an early post on this blog in September 2011. I also wrote about the Hayek-Sraffa controversy in a post in June 2012 just after the HES
" The gross return for bananas has to exceed the gross return for apples by enough to justify incurring the added storage costs." In my last example it did. The net nominal return (using the same...
My understanding is that Wicksell's notion of a 'natural' rate of interest derives from and is grounded in Bohm-Bawerk's 'barter economy' / no money theory of 'interest', i.e. the valuational str...
Hayek moved to a 'stream' metaphor with elements in the production goods coordination process which would never be reproduced. I.e. it's not a traditional 'equilibrium' construct. The differentia...
"JP, Why do you say it’s getting more complicated? You seem to get the idea pretty well, except that liquidity premium refers to the increase in the asset’s value as a result of its monetary/...
nemi, Real returns are equalized net of storage costs. The gross return for bananas has to exceed the gross return for apples by enough to justify incurring the added storage costs. So if bananas...
Glasner: Ok – you are right. I was thinking infinite storage cost (you have to sell your fruit and transfer your wealth in money form) while I wrote no storage cost. How am I supposed to be abl...
JP, Why do you say it’s getting more complicated? You seem to get the idea pretty well, except that liquidity premium refers to the increase in the asset’s value as a result of its monetary/l...
@ Mike Sproul and David Glasner I do not understand your response to Nick Rowe. Whether you save bananas or apples you end up with 105 $ in period t+1. (Obviously Nick´s use of “inflation” s...
David, have you read Hayek's _Pure Theory of Capital_? The distinctions I make regarding two notions of 'interest' embedded in two different conceptual constructs are discussed there.