field of economics.
  - randmeerkat 5y ago
    > You might as well say that gravity has nothing to do with up and down. To be pedantic, gravity has nothing to do with “up” or “down”, it’s just the attraction of two or more masses relative to one another. “Up” or “down” is perspective. If someone on the South Pole is looking up and someone on the North Pole is looking down, an argument could be made that the person on the South Pole is actually looking down.
    - quadrangle 5y ago
      This is really tangential, but "up" and "down" are completely meaningless without gravity. Literally, without gravity, "up" doesn't exist. "Up" is literally just "away from the primary gravitational pull". People on either pole looking away from the planet are both looking up. That's what "up" is. It's funny to realize that two people can look "up" in opposite directions, but that's what's going on. Neither of them is looking "down", even though each one is looking in the direction of the other person's down.
      - randmeerkat 5y ago
        “From our experiments, the presence of gravity appears to be a sufficient condition to evoke up/down biases in interceptive responses, at least in some subjects. It is not, however, a necessary condition. Indeed, it is thought that a network of connections involving the insulae and temporoparietal junction of the brain integrates a variety of sensory modalities to define an up/down reference frame and then tunes fast interceptive responses within that context (Indovina et al., 2005).” https://www.jneurosci.org/content/32/6/1969 https://www.jneurosci.org/content/32/6/1969 TLDR; Up and Down is just perception and has nothing to do with gravity.
        quadrangle 5y ago
        Up and down are perceptions that we evolved specifically to indirectly sense gravity. "nothing to do with" is wrong, it's like saying that thermometers have nothing to do with temperature because various versions of them can get miscalibrated and are really visual devices.
- majormajor 5y ago
  > More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. Crypto isn't in a vaccuum. If the only currency in the world was bitcoin, sure, call it deflationary. But compared to a decade ago, there are far more dollars floating around thanks to crypto. Not only are there are the rich people holding dollars and other currency, or gold, etc, but we've invented a bunch of crypto tokens that we also value massively, so you can be bitcoin-rich or ethereum-rich or nft-rich OR currency-rich... which is no different than printing currency out of thin air.
  - quadrangle 5y ago
    > there are far more dollars floating around thanks to crypto Uh no, cryptocurrencies can't generate USD. But if you meant "dollars" as a generic term for currency, then sure, kinda yeah, to the degree that cryptocurrencies are actually working as currencies (which they mostly are not). Anyway, the "deflationary" claim is internal to a cryptocurrency. Nobody is asserting that cryptocurrencies cause deflation of USD.
    - ravel-bar-foo 5y ago
      > Uh no, cryptocurrencies can't generate USD. If I buy crypto from a miner, the dollars don't disappear. The miner uses it to buy energy and semiconductors, which makes its way around the econony until some miniscule fraction of it comes back to me. (The loss of assets in the economy needed to create the transaction does not destroy dollars, but it does destroy finite resources such as fuel or sunlight for energy, the time of the people involved in the supply chain, etc. In that sense, buying crypto generates USD: we end the process having completed the reaction Dollars + fuel/energy/resources + time -> Dollars + Crypto So if one values crypto more than fuel/energy/resouces + time (say, because crypto is deflationary and its value will rise faster than that of the natural resources used to create it, then it does look (if you squint at it) like dollars are generated: the crypto can be sold later for more than the dollars. At the individual level, the transaction might be even more biased: dollars -> crypto now looks a lot like it generates dollars later if dollars are inflationary and crypto is deflationary (with stable demand for crypto).
- lottin 5y ago
  > This is why cryptocurrencies that burn crypto are considered deflationary. By whom? The idea of a "deflationary currency" isn't supported by any economic theory.
- jessaustin 5y ago
  Printing dollars out of thin air, makes the ones in your pocket less powerful. We've been doing this "thin air" thing for twenty years. Why has it only caused inflation over the last several months?
  - coryrc 5y ago
    Graph housing and health care prices. Maybe low inflation was a lie all along.
    - jessaustin 5y ago
      OK, sure, let's assume inflation has been understated this whole time. (That might even be true!) Do you suggest that it's less understated now? If not, we still don't see the simple relation suggested upthread between inflation and a hypothetical "incorrect" Fed policy, since Fed policy has been pedal-to-the-metal for a long time.
      - coryrc 5y ago
        I think the current reported inflation is related to notable supply (eg ICs) or demand (eg home improvement) changes, as a first order cause. But why do so many have excessive money to burn on increasing demand? Because asset prices are propped up with Fed dollars and no-interest loans.
- RC_ITR 5y ago
  Why does nobody ever think about the supply of goods and services side of the inflation equation?!?! If you print dollars faster than the real economy can create new things to buy that causes inflation, but only then and in recent history that’s only happened because of a pandemic. I really don’t know why that isn’t talked about more.
didericis 5y ago
