tag:blogger.com,1999:blog-2761684730989137546.post1784269650718754775..comments2024-03-29T02:19:19.866-04:00Comments on Mike Norman Economics: Recent Krugman Out of Paradigm Tidbitsmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger37125tag:blogger.com,1999:blog-2761684730989137546.post-4338166649439295812013-04-29T13:46:12.615-04:002013-04-29T13:46:12.615-04:00right Tom,
and i would add that "G-T" i...right Tom,<br /><br />and i would add that "G-T" is ex post like this too, and "GDP" ... so I dont know if these are the best financial metrics to look at to figure out what govt is doing... or what is really going on in the economy for that matter....<br /><br />Rsp,<br /><br /><br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-66792602812681381572013-04-29T11:09:18.296-04:002013-04-29T11:09:18.296-04:00Right, they seem to think that the spreadsheet is ...Right, they seem to think that the spreadsheet is in charge ex ante instead of being an ex post record.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-34029294612896279342013-04-29T10:35:25.003-04:002013-04-29T10:35:25.003-04:00A fiat currency issuer must pay it's fiat in t...A fiat currency issuer must pay it's fiat in the long run? WTF?<br /><br />Literally translating, the "public" must pay it's "public initiative" back some day?<br /><br />Krugman's not only semantically sloppy, he's plain out of paradigm, still looking at a human culture as a closed spreadsheet - instead of as the entity that constantly creates and enlarges spreadsheets.Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-38814502163145961162013-04-29T07:20:45.619-04:002013-04-29T07:20:45.619-04:00Now that Matt has made the case I'm going to r...Now that Matt has made the case I'm going to revise and extend my previous remarks...<br /><br />The government does...literally...create wealth...financial wealth.<br /><br />Workers and businesses in turn create real wealth and commerce in the pursuit of that financial wealth.<br /><br />The U.S. is a hybrid system of socialism and capitalism...it relies on the preferences of the public to make some of the decisions about how resources are allocated but the government funds all activity, public or private.<br /><br />The MOU want to make ALL of those decisions while using the people's money...I wonder which group will end up on the short end?paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-61906268046081390352013-04-28T20:26:36.941-04:002013-04-28T20:26:36.941-04:00d,
I think state currency systems (we have found ...d,<br /><br />I think state currency systems (we have found a quote from Aristotle on what the Greeks termed 'nomisma') re-published this here:<br /><br />http://mikenormaneconomics.blogspot.com/2012/08/aristotle-on-nomisma.html<br /><br />Aristotle termed it a "device" or what we may call a "tool" today...<br /><br /> this "device" had to have been developed for the purpose of 'calibrating' or being made able to quantify the economic performance of their "Public Enterprise" or other provisioning systems in their society...<br /><br />A 'device' similar to "weights and measures" but in this case to facilitate the true sciences of financial accounting and MICRO-economic analysis.<br /><br />So right govt cant 'create wealth' or "real wealth" but one important thing we (humans) are trying to do with this 'device' termed 'nomisma' by the Greeks is operate the system, under law, so that we can do valid quantitative analysis of our economy and gauge economic performance...<br /><br />Looks like we went off this system and under metals for quite a while, opposite of what Aristotle asserts here... but now somehow we find ourselves back on it after almost 2,000 years at the end of the 20th century... dont ask me how but we find ourselves there again...<br /><br />So these 'austerians' and the academe of economics are still stuck in what Warren describes as "the gold standard mentality" where they are not able to see that we have been able to get back to this 'nomisma' system again and all the potential good opportunities ("policy space") this opens up for us...<br /><br />As to your point, now the only constraints are the real ones again not financial... this should be "good news" for everybody... but many remain blind to what is really going on...<br /><br />rsp,<br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-19475130058235991592013-04-28T20:12:20.988-04:002013-04-28T20:12:20.988-04:00"the libertarian types say "government c..."the libertarian types say "government can't create wealth, people and business does".<br /><br />Yes and I agree as far as that goes...people and businesses are competing for the dollars spent into the system by the government. The cream rises normally although many actors are able to game the outcome.<br /><br />We would expect the best ideas to "win" so in this respect "the market" is responsible for the outcome.<br /><br />What I'm saying is that this dynamic won't take place at the necessary scale if the government doesn't provide the capital by purchasing a significant level of output.<br /><br />The John Galts of the world would be shocked to learn that their vacuum could easily be filled by a nearly limitless number of willing entrepreneurs if they choose to sit it out because we don't deserve their abilities.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-61364162812787706072013-04-28T19:51:02.395-04:002013-04-28T19:51:02.395-04:00Paul,
