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wedrifid comments on Q for GiveWell: What is GiveDirectly's mechanism of action? - Less Wrong
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Technically. But the 'just' is a tad misleading. I mean that if money1, money2 and money3 behave in similar ways and can be freely exchanged between each other then adding fees to holding money1 will have a limited effect on how much (money1 + money2 + money3) is held. It's a lever without a natural fulcrum.
(Note that this is not intended as a criticism of Market Monetarism itself, just of the specific Wikipedia excerpt. Where your words spoken here in the name of Market Monetarism raise that theory's credibility, the wikipedia quote lowered it.)
Pardon me. English's reference system leaves a lot to be desired. What 'this' is this? The stuff about not subsidising?
Ah, I think I understand you now. Yes, if you have very close substitutes, making one less desirable will just push people into holding more of the others and not much less of the aggregate.
This is certainly a problem for physical cash vs. reserves with the fed, though less than it seems, I think because the return on cash has to take into account storage and security costs.
People also sometimes think that this applies to holding cash vs short term government debt, but government debt isn't a medium of exchange, which makes it not a very close substitute for money.
Sorry, I meant