I know Austrians make a lot of noise about “not being empirical” (to their detriment), but I think that’s a bit misinterpreted, and I get where they’re coming from. I get not wanting to try to parse out a theory from a stream of data complex enough to justify nearly any initial hypothesis. You can still test whether core ideas on the Austrian side fit the facts via historical analysis and looking at how things respond to fed decisions/do at least a rough qualitative empirical analysis. I think the business cycle is an Austrian idea that has empirical evidence behind it at this point, for example. My gut impression of economics from the outside is similar to yours, though, even though I think Austrians seem to have mostly the right core theory. Are there any economic schools you or anyone else know of or forums where people discuss these types of things from a less ideological lens? I ran across this video a while ago by Scott Kominers, was very inspired by the example given and the lucidity of the explanation of what was going on/what helped improve things. https://youtu.be/JCKwkuzROzs https://youtu.be/JCKwkuzROzs . Do you think economics is just too broad a field to avoid ideological schools that generalize/applied economics is better? Part of why I haven’t dug into theory more complicated than basic Austrian ideas is it feels kind of self referential and a waste of time. Applied economics seems like it might be different/an area where good rules and bad rules become evident, but idk. Even if macro economics is ideological and arrogant and hand wavy, still curious about different arguments and counter arguments between schools
- quadrangle 5y ago
  I'm no expert, I just have the impression that the field of economics professionally is basically a lost cause, at least until generational turn-over if even that. Anything interesting has to engage with real facts like energy consumption, pollution, harvesting of raw materials, and somehow acknowledge the huge portion of human activities that are not measured in money. I don't know of anyone within economics who really does this, but if they exist, I am certain they are a pariah in the field, treated with contempt if even acknowledged by the rest of the folks. I think there's something like "environmental economics" but I'm not sure the quality of it. I haven't looked in depth, but https://doughnuteconomics.org https://doughnuteconomics.org seems good, I just have the impression that it's enough work to just get people to even accept the basic premise, so there's not yet the depth of study that would get into the deep complexities, though I see no reason it couldn't get there. On studying real humans as economic actors (rather than homo economicus), the best might be "behavioral economics" which is psychology, empirical, interested in real science (but arguably too behaviorist and not cognitive enough). I think they mostly only grapple with microeconomics and not macro. (I have the impression that the field of economics today, Austrians included, just have this say-so assertion that there is no macroeconomics beyond being just the sum of microeconomic patterns, and this leads to them refusing to study things on a macro level). I have a friend who went to Japan to do economics grad-school work with some professor he thought was onto some better view, but it turned out that guy was a pariah of course who had no respect from colleagues, and the whole thing was a dead-end, and he eventually just gave up on economics having any hope as a field. FWIW, I'm skeptical about aspects of what Marxists say often, but there's a good portion at least of concepts Marx talked about that are pretty darn sensible, and they are basically verboten because of the political biases in the field. When some topics that are intellectually sound enough are barred from discussion for political reasons, then it's just not an intellectually honest field of study. I've heard incidentally that Marx himself was anti-Marxist. There's a lot of confusion that gets wrapped up in associations people have with economic concepts versus the assertions of dogmatic political activists. I do respect Yanis Varoufakis (he calls himself an "erratic Marxist" to emphasize a non-dogmatic view that includes and respects ideas from Marx). If I have to pick one reference to suggest, I'd go with him at this point. If anyone else has a good reference that really engages with these things, I'm curious too
jessaustin 5y ago
An esteemed economist really let the cat out of the bag recently: “The world at the moment is in a really a rather extraordinary state because we have no general theory of inflation.” https://www.pacemaker.global/post/goodhart-we-have-no-general-theory-of-inflation https://www.pacemaker.global/post/goodhart-we-have-no-genera...
jdasdf 5y ago
That's not really a good argument though because there are 2 definitions of inflation which are often confused due to the fact that they have the same name, and can lead to the same results. One is "the generalized increase in prices" and the other is "The increase of the money supply". If you understand that those 2 things are inflation, but not the same thing, then you can see why there's some issues calling an increase in prices that isn't the result of an increase in the money supply "inflation", and vice versa. This gets worse when you realize that an increase in the money supply can (but is not guaranteed) to cause an increase in prices. Like the professor says "The key driver of inflation is not just how much money exists in the world; it's what are people doing with that money." What he's really saying here is that "The key driver of (general increase in prices) is not just (increase of the money supply) but what are people doing with that (increase of the money supply)". You can have inflation even with a reducing money supply, for example when production decreases, or when velocity of money is higher. In fact this brings me to another point that really irks me, which is that M2 and above are arguably not even money in the first place. They are better described as liquidity, and calling them money simply increases confusion with actual money. By making that distinction clear, this dual definition of inflation becomes clearer since it becomes obvious that an increase in liquidity (willingness and ability to spend) can increase prices, regardless of whether the actual liquid (money) has increased. Just like a pipe, you can pump more stuff out by either increasing pressure (increasing money) or making the pipe have less friction (liquidity).

