I will give you a hint. If it were the case that a regulatory authority could control the amount of air, water, and food that everyone got, such that their selection of the air, water, and food that individuals get uniquely determined the reproduction rate then reproduction would not be endogenous. Lets make it more explicit in our example.
Women create babies. But baby making is not an endogenous system. In order to make a baby they need sperm. Even if they can decide when to have children (by finding sperm) and even if their decision to have a baby lead directly to finding the sperm, it would not be the case that the decision to have children created sperm. If there was a regulatory authority which could control how much total sperm was available and such a limit was binding then the total number of babies, being limited by the total amount of sperm, would not be endogenous. But rather it would be uniquely determined by the sperm authorities regardless of the fact that women create children and regardless of the fact that the individual women choose to have children and regardless of the fact that the choice of the individual women to have children is what acquired them the requiste sperm
In this case the regulatory authority can, and does, control the money supply in such a way that banks, despite "actually creating the money" just like women "actually create the babies" are limited by the total amount of reserves available.
As an exercise i went and examined the quote in question. Greenspan isn't saying what you think he is saying.
What he is saying is that "we aren't using a specific policy rule to handle the money supply". This is a far far far far far cry from "we can't control the money supply". Indeed Greenspans talks on this are precisely what the Fed should be saying if we expect the fed to be credible (that is, if we know it has a rule, we know what the outcome will be and so if that is different from its expressed target we believe the rule and not the target. This would actually set money supply more endogenous, because the aggregate of individual actors would be controlling it rather than the fed, and we don't want that to happen)
no subject
I will give you a hint. If it were the case that a regulatory authority could control the amount of air, water, and food that everyone got, such that their selection of the air, water, and food that individuals get uniquely determined the reproduction rate then reproduction would not be endogenous. Lets make it more explicit in our example.
Women create babies. But baby making is not an endogenous system. In order to make a baby they need sperm. Even if they can decide when to have children (by finding sperm) and even if their decision to have a baby lead directly to finding the sperm, it would not be the case that the decision to have children created sperm. If there was a regulatory authority which could control how much total sperm was available and such a limit was binding then the total number of babies, being limited by the total amount of sperm, would not be endogenous. But rather it would be uniquely determined by the sperm authorities regardless of the fact that women create children and regardless of the fact that the individual women choose to have children and regardless of the fact that the choice of the individual women to have children is what acquired them the requiste sperm
In this case the regulatory authority can, and does, control the money supply in such a way that banks, despite "actually creating the money" just like women "actually create the babies" are limited by the total amount of reserves available.
As an exercise i went and examined the quote in question. Greenspan isn't saying what you think he is saying.
http://pages.stern.nyu.edu/~nroubini/articles/FedPolicyDilemmaOpEdRosettWSJ1297.htm
What he is saying is that "we aren't using a specific policy rule to handle the money supply". This is a far far far far far cry from "we can't control the money supply". Indeed Greenspans talks on this are precisely what the Fed should be saying if we expect the fed to be credible (that is, if we know it has a rule, we know what the outcome will be and so if that is different from its expressed target we believe the rule and not the target. This would actually set money supply more endogenous, because the aggregate of individual actors would be controlling it rather than the fed, and we don't want that to happen)