An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
The efficacy of OPEC certainly increased for one... and the capability of the logistics industry were increased largely due to the increases in information technology since then..
His statement here: "The important cause of the first asymmetry is that while commodity prices are demand-determined" is false in the case of oil when OPEC finds themselves in the sweet spot...
And here: "any sudden shift in the distribution of world income, caused by a change in the terms of trade, is likely to have an adverse effect on industrial demand (in real terms)."
No acknowledgement of floating exchange rates... today we have exchange rates that govts often let "float" iow the govt does not intervene to directly set the exchange rate (China a current exception to this...)
This excerpt from Kaldor in 1976 is as typical very gold standard oriented...
I sympathize with the sentiment that any dramatic price change in commodities is bad, whether the change is up or down.
"Stability" is a good thing for the economy, it encourages investment and risk taking.
Instability makes people behave cautiously, to wait and see. Instability invariably causes some investments to fail (i.e. the fracking bubble and tar sands bubble).
2 comments:
Well a lot has changed since 1976...
The efficacy of OPEC certainly increased for one... and the capability of the logistics industry were increased largely due to the increases in information technology since then..
His statement here: "The important cause of the first asymmetry is that while commodity prices are demand-determined" is false in the case of oil when OPEC finds themselves in the sweet spot...
And here: "any sudden shift in the distribution of world income, caused by a change in the terms of trade, is likely to have an adverse effect on industrial demand (in real terms)."
No acknowledgement of floating exchange rates... today we have exchange rates that govts often let "float" iow the govt does not intervene to directly set the exchange rate (China a current exception to this...)
This excerpt from Kaldor in 1976 is as typical very gold standard oriented...
I sympathize with the sentiment that any dramatic price change in commodities is bad, whether the change is up or down.
"Stability" is a good thing for the economy, it encourages investment and risk taking.
Instability makes people behave cautiously, to wait and see. Instability invariably causes some investments to fail (i.e. the fracking bubble and tar sands bubble).
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