At There is no such thing as "global aggregate demand", someone pretending to be Scott Sumner quotes Raghuram Rajan
I fear that in a world with weak aggregate demand, we may be engaged in a risky competition for a greater share of it
and reacts defensively -- as one might if one's only good idea were suddenly put at risk. Sumner would never do that.
How does the false Sumner respond? He takes the concept of Aggregate Demand and dumbs it down -- all the way down to pure bullshit:
Rajan seems to imply there is such a thing as global AD, that it's a pie that countries can take a larger piece of by engaging in beggar-thy-neighbor policies, such as monetary stimulus. This is almost entirely wrong. There is no such thing as global AD
Dick.
Demand is measured by what we spend. Aggregate demand is measured by totaling up demand. If some demand is expressed (or spent) in dollars, and some in euros, so what? You can't add dollars and euros, but you can do exchange rate calculations that let you aggregate the numbers. Sumner is just being a dick.
Oh, right, it can't be Sumner. Because there's no such thing.
4 comments:
Its almost as if these crazed supply-siders ever acknowledge the most fundamental building block of the capitalist system....(that capitalism runs on sales and that spending = income).....then their entire conceptual framework for talking about and understanding the modern economy would come crumbling down.
Oh wait, maybe thats why they dont acknowledge that demand is king. It would be like politicians admitting that there is no such thing as a scarcity of fiat dollars, the entire rationale for austerity in a non-inflationary environment would go out the window.
Poetry. Pure poetry.
I meant to link to the Reddit page.
If you read the comments at econoblog, Sumner concedes that you can calculate a global AD; then he contends that it would be essentially meaningless.
He real point is -- ",that it's a pie that countries can take a larger piece of by engaging in beggar-thy-neighbor policies, such as monetary stimulus. This is almost entirely wrong."
I can't figure out which side of this to believe.
Cheers!
JzB
Post a Comment