Here is an interesting excerpt:
Others say we have no special device for representing numbers in the brain and that far from being an independent ability or instinct, our number sense flows from general intelligence and reasoning, or spatial awareness, or linguistic abilities - or some combination of all three. So why is Butterworth convinced this is wrong?
Meeting and studying people who lacked the normal version of the sense was a big factor, he says -
He should meet many of those hardcases that remain out of the MMT paradigm then.
Those who remain out of the MMT paradigm after being introduced to MMT, I believe suffer from some form of a Mathematical Cognition deficiency. The interview at the link above with Butterworth talks about some extreme forms of deficiency, and I do not believe that those that remain adverse to MMT possess such extreme deficiencies. But their cognitive deficiencies are perhaps still very important to recognize as many of these people occupy high level policy making positions.
This subject accounts for much of the non-acceptance of MMT throughout economic orthodoxy imo.
28 comments:
Brain doesn't need any math to look at the chicanery in Europe -
the whole economic mess can be cleaned up with MMT and they know it.
they only dragged their feet as a smoke screen for the day ( today actually ) when Sarkozy and Cameron waltz on to Libya's tarmac and celebrate the new (un)empire.
Goog, They are all Lawyer types; high verbal, low math... Resp
Like every other non-Austrian, you guys just do not understand the essential concept of economic calculation or the concept of the equilibrium price structure that does not yet exist.
Hayek:
“The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept. The point I want to make is that this equilibrium structure of prices is something which we cannot know beforehand because the only way to discover it is to give the market free play; by definition, therefore, the divergence of actual prices from the equilibrium structure is something that can never be statistically measured.
****
In contrast, the modern fashion demands that a theoretical assertion which cannot be statistically tested must not be taken seriously and has to be discarded. As a result of this belief, a theory which, in my opinion, is the true explanation has been discarded as not adequately confirmed, and a false theory has been generally accepted merely because it happens to be the only one for which statistical evidence, even though very inadequate evidence, is available.”
All that your funny money dilution regime can accomplish is theft of purchasing power from those holding the existing money for the benefit of the financial elites and a fatal distortion of the price, investment and capital structures resulting from the impairment of economic calculation by the funny money.
Innteresting from the interview: "Brian Butterworth: That's absolutely true. It's not regarded as a great national problem that we're not very musical. But actually not being able to multiply 8 x 7, which our current First Secretary of the Treasury was unable to do in public, isn't regarded as a great social problem, whereas saying "we was" instead of saying "we were" still is regarded as a great social problem."
Our own Tim Geithner was not able to handle the IRS Form 1040...
Bob,
It is evident that you for sure can handle the maths related to "dilution".
Resp,
Goog,
They cannot see the systemic mathematical solution, so they are resorting to 'dividing the spoils' / 'fixed sum' type of political approach... like Bob here they can handle 'dilution' ie 'mass per unit volume' but that is as far as they can go with it....
Economics is the study of human action and human exchange. Each party exchanges one thing for another that one appears to value more. The resulting price provides information to others about what types of goods and services are desired by others in the market. There is nothing mathematical about the process because each person’s desires are purely subjective and ever changing. Human beings are not molecules or projectiles subject to formulae because there are no constants.
I’m sure Murray Rothbard with his math degree from Columbia could “do the math”.
http://mises.org/daily/3638
MMT is garbage because it ignores human exchange, aka “Catallactics”.
http://mises.org/books/Theory_Money_Credit/Part1_Ch4.aspx
I think we need to slow down a bit. We are already at the stage when we brand anybody who doesn't get MMT "mentally defficient" :)
Wray at economonitor has an article stating that those who don't get that the US cannot go bankrupt are brainwashed.
No wonder they say "MMT types" are annoying. :)
I say we better focus on spreading the word and explaining stuff. The moment is good: the Euro is collapsing and austerity doesn't work its magic in Europe. We can explain why.
It's not their fault. It's almost groupthink. When you try to understand a concept that is so simple while trying to disregard all the nonsense that has rammed into your mind it's difficult. Once I saw the accounting of it all it all made sense. Maybe theres something to that. I was reading abba lerner on moslers mandatory readings and i recall lerner saying that the money left over after taxes was enough to buy all the goods and services the economy could produce.
would this not be how prices are determined and not by the market.
MMTers understand and can easily control inflation, right?
