tag:blogger.com,1999:blog-2761684730989137546.post5516479092384699152..comments2024-03-29T02:19:19.866-04:00Comments on Mike Norman Economics: Ingrid Harvold Kvangraven — 200 Years of Ricardian Trade Theory: How Is This Still A Thing?mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-2761684730989137546.post-3028557468482960072017-04-25T03:47:20.664-04:002017-04-25T03:47:20.664-04:00The best way to do that, using Germany / Greece as...<i>The best way to do that, using Germany / Greece as an example, would not be to push for ever more consumption in Germany or to relocate German business to Greece (what would then happen to German workers?), or to lower Greek wages.</i><br /><br />The best way, it seems to me, would be for Germany to buy Greek goods.MRWhttps://www.blogger.com/profile/13878920695841363553noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-14388205718613877912017-04-24T12:20:12.711-04:002017-04-24T12:20:12.711-04:00I think it's important to keep in mind that th...I think it's important to keep in mind that the system is fundamentally global and not inter-national. We see this in global portfolio diversification, the nature of transnational corporations, supply chains, and so on. <br /><br />This being the case, the entire subject of inter-national trade deficits strikes me as little more than a status-quo ideology serving to force workers into ever downward competition. It's immaterial to the diversified global oligarchy where production occurs for they get their profit regardless. <br /><br />Far better to completely ignore trade deficits and focus only on what's important - assuring widespread prosperity everywhere. The best way to do that, using Germany / Greece as an example, would not be to push for ever more consumption in Germany or to relocate German business to Greece (what would then happen to German workers?), or to lower Greek wages. It would be to create enough money for use in Greece to bring the Greek people up. Trade deficits aren't remotely the problem - it's the lack of agency on the part of the global population.<br /><br />Jim<br /><br /><br /> Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-29569940140458109252017-04-24T11:51:19.310-04:002017-04-24T11:51:19.310-04:00Well I dont think they "want" to hold th...Well I dont think they "want" to hold the assets Neil seems like that is just what they have to deal with to be a member institution... so they have to accept deposits and code them as liabilities on the right and reserve assets on the left... its their role as fiscal agents...<br /><br />Look at Deutchbank over in Germany, the German economy is firing on all cylinders and yet DB has had a very hard time of it their stock is in the toilet... they are probably drowning in reserves coming in from all over the EZ with that huge trade surplus at negative yield and are circling the toilet bowl... this does not look attractive from the POV of an investor at least...<br /><br />Matt Frankohttps://www.blogger.com/profile/11082502216984169113noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-14699010598728676552017-04-24T07:33:09.105-04:002017-04-24T07:33:09.105-04:00"they strive to maintain a fixed regulatory r..."they strive to maintain a fixed regulatory ratio... "<br /><br />Isn't that the problem. The regulation is based upon an idea of financial exchange that is just false. <br /><br />Change to the Mosler approach - where banks cannot hold foreign exchange as assets (since that is a loan to a foreign entity and is banned), but have access to liquidity overdrafts as long as they stay solvent. NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-20457360796848136582017-04-24T07:30:31.272-04:002017-04-24T07:30:31.272-04:00"Why wouldn't exporters based in the US j..."Why wouldn't exporters based in the US just invoice in USD and let the foreign importers figure out how to get the $"<br /><br />(i) Invoicing in local currency gets you the trade ahead of those that don't. Remember you're competing with the rest of the world.<br />(ii) If you invoice in your own currency, you're not the functional entity at the currency area edge. The functional entity at the currency area edge is the one that does the currency swap and stands the currency exchange risk - wherever they are physically located. <br /><br />Forget about national borders. That's not always where the currency area edge is. <br /><br />NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-14747969693067037602017-04-24T06:56:04.965-04:002017-04-24T06:56:04.965-04:00Free trade is still a thing because it benefits th...Free trade is still a thing because it benefits the financial interest that control the universities, the media and the government - better known as the deep state. GLHhttps://www.blogger.com/profile/02791463748430739099noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-49248295901122506682017-04-23T20:38:07.161-04:002017-04-23T20:38:07.161-04:00Well if you set he exchange rate at 1:1 and have t...Well if you set he exchange rate at 1:1 and have the CB redeem at that ratio, it doesn't become barter but rather a gratuity between nations....might be a better system than present....