kangaroozach 5y ago

More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for inflating a giant bubble based on their politically motivated propaganda. Inflation is not about prices, it’s about simple math. Printing dollars out of thin air, makes the ones in your pocket less powerful. But if you are a the direct beneficiary of the newly printed dollars, (government) who cares! You get to spend it!

quadrangle 5y ago
"Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spend it, it will have zero effect on anything. And if people get dollars and never spend them, it's the same effect in practice. Or if someone with a quadrillion-dollar bill gives it as a gift to someone else who then later gifts it, and that's all that ever happens… again, no effect on inflation. Inflation is one thing and one thing only: it's when people who make the decisions about setting prices for things choose to inflate (increase) the prices and that this happens on a noticeable system-wide scale. If the people who set prices chose not to change them, there would be no inflation, period. The interesting thing in studying inflation amounts to studying what patterns correlate with people making the decision to increase prices. And yes, knowledge that buyers have more dollars to spend is a factor that could (and does) influence those decisions on setting prices. The same thing happens with "demand" (so, that professor I summarized above is still not quite right when he asserts that demand and spending is what causes inflation). Sellers can very well (and do often enough) keep prices unchanged even when demand is high and everything just sells out quickly. The result of that isn't inflation, it's shortages — unless the shortages somehow motivate people to just produce more — in which case increased spending just leads to increased production and consumption without inflation or shortages. Shortages don't mathematically cause inflation. Inflation ONLY EVER happens if price-setters choose to increase prices. Nobody is EVER forced to increase prices. You just have the ramifications of doing so or not. Maybe keeping prices the same means less profit. Or maybe it means going bankrupt. And yes, any one decision to change a price has an impact on other people who may choose other prices. That's why all the interacting decisions from all the actors adds up to patterns we can potentially (but always imperfectly) predict. This is human beings making decisions and taking action in a complex game we play around money. Yes, there are mathematical aspects to it. But it's not some pure math abstraction. And relying too heavily on math abstractions is one of the deepest flaws in the whole field of economics.
- randmeerkat 5y ago
  > You might as well say that gravity has nothing to do with up and down. To be pedantic, gravity has nothing to do with “up” or “down”, it’s just the attraction of two or more masses relative to one another. “Up” or “down” is perspective. If someone on the South Pole is looking up and someone on the North Pole is looking down, an argument could be made that the person on the South Pole is actually looking down.
  - quadrangle 5y ago
    This is really tangential, but "up" and "down" are completely meaningless without gravity. Literally, without gravity, "up" doesn't exist. "Up" is literally just "away from the primary gravitational pull". People on either pole looking away from the planet are both looking up. That's what "up" is. It's funny to realize that two people can look "up" in opposite directions, but that's what's going on. Neither of them is looking "down", even though each one is looking in the direction of the other person's down.
    - randmeerkat 5y ago
      “From our experiments, the presence of gravity appears to be a sufficient condition to evoke up/down biases in interceptive responses, at least in some subjects. It is not, however, a necessary condition. Indeed, it is thought that a network of connections involving the insulae and temporoparietal junction of the brain integrates a variety of sensory modalities to define an up/down reference frame and then tunes fast interceptive responses within that context (Indovina et al., 2005).” https://www.jneurosci.org/content/32/6/1969 https://www.jneurosci.org/content/32/6/1969 TLDR; Up and Down is just perception and has nothing to do with gravity.
      - quadrangle 5y ago
        Up and down are perceptions that we evolved specifically to indirectly sense gravity. "nothing to do with" is wrong, it's like saying that thermometers have nothing to do with temperature because various versions of them can get miscalibrated and are really visual devices.
majormajor 5y ago
> More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. Crypto isn't in a vaccuum. If the only currency in the world was bitcoin, sure, call it deflationary. But compared to a decade ago, there are far more dollars floating around thanks to crypto. Not only are there are the rich people holding dollars and other currency, or gold, etc, but we've invented a bunch of crypto tokens that we also value massively, so you can be bitcoin-rich or ethereum-rich or nft-rich OR currency-rich... which is no different than printing currency out of thin air.