the libertarian types say "government c...Paul,<br />the libertarian types say "government can't create wealth, people and business does".<br /><br />With a few qualifiers, let's concede they are mostly or partly right.<br /><br />Technical innovation has in some cases come from an individual "genius" inventor, but usually a team of researchers and developers.<br /><br />These are often working for Govt directly or on Govt contracts.<br /><br />Rarely is this a "mad scientist" in his basement laboratory ... or Steve Jobs in his garage. Steve Jobs was improving and applying technology that was previously created by/for the military and the census program, and by LARGE corporations like Xerox, presumably with a slice of the Pentagon budget.<br /><br />That's one definition of wealth, the kind that ideologues imagine in their stories.<br /><br />That's a separate issue from the monetary issues you guys are discussing, though they are inter-related.<br /><br />The monetary phenomenon is dependent on the tangible wealth to give the money a purpose and meaning. Money can only purchase stuff that's for sale. If stuff hasn't been invented, developed, produced, or grown, money can't buy it. You can't eat money.<br /><br />But without a functional monetary system, one that doesn't lead to cascading bankruptcies and kleptocracy-style wealth disparity, the system that produces and sells the tangible wealth doesn't function. Businesses fail as often from insufficient capital as lack of inventiveness and work.<br /><br />The "austerians" are TRYING to describe this symbiosis, in the most charitable explanation, assuming very sincere arguments, but they FAIL at doing so. Sincerity does not substitute for accuracy and clarity.<br /><br />A businessman should grasp this much, FACTS matter, unless his business is mostly applying marketing and "spin" to commodity products.<br /><br />I guess because they are familiar with the tangible wealth side of the story, the creativity and "noble businessman" story, and obsess about their own limited budgets and cash flow, but not how the macro-monetary story operates. They can hire accountants to manage their money flows or do their own figures, but Macro must be strongly counter-intuitive.<br /><br />I've talked to a few non-economists in business that seem to understand it quickly.dilbertgeghttps://www.blogger.com/profile/09789262821187351034noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-43723076209732544572013-04-28T19:48:23.319-04:002013-04-28T19:48:23.319-04:00This comment has been removed by the author.dilbertgeghttps://www.blogger.com/profile/09789262821187351034noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-35898624056448731222013-04-28T19:48:22.882-04:002013-04-28T19:48:22.882-04:00I thought I might add that Krugman is not ready to...I thought I might add that Krugman is not ready to give up his IS/LM binky. Chewituphttps://www.blogger.com/profile/05912166063718393059noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-74092257369209033392013-04-28T18:35:49.105-04:002013-04-28T18:35:49.105-04:00"a deflationary spiral"
In my view of t..."a deflationary spiral"<br /><br />In my view of the world this is the path of an ordinary entropic process. It isn't a shocking anomaly.<br /><br /> Those that think otherwise should demonstrate a self-sustaining process for us.<br /><br />Governments, one way or the other, have to actively push economies in the other direction via policy (towards activity) otherwise economies will always wind down. Stuff doesn't just happen.<br /><br />Neoclassical economics has managed to convince us the Sun orbits the earth.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-78691129945566027152013-04-28T18:09:00.120-04:002013-04-28T18:09:00.120-04:00[Paul: businesses don't "create jobs&quo...[Paul: businesses don't "create jobs"...they fish for the dollars the government spends and they need workers to do the fishing for them if the goal is to accumulate a lot of wealth. One can only do so much with his own hands.]<br /><br />What a socialistic viewpoint! ;)<br /><br />(Michael Parenti, non-economist socialist, replied to critics that his writings are radical because reality is radical.)<br /><br />YES. In an economy with a FIXED non-expanding volume of money (kinda like the EU), one company's surplus (profits) can only come from another company's deficit (loss), one person's positive net worth can only come from another person's negative net worth.<br /><br />This is the "freedom" of a deflationary spiral proposed by Austrian types who rage at an expanding money supply. Yes, in theory, if there's no cartels and no demand leakage, then family expenses ought to decline over time, or prices would remain stagnant as *some* items become more valuable ... like computer hard drives and memory.<br /><br />But for one, the entire economy is not the computer biz.