<br /><br />Laborers will labor as long as they are paid well so the needed stuff will surely get produced... <br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-15886683557042370572017-04-23T19:18:29.627-04:002017-04-23T19:18:29.627-04:00The classical economists realized that money is a ...The classical economists realized that money is a convenience for overcoming the issue of double coincidence of wants that inhibits barter exchange. They and the neoclassicals assumed that this was all there was to it. So they concluded that money is neutral in the long run.<br /><br />Marx and Keynes demurred, observing that money is itself a good that is wanted for itself. Hence money is not the "hot potato" that Say's law assumes. Saving money and financial assets (banking and finance) affect that the economic cycle of production-distribuiton and consumption through demand leakage, for example.<br /><br />Similarly with monetarism. Trade was conducted with the objective of accumulating gold and silver, which were used for military expenditure to acquire and project power. <br /><br />Marxists also observed that financial wealth is also integral to class structure and class power.<br /><br />Marxists tried to avoid these issues by abolishing private ownership of the means of production and monetary exchange, eliminating finance, but it didn't go so well. <br /><br />Ideally, exchange would be essentially barter, but there is little prospect of getting away from a monetary production economy and the attendant significance of money, banking, finance and financial assets socially, politically and economically. <br /><br />How to deal with this optimally is the underlying question. We are a long way from figuring this out.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24684668566531844002017-04-23T18:57:02.546-04:002017-04-23T18:57:02.546-04:00I'm not recommending it... I'm just pointi...I'm not recommending it... I'm just pointing out what would happen...<br /><br />I'd probably recommend fixed exchange at 1:1 so real terms would also soon also equalize then the decision to export or not would become less financial and more based on the real relationship between the nations... get the munnie zombies out of it....Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-43822147505987944412017-04-23T18:39:28.445-04:002017-04-23T18:39:28.445-04:001. Setting a fixed rate of exchange sounds like a ...1. Setting a fixed rate of exchange sounds like a gold standard without the gold.<br /><br />2. So here there are two fixed rates. The first is the peg that China adopts and the second is the fixed rate that the Fed sets for currency exchange.<br /><br />Hmm.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-5681891342978007822017-04-23T18:32:21.445-04:002017-04-23T18:32:21.445-04:00They would invoice in the yuan in order to get the...They would invoice in the yuan in order to get the sale easier... you never want to make it hard for your customers to do business with you... so you work with them in their own currency over there knowing when you got back your own CB would change you out into USDs at a fixed exchange rate....<br /><br />If the CB delegates that function to fiscal agents then those agents will have to exchange at varying rates as they have fixed capital (effectively) as compared to often high volatility asset prices between which they strive to maintain a fixed regulatory ratio... <br /><br />So if the external deficit nation fiscal agent takes a hit in some other asset category (say loans) , they have to acquire deficit nation reserve assets so they offer MORE surplus nation reserves per unit deficit nation reserves (increase their bid for deficit nation currency) which decreases the exchange value of the surplus nations currency.... vice versa, etc...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-32892940303280210812017-04-23T18:12:26.157-04:002017-04-23T18:12:26.157-04:00Why wouldn't exporters based in the US just in...Why wouldn't exporters based in the US just invoice in USD and let the foreign importers figure out how to get the $.<br /><br />A BOP issue arises with US FDI in China where US firms operating in China operate in yuan. And the only issue is if they decide to repatriate their RMB earnings and want to get USD for them. Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-16234761756744118272017-04-23T18:04:35.129-04:002017-04-23T18:04:35.129-04:00Well if when US exporters came back to the US with...Well if when US exporters came back to the US with CNY balances and the US Fed would agree to exchange the CNY balances obtained by US exporters for USD at 6 USD : 1 CNY for as much as the exporters would show up with then we would soon have balanced trade ...<br /><br />Fed would just have to accrue CNY as foreign reserves... US real terms of trade would be reduced from current though....Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.com