- quadrangle 5y ago
  > there are far more dollars floating around thanks to crypto Uh no, cryptocurrencies can't generate USD. But if you meant "dollars" as a generic term for currency, then sure, kinda yeah, to the degree that cryptocurrencies are actually working as currencies (which they mostly are not). Anyway, the "deflationary" claim is internal to a cryptocurrency. Nobody is asserting that cryptocurrencies cause deflation of USD.
  - ravel-bar-foo 5y ago
    > Uh no, cryptocurrencies can't generate USD. If I buy crypto from a miner, the dollars don't disappear. The miner uses it to buy energy and semiconductors, which makes its way around the econony until some miniscule fraction of it comes back to me. (The loss of assets in the economy needed to create the transaction does not destroy dollars, but it does destroy finite resources such as fuel or sunlight for energy, the time of the people involved in the supply chain, etc. In that sense, buying crypto generates USD: we end the process having completed the reaction Dollars + fuel/energy/resources + time -> Dollars + Crypto So if one values crypto more than fuel/energy/resouces + time (say, because crypto is deflationary and its value will rise faster than that of the natural resources used to create it, then it does look (if you squint at it) like dollars are generated: the crypto can be sold later for more than the dollars. At the individual level, the transaction might be even more biased: dollars -> crypto now looks a lot like it generates dollars later if dollars are inflationary and crypto is deflationary (with stable demand for crypto).
lottin 5y ago
> This is why cryptocurrencies that burn crypto are considered deflationary. By whom? The idea of a "deflationary currency" isn't supported by any economic theory.
jessaustin 5y ago
Printing dollars out of thin air, makes the ones in your pocket less powerful. We've been doing this "thin air" thing for twenty years. Why has it only caused inflation over the last several months?
- coryrc 5y ago
  Graph housing and health care prices. Maybe low inflation was a lie all along.
  - jessaustin 5y ago
    OK, sure, let's assume inflation has been understated this whole time. (That might even be true!) Do you suggest that it's less understated now? If not, we still don't see the simple relation suggested upthread between inflation and a hypothetical "incorrect" Fed policy, since Fed policy has been pedal-to-the-metal for a long time.
    - coryrc 5y ago
      I think the current reported inflation is related to notable supply (eg ICs) or demand (eg home improvement) changes, as a first order cause. But why do so many have excessive money to burn on increasing demand? Because asset prices are propped up with Fed dollars and no-interest loans.
RC_ITR 5y ago
Why does nobody ever think about the supply of goods and services side of the inflation equation?!?! If you print dollars faster than the real economy can create new things to buy that causes inflation, but only then and in recent history that’s only happened because of a pandemic. I really don’t know why that isn’t talked about more.

didericis 5y ago

I know Austrians make a lot of noise about “not being empirical” (to their detriment), but I think that’s a bit misinterpreted, and I get where they’re coming from. I get not wanting to try to parse out a theory from a stream of data complex enough to justify nearly any initial hypothesis. You can still test whether core ideas on the Austrian side fit the facts via historical analysis and looking at how things respond to fed decisions/do at least a rough qualitative empirical analysis. I think the business cycle is an Austrian idea that has empirical evidence behind it at this point, for example. My gut impression of economics from the outside is similar to yours, though, even though I think Austrians seem to have mostly the right core theory. Are there any economic schools you or anyone else know of or forums where people discuss these types of things from a less ideological lens? I ran across this video a while ago by Scott Kominers, was very inspired by the example given and the lucidity of the explanation of what was going on/what helped improve things. https://youtu.be/JCKwkuzROzs https://youtu.be/JCKwkuzROzs . Do you think economics is just too broad a field to avoid ideological schools that generalize/applied economics is better? Part of why I haven’t dug into theory more complicated than basic Austrian ideas is it feels kind of self referential and a waste of time. Applied economics seems like it might be different/an area where good rules and bad rules become evident, but idk. Even if macro economics is ideological and arrogant and hand wavy, still curious about different arguments and counter arguments between schools