In 1980, two years before he died, Abba Ptachya Lerner (1903-1982) was dabbling in the following ghastly Rube Goldberg price control system according to this article by David Colander, a co-author of a 1980 book with Lerner:
Lerner found the implications of sellers’ inflation so important that, beginning in the 1960s, he changed his research program to center on finding cures for sellers’ inflation. Initially he toyed with various administrative wage and price control policies, but he found those lacking and soon gave them up. He replaced them, first, with a tax based incomes policy and ultimately, a market based[??!!!] incomes policy in which property rights in prices are set and individuals have to buy the right to change prices from others who change their price in the opposite direction. It was this idea that formed the basis of our market [???!!!!] anti inflation (MAP) book. (Lerner and Colander 1980) Under MAP, rights in value added prices would be tradable so that any firm wanting to change its nominal price would have to make a trade with another firm that wanted to change its nominal price in the opposite direction. Thus, by law, the average price level would be constant but relative prices would be free to change [@page 12]
http://tinyurl.com/4rfk3jk
So, we now know enough about MMT to know that Abba Lerner wrote a book in 1980 proposing a ghastly and barbaric Rube Goldberg system where one would be precluded from raising (setting) one’s one prices without trading the right to do so with somebody else under penalty of statist law. But I thought the MMTers could cure inflation just by changing the tax code. Hmmm.
AE is bonkers because it ignores science and worships dead gods instead. It is a religion.
AE is bonkers because it ignores science and worships dead gods instead. It is a religion.
The detail and substance of your refutation is truly breathtaking.
Truly.
Bob,
Edward Harrison at Credit Writedowns is an Austrian AND he understands MMT. The two are not mutually exclusive as far as being able to understand them.
The fact is that we are under a free-floating non-convertable currency system, and MMT explains how that operates. If we were under a gold/metallic system, I'm sure that the Mises folks would have a lot of insight into that type of system, but again, we are not operating that way now....
Ron, I never said anyONE was 'deficient'; rather that folks who cannot understand MMT have a bit of a problem (deficienCY) with certain aspects of Mathematical Cognition.... we all have our limitations, for instance mine is in the verbal area (I find it hard to produce written communications) but I am not going around saying that Shakespeare had it all wrong....
Resp,
Bob Roddis,
It's not hard to understand human action and free markets. But AE is not perfect. Some agents are taken advantage of and some agents abuse others in a free market. Buyer beware and all that. Boom and bust cycles are fine and dandy and work themselves out. The fly in the ointment is politics. People tend to get a little hostile during the bust cycles. Various attempts at evening out the cycle to reduce the discomfort of those affected by the bust have been tried throughout the centuries. So far political powers that be have not quite figured out how to do this.
MMT does nothing more than explain how our current monetary system works. It requires some math aptitude to understand sectoral balances. If you are willing to admit that we are no longer on the gold standard, MMT should be comprehendible.
AE seems to be hypersensitive about inflation but almost numb when it comes to unemployment. So far in modern history, not every human has been able to be self sufficient at the same time as all the others. AE seems to be adverse to helping others less fortunate than themselves. I do agree that charity goes a long way in this regard, but unfortunately, it's never enough. With our current system of fiat money, government can help in regard. MMT can guide politicians to properly use it's spending power for public purpose, while at the same time being against cronyism and waste.
Just my two cents.
Hi Matt
Your past posts have easily helped to drive down the "gold standard mentality" further.
MMT is about how to create and uncreate "heat", "liquidity", and or credited monies in a manageable way and to accept deficits as part of the spiel.
IF you are on a gold standard, then you can get rid of deficits and the means by which you do this is to plunder lower economies and to create war.
So the harkening of going back to a gold standard is a pining for undoing the civil rights movement, creating war to "get" the deficit undone, and to hid the workings of wall street and mega global corps.
Therefore, MMT exposes the sham of libertarianism with the highest transparency.
Ergo, Ron Paul is not ANTI WAR since he is Gold Standard OLD HAT.
His wanting of a gold standard would lead to more war over commodities such as seen by the false groping towards commodities currently seen in their respective markets. We know from MMT that at the core there is no need to run to gold either in it's self curtailed ETF or by revamping the entire system to be based on certain dollars to certain pounds of gold in stock.
Redoing the sheets to provide more circulation and flow of heat/money/liquidity is a much better approach than balancing and elliminating shortfalls.
I posit further to Mike Norman's analysis of Clinton's balancing of the budget not only created the recession, but also led to the wars that followed since if America were in a good economic state, then maybe we would have thought twice about squandering a good economy for a war economy.
