tag:blogger.com,1999:blog-2761684730989137546.post1433582221691100220..comments2024-03-28T07:50:06.102-04:00Comments on Mike Norman Economics: The Depression Blues, sung by Randy Wraymike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-2761684730989137546.post-5789787176091860002011-04-08T01:47:35.928-04:002011-04-08T01:47:35.928-04:00There's a longer version of Wray's article...There's a longer version of Wray's article at Benzinga: http://www.benzinga.com/life/politics/11/04/987515/budgetary-impasse-is-there-an-alternative-to-hoovernomicsCalgacushttps://www.blogger.com/profile/06031818010224747000noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-26956392412350362202011-04-07T13:20:23.093-04:002011-04-07T13:20:23.093-04:00I think "crowding out" is essentially an...I think "crowding out" is essentially an interest rate argument. The thinking goes that government competing with the private sector to borrow raises interest rates, which makes investment more expensive, thereby reducing "I".<br /><br />Of course, that is not happening now, so they explain this by government "printing money" to monetize the debt, which will lead to inflation and very high rates down the line. Why is there not more investment now wit low rates? The Ricardian argument that companies are saving to pay the taxes needed to pay down the government debt that is being accumulated now.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-46918991425751601482011-04-07T07:17:25.598-04:002011-04-07T07:17:25.598-04:00Tom,
do you think this is where they get their &#...Tom,<br /><br />do you think this is where they get their 'crowding out' ideas?<br /><br />ie a deficit 'crowds out' or results in lower levels of 'I' cet par? As the term (T-G) goes negative..<br /><br />So this may be what these people are currently thinking:<br /><br />Moron 1: "We need more 'I'!"<br /><br />Moron 2: "But we already are running a trade deficit of 5% of GDP, and people are saving..what can be the problem?"<br /><br />Moron 1: "I got it! It must be the fiscal balance then!"<br /><br />Moron 2: "Yes that's it. The fiscal balance! Here's what we have to do then, let's cut government spending and increase taxes!"<br /><br />Moron 1: "Brilliant!"<br /><br />LOL!Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-51441199523511158742011-04-06T23:41:37.235-04:002011-04-06T23:41:37.235-04:00"I" is tricky. It includes capital expen..."I" is tricky. It includes capital expenditure and inventory. They are erroneously presuming that "I" is always capital expenditure and <i>planned</i> inventory. It isn't.<br /><br />This equation represents flow over a period. In that period, it could mean mounting unplanned inventory as saving increases. If there is budget surplus and net exports don't offset, then a lot of "I" is going to be inventory buildup. This portends a contraction in the next period.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-55399460817198610942011-04-06T23:14:23.187-04:002011-04-06T23:14:23.187-04:00Love this. Their precious "I."
Beautifu...Love this. Their precious "I."<br /><br />Beautiful.mike normanhttps://www.blogger.com/profile/03296006882513340747noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-48913530955400426982011-04-06T22:58:07.465-04:002011-04-06T22:58:07.465-04:00Tom
It looks like these depraved people focus on &...Tom<br />It looks like these depraved people focus on "private investment" above all economic outcomes. Employment is not on their radar screen.<br /><br /><a href="http://assets.opencrs.com/rpts/RL31235_20100202.pdf" rel="nofollow">Here </a> is a CRS report one of these types of folks pointed out in another blog Excerpt:<br /><br /><i>"In the long run, economic growth is determined primarily by three factors: growth in the labor force, the rate of technological advance, and the amount of capital available to the workforce. Of the three, the last one may be the most susceptible to the influence of policymakers. The larger the capital stock, the more productive the labor force tends to be. <br />Although it may be possible for fiscal policy to have an effect on the rate of technological <br />progress in the way public money is spent, it probably has a much larger effect on growth through its influence on the size of the domestic stock of capital and the amount of capital available to each worker in the labor force. How this comes about can be illustrated by a brief introduction to economic accounting. <br />The total value of national output can be measured in two ways. Either the total value of the goods and services produced can be added up, or the total value of the incomes resulting from that production can be counted. These two accounts, at least in the abstract, add up to the same total. <br />The measure of total output based on the value of production is typically subdivided into several categories of demand. Specifically, it is calculated as the sum of consumption spending (C) investment (I), government spending (G) and the difference between exports (X) and imports (M):<br /> <br />GDP = C + I + G + (X - M).<br /> <br />The alternative measure of total output is the sum of the various uses to which income is <br />allocated. On this side of the economic accounting ledger the value of national output is expressed as the sum of consumption (C), private sector saving (S) , and tax payments (T):<br /><br />GDP = C + S + T. <br /><br />Combining the two equations, and simplifying gives:<br /><br />I = S + (T - G) + (M - X). <br /><br />That is, total investment spending is equal to the sum of private saving (S), the government <br />budget surplus (T - G, which, if it is negative, is a deficit), and the difference between imports and <br />exports of goods and services (M - X). The last equation is an identity. In other words, investment is by definition equal to the sum of private saving, the budget surplus, and net capital inflows from abroad. Other things being equal, a reduction in public sector saving means less investment <br />and slower growth in the capital stock."</i><br /><br />You can see how the big equation they go for is I = blah, blah...to them "I" is the big thing to go for in policy. INVESTMENT not employment.<br /><br />But look at their equation for 'I'. To have high 'I', you could have a balanced budget (T-G)=0; high net imports (M-X)>>0, and high savings S>>0. This may result in high 'I', but millions of unemployed!<br /><br />AND, if the Govt runs a deficit, ie (T-G)>>0 then this is seen as reducing their precious 'I'. It seems to me the way these morons look at it, high govt SURPLUSES will increase investment. <br /><br />This equation that they glorify and how they seek to position it is the mathematical definition of SERFDOM.Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.com