quadrangle 5y ago
I'm no expert, I just have the impression that the field of economics professionally is basically a lost cause, at least until generational turn-over if even that. Anything interesting has to engage with real facts like energy consumption, pollution, harvesting of raw materials, and somehow acknowledge the huge portion of human activities that are not measured in money. I don't know of anyone within economics who really does this, but if they exist, I am certain they are a pariah in the field, treated with contempt if even acknowledged by the rest of the folks. I think there's something like "environmental economics" but I'm not sure the quality of it. I haven't looked in depth, but https://doughnuteconomics.org https://doughnuteconomics.org seems good, I just have the impression that it's enough work to just get people to even accept the basic premise, so there's not yet the depth of study that would get into the deep complexities, though I see no reason it couldn't get there. On studying real humans as economic actors (rather than homo economicus), the best might be "behavioral economics" which is psychology, empirical, interested in real science (but arguably too behaviorist and not cognitive enough). I think they mostly only grapple with microeconomics and not macro. (I have the impression that the field of economics today, Austrians included, just have this say-so assertion that there is no macroeconomics beyond being just the sum of microeconomic patterns, and this leads to them refusing to study things on a macro level). I have a friend who went to Japan to do economics grad-school work with some professor he thought was onto some better view, but it turned out that guy was a pariah of course who had no respect from colleagues, and the whole thing was a dead-end, and he eventually just gave up on economics having any hope as a field. FWIW, I'm skeptical about aspects of what Marxists say often, but there's a good portion at least of concepts Marx talked about that are pretty darn sensible, and they are basically verboten because of the political biases in the field. When some topics that are intellectually sound enough are barred from discussion for political reasons, then it's just not an intellectually honest field of study. I've heard incidentally that Marx himself was anti-Marxist. There's a lot of confusion that gets wrapped up in associations people have with economic concepts versus the assertions of dogmatic political activists. I do respect Yanis Varoufakis (he calls himself an "erratic Marxist" to emphasize a non-dogmatic view that includes and respects ideas from Marx). If I have to pick one reference to suggest, I'd go with him at this point. If anyone else has a good reference that really engages with these things, I'm curious too

jessaustin 5y ago

An esteemed economist really let the cat out of the bag recently: “The world at the moment is in a really a rather extraordinary state because we have no general theory of inflation.” https://www.pacemaker.global/post/goodhart-we-have-no-general-theory-of-inflation https://www.pacemaker.global/post/goodhart-we-have-no-genera...

jdasdf 5y ago

That's not really a good argument though because there are 2 definitions of inflation which are often confused due to the fact that they have the same name, and can lead to the same results. One is "the generalized increase in prices" and the other is "The increase of the money supply". If you understand that those 2 things are inflation, but not the same thing, then you can see why there's some issues calling an increase in prices that isn't the result of an increase in the money supply "inflation", and vice versa. This gets worse when you realize that an increase in the money supply can (but is not guaranteed) to cause an increase in prices. Like the professor says "The key driver of inflation is not just how much money exists in the world; it's what are people doing with that money." What he's really saying here is that "The key driver of (general increase in prices) is not just (increase of the money supply) but what are people doing with that (increase of the money supply)". You can have inflation even with a reducing money supply, for example when production decreases, or when velocity of money is higher. In fact this brings me to another point that really irks me, which is that M2 and above are arguably not even money in the first place. They are better described as liquidity, and calling them money simply increases confusion with actual money. By making that distinction clear, this dual definition of inflation becomes clearer since it becomes obvious that an increase in liquidity (willingness and ability to spend) can increase prices, regardless of whether the actual liquid (money) has increased. Just like a pipe, you can pump more stuff out by either increasing pressure (increasing money) or making the pipe have less friction (liquidity).