<br /><br />Two, the COST IMPOSED ON SOCIETY by such a scheme is a continuous wave of bankruptcies and debt spiral as future earnings are NEVER big enough to cover past debt service and investments, regardless of tangible non-financial "wealth" improvements such as technological advances ... likely not happening, capital investment choked off.<br /><br />But at least we would have FREEDOM!!!<br /><br />None of that government stealing from us with the "printing press" and banksters stealing from us with "an inherently dishonest system" - F. Beard.<br /><br />Sarcasm is for debating with dumkopfs. I know you folks can explain this with much more accuracy.dilbertgeghttps://www.blogger.com/profile/09789262821187351034noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-81646943674270390332013-04-28T17:37:45.374-04:002013-04-28T17:37:45.374-04:00To make the system work the govt has to keep shove...To make the system work the govt has to keep shoveling currency into it to support saving desire, which then gets funneled up in an unending cycle unless govt institutes a progressive tax policy that recycles the input. Of course, govt doesn't need to get the taxes for funding purposes, or even to manage inflation in most cases. It's required to keep the system in balance so it doesn't become top-heavy and collapse politically of its own weight. Capitalism is not compatible with liberal democracy without a suitably progressive tax policy that keeps wealth in balance more or less.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-9349807147408215452013-04-28T16:58:44.630-04:002013-04-28T16:58:44.630-04:00"Plus, if a person is not working for money, ..."Plus, if a person is not working for money, then they are at leisure. This totally disregards all the unpaid work that transpires in the informal economy that is as significant as paid work or more significant that a whole lot of paid work occupied with trivia."<br /><br />Yes this informal economy (including illegal activity) seems to be taken for granted or waved away…let's give all the credit to the big boyz for making stuff happen.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-66524846082901395922013-04-28T16:53:10.008-04:002013-04-28T16:53:10.008-04:00"And if the govt would inject more $NFA, the ..."And if the govt would inject more $NFA, the S&Ps would just end up with more…"<br /><br />Which leads to why inequality has ballooned since we lowered tax rates on the richest cohort while leaving the rest of us more or less unchanged…<br /><br />(more) Progressive taxation tends to make the capitalist system more stable, because it reduces excess savings at the high end.<br /><br />These folks have so much excess wealth it makes it easy to buy influence and game the system. That and a million dollar investement returns 100 times that in gains through a lack of competition.<br /><br />Small business is a completely different story…no real political influence and the competition can be crushing.<br /><br />Small business is pretty much in the same boat as middle-class households…Hell, they are mainly middle-class households.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-16619237584454434722013-04-28T16:40:13.119-04:002013-04-28T16:40:13.119-04:00Paul,
Recent trend is that govt is injecting over...Paul,<br /><br />Recent trend is that govt is injecting over $350B per month ... which is over $4T annual...<br /><br />So the S&P earnings are about $1T annual now also about 50/50 foreign and domestic... now you have to really get into it for accuracy on the actual currencies used, but lets say S&P domestic earnings are 50% of this $1T total so that is $500B...<br /><br />So at the end of the year the S&P cohort is left with 500B after taxes or about 1/8th of total current US $NFA injection if they are to "make their domestic numbers".... this does not seem unreasonable...<br /><br />The S&Ps "go fishing" and end up with about 12 or 13% of the year's $NFA injection after taxes from domestic operations... doesnt seem unreasonable to see this happening... <br /><br />And if the govt would inject more $NFA, the S&Ps would just end up with more...<br /><br />rsp,Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-52769315333714170592013-04-28T16:15:01.030-04:002013-04-28T16:15:01.030-04:00Plus, if a person is not working for money, then t...Plus, if a person is not working for money, then they are at leisure. This totally disregards all the unpaid work that transpires in the informal economy that is as significant as paid work or more significant that a whole lot of paid work occupied with trivia.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-70207855144255503372013-04-28T15:51:03.765-04:002013-04-28T15:51:03.765-04:00"...does not include social security"
T..."...does not include social security"<br /><br />This is a big deal...40+ million people at an average of about $1500/mo. ==> around $700B plus per year.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-9457907376561860732013-04-28T15:04:35.718-04:002013-04-28T15:04:35.718-04:00JK,
