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.
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Tuesday, July 24, 2012
Bill Mitchell — Another macroeconomist who is blind
Bill explains the different varieties of "Keynesianism," and how many of their proponents don't understand modern monetary operations.
Bill nails it as usual... and indeed they are blind. Here's the guys name "Blind-er" it's a tip-off... he's blind and he's blinding other people.
now over to Krugman from the other day:
"To be fair, in IS-LM type models that don’t include balance sheet effects and also assume that we’re not in the liquidity trap, it is the case that the level of employment is determined by M/w — the ratio of the money supply to the wage rate. So in such models you could say that other things equal a wage cut would be expansionary. But even then it’s far easier to just increase M."
So we have had exponential increases in measures of M, w has stayed constant, but employment has collapsed.
What gives??????
Looks like he thinks we are experiencing "balance sheet effects" (as if an ex post accounting PICTURE can effect reality: which is voodoo...), and are in a "liquidity trap" , what does this even mean? What is trapped? and therefore the ratio of M/w is not somehow "operative" on the US employment levels for people who have been thrown out of their jobs as these jobs have been transferred by mercantilists to locations external to the US..... , again, as if an ex post accounting picture (M/w) can effect reality going forward in time....
These people at core, consistently make statements that indicate that they believe ex post data, when published, can actually effect real outcomes going forward in time based on the numbers themselves: "just increase M" whaaaaat????
Do they realize that this is what they are doing? Looks like they are indeed BLIND to this.
If pushing on a string doesn't work we could try standing it on it's end. Just fray it a bit to give it a base and it's sure to stand there, just like Columbus's egg.
Bill nails it as usual... and indeed they are blind. Here's the guys name "Blind-er" it's a tip-off... he's blind and he's blinding other people.
ReplyDeletenow over to Krugman from the other day:
"To be fair, in IS-LM type models that don’t include balance sheet effects and also assume that we’re not in the liquidity trap, it is the case that the level of employment is determined by M/w — the ratio of the money supply to the wage rate. So in such models you could say that other things equal a wage cut would be expansionary. But even then it’s far easier to just increase M."
http://krugman.blogs.nytimes.com/2012/07/22/sticky-wages-and-the-macro-story/
So we have had exponential increases in measures of M, w has stayed constant, but employment has collapsed.
What gives??????
Looks like he thinks we are experiencing "balance sheet effects" (as if an ex post accounting PICTURE can effect reality: which is voodoo...), and are in a "liquidity trap" , what does this even mean? What is trapped? and therefore the ratio of M/w is not somehow "operative" on the US employment levels for people who have been thrown out of their jobs as these jobs have been transferred by mercantilists to locations external to the US..... , again, as if an ex post accounting picture (M/w) can effect reality going forward in time....
These people at core, consistently make statements that indicate that they believe ex post data, when published, can actually effect real outcomes going forward in time based on the numbers themselves: "just increase M" whaaaaat????
Do they realize that this is what they are doing? Looks like they are indeed BLIND to this.
This is irrational behavior at best.
rsp,
Title of post had me for a second.
ReplyDeleteIf pushing on a string doesn't work we could try standing it on it's end. Just fray it a bit to give it a base and it's sure to stand there, just like Columbus's egg.
ReplyDelete