Ron Paul's gold standard cry is a rally for future wars.
Gold CAUSING war? Sorry. The financial elite created the Fed in 1913 to fund wars so that the rabble would not see the cause or source of their loss of wealth. Wars could not be prosecuted without raising taxes in the present-time absent fiat money. Fiat money is the major funding source of war, slaughter and plunder.
http://mises.org/daily/2543
The whole point of fiat money is to allow the financial elite to rob the masses of purchasing power without them knowing what hit them. You MMTers make that clear with everything you write.
THE GOVERNMENT IS UNCONSTRAINED!!! No shit, Sherlock.
Bob,
"Fiat money is the major funding source of war, slaughter and plunder."
It can be.... Resp,
Rob
The whole point of fiat money is to allow the financial elite to rob the masses of purchasing power without them knowing what hit them.
One question for you: what is the correlation between deficits and inflation? More or less?
One question for you: what is the correlation between deficits and inflation? More or less?
I'm not sure there is a necessary correlation. If the debt is paid by foregoing current consumption, there's probably no price inflation. If the debt is paid with diluted funny money in lieu of real assets, there will probably be price inflation.
The fundamental problem with funny money is that it impairs economic calculation, and thus distorts the price, investment and capital structure.
Since there are no human beings in the alternative universe of MMT, such a statement is apparently incomprehensible.
"Since there are no human beings in the alternative universe of MMT, such a statement is apparently incomprehensible."
I think human activity has something to do with the flows between the National Accounts…
Bob,
What is comprehensible is that you don't want to engage on the level of talking numbers. You can use the words "humans" and "action" all you want, but if you don't want to commit to numerical predictions you are just a con artist. If by adding "humans" to your economy everything becomes so much clearer, it should be a piece of cake for you to make precise predictions, right?
Btw, you don't understand what a deficit is. The moment the govt has a deficit no debt is "paid".
Instead of numbers, you pefer emotive words, like "funny money", "dilution", "garbage".
You are just confused and prefer to stay that way. Enjoy.
THe whole point of fiat money is to facilatate trade and to transfer resosurces to the private sector. I can infer from comments that some here beleive in the quantity theory of money. Yes, if the economy was at full steam and they government spent more money inflation would result and the first users would benefit. But when has this happened in recent history? Inflation is not a problem right now nor is it likely to in th near future. Our problem lies with the people controlling the system. They are intentionally creating unemployment which drives wages down. The money they keep stops us from buying the goods and services we produce. This forces us into debt to keep up demand. Has nothing to do with inflation. Forgoing consumption just inflates the demand leakage creating yet more unemployment. Classic fallacy of composition.
Bob:MMT is garbage because it ignores human exchange, aka “Catallactics" No, MMT is quite catallactic, to use a silly Big Word. Anyone who actually reads Mises on Knapp - rather than memorize it as holy scripture - understands that Mises had no idea then at all of what Knapp was saying.
However, thanks for the latest chapter you have given. Mises is closer, but still fails to understand the basic idea of Chartalism. But money only becomes a medium of payment by virtue of being a medium of exchange. Exactly wrong, exactly backwards, as in many places, the exact reverse of the historical sequence, as is much of Mises history here.
MMT-guided policy wonks would question the need for the violent state intervention into the market that a gold standard in modern times would represent.
There is nothing mathematical about "the process"? Economics, accounting incorporates the mathematical theory of addition & subtraction, and even in fairly recent historical times has made major contributions to this theory.
Rodney Rondeau Jr.: The point of money is to facilitate trade (& production) & transfer resources to the public, not private sector.
Too tired to continue rambling.
Transfer goods and services to the public sector. Typo.
Translate
"I won't have sex with you until you kill that sabertooth tiger"
into a math problem.
OK I will translate that :
F = (u)N
S = eX
F = S
where u is mu, N the normal, e 2.71, X variable. The angle of the dangle is proportional to the mass of the ....
That is an interesting constraint to MMT by AE : set a boundary condition on MMT that it shall not be used for military and to AE by MMT such that AE will not be so assinely rascist.
Bob,
Translate
"I won't have sex with you until you kill that sabertooth tiger"
into a math problem.
Sorry buddy, inflation and deficits are already translated for you into a math problem and still you failed. Try again.
Translate
"I won't have sex with you until you kill that sabertooth tiger"
into a math problem.
I asked my math pal, Right Said Fred Flintstone. Translated back into English, it becomes:
"I'm too sexy for my sabertooth tiger." Oh, well.
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