Some investors have used the Kalecki profits equation to break corporate profits into its fundamental macroeconomic elements, specifically:
Profits = Investment – Household Savings – Government Savings – Foreign Savings + Dividends
From this equation, investors can see that corporate profits have expanded to such a large share of GDP due to large government deficits. Therefore, if the government implemented a deficit reduction plan, corporate profits could suffer.Read it at PIMCO | Equity Focus
Newtonian Profits
by Neel Kashari
(h/t Scott Fullwiler via Twitter)
Scott tweets: "PIMCO does the Kalecki profits equation, precursor to Godley sector balances."
7 comments:
Send this to Larry Kudlow!
Hit him with it next time he has you on.
Tom you needed to continue the quote:
"From this equation, investors can see that corporate profits have expanded to such a large share of GDP due to large government deficits. Therefore, if the government implemented a deficit reduction plan, corporate profits could suffer.
Let’s explore this scenario in more detail. We know that Washington D.C. is currently dysfunctional and that large deficit spending is ultimately unsustainable."
Is NK making the point that deficits are unsustainable because we have morons who think they are "unsustainable"?
Or is NK a moron in this regard also?
hard to tell... Resp
Matt,
You use "moron" so much, it's starting to sound endearing. Back when I was in college, we used "knucklehead" so much it actually became a compliment. Kind of like "sick" and "filthy" have become. Anyway, just an observation. Love this website and all you guys do to promote the realities of our monetary system.
Moron, followed by Resp.
it's starting to sound endearing
Yes, it's like he's calling them muggles because they don't know about the wizarding world of fiat magic.
I dont know how else to put it, I'm sorry. And really I'm sorry for them. These are otherwise intelligent people.
I've been watching this for years now, witnessed folks like Mike point out things to them in the different media, heard accounts of personal meetings between Warren Mosler and high profile individuals and they just cant get it.
You have to put a clock on things.
For instance I read the book "Bankruptcy 1995" in 1992, honestly it concerned me.
But then 1995 came and no BK, we went on to run surpluses soon after. So these types of events will be a tip-off to any truly non-moron person. I started to look into it and found MMT.
"Who's going to buy them now?" tweet and then bonds rally like 25%.... now here they are beating the same drum more or less.
How else can you explain it?
'Doublethink' ?
http://en.wikipedia.org/wiki/Doublethink
That concept is from a fiction novel.
This is from the non-fiction (to me anyway):
"there are not many wise according to the flesh; not many powerful, not many noble,
27 but the stupidity of the world God chooses, that He may be disgracing the wise , and the weakness of the world God chooses, that He may be disgracing the strong," 1 Cor 1:26
Hence as we (who are in truth) can see these morons are indeed a disgrace!
Resp,
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