The way I see the system, priming the pump is...JK,<br /><br />The way I see the system, priming the pump is pointless if the pump isn't in the water...government spending gives the economy...the "pump"...something to work with.<br /><br />Like a poker game...one can only win what's on the table or in the game. Savings (most of the money that has been created, either by government spending or private debt) isn't on the table, or at least it isn't available to win because the winners already hold it.<br /><br />Government spending recapitalizes the game. So imagine if the game is financed by private borrowing and the same group keeps winning...there is no chance of the losers to repay the debt...what happens to the bank?<br /><br />At least the way I see it businesses don't "create jobs"...they fish for the dollars the government spends and they need workers to do the fishing for them if the goal is to accumulate a lot of wealth. One can only do so much with his own hands.<br /><br />The government creates the demand that leads to jobs.<br /><br />At least that's how it worked before the economy became financialized. Now it seems capitalism is consuming itself and we should expect steadily declining demand from the 99%.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-753036754028716782013-04-28T14:48:52.589-04:002013-04-28T14:48:52.589-04:00jk,
Paul talks about "no perpetual motion ma...jk,<br /><br />Paul talks about "no perpetual motion machine"...<br /><br />There always exists what Paul has termed a "net liability cohort" (Ken Langone is NOT in this cohort) in the non-govt that has to be provisioned with positive flow of $NFA balances (ultimately from govt $NFA injection) or the system shuts down...<br /><br />rsp,Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-15505676095260960542013-04-28T14:35:58.053-04:002013-04-28T14:35:58.053-04:00Tom,
"Disregarding them is a methodological ...Tom,<br /><br />"Disregarding them is a methodological choice that I have argued is not representative of the facts and skews the data."<br /><br />FD: I'm operating in no small part under your teachings on this...<br /><br />rsp,Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-34799347232049069282013-04-28T14:28:01.753-04:002013-04-28T14:28:01.753-04:00d,
"but ultimately paints the same nightmare...d,<br /><br />"but ultimately paints the same nightmare scenario that austerity freaks are selling."<br /><br />Right Mike has blogged about this often... the "conservatives" just (by their "conservative" nature) just assert that this should be addressed sooner rather than later, "we can't put this off!", so Ks argument fails with them... <br /><br />While for us Ks assertions here are just mathematically false... as "govt has already PAID" ie there is no more "paying" required once the bill is PAID...<br /><br />Here:<br /><br />https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=13042500.pdf<br /><br />We can see that thru last Thursday, govt has PAID almost $44B to Medicare providers this month... ie THEY ARE PAID!<br /><br />There is NO MORE "PAYING" REQUIRED... earth to Krugman!<br /><br />rsp,Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-13324766724710679032013-04-28T14:21:44.086-04:002013-04-28T14:21:44.086-04:00Matt or Paul,
Paul said: "s Matt likes to sa...Matt or Paul,<br /><br />Paul said: "s Matt likes to say "priming the pump" analogies misunderstand the dynamic completely."<br /><br />Can either of you elaborate on this?<br /><br />thanks.JKhttps://www.blogger.com/profile/10304508322452669073noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-39449071262861191042013-04-28T14:09:40.237-04:002013-04-28T14:09:40.237-04:00Matt, wrt G-T in GPD, GPD is defined as only count...Matt, wrt G-T in GPD, GPD is defined as only counting money transaction. The informal economy of non-monetary "transactions" and money-transactions in the form of grants don't appear in GDP. But these are important aspects of a national economy. Disregarding them is a methodological choice that I have argued is not representative of the facts and skews the data.<br /><br />There are all sorts of choices like this that make academic economics unsuitable as a policy science and not very useful in the management of private firms. Add to that the neoliberal bias of so-called orthodox economics, as well as general ignorance of monetary economics among mainstream economists.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-36769452333138207702013-04-28T14:07:57.376-04:002013-04-28T14:07:57.376-04:00ya, people don't get that Govt must tax only a...ya, people don't get that Govt must tax only a PORTION of deficit spending, this spending that amounts to an advance TAX CREDIT that is used for genuine economic activity (and savings), and also to pay future tax obligations.<br /><br />How the tax credit of Deficit Spending funds the economy and growth of Net Worth, while tax collection on a small portion of that creates a broad Demand for the State-issued currency.<br /><br />I'm hardly well-versed in this, as I have stated, just some online cribbing. But these points have become <b>obvious</b>.dilbertgeghttps://www.blogger.com/profile/09789262821187351034noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-41090953060824029872013-04-28T14:04:06.014-04:002013-04-28T14:04:06.014-04:00This comment has been removed by the author.dilbertgeghttps://www.blogger.com/profile/09789262821187351034noreply@blogger.com