tag:blogger.com,1999:blog-2098432983500045934.post4305161073971472050..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Ouroboros and IronyThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-2098432983500045934.post-6535960279562261222012-05-07T07:00:26.810-04:002012-05-07T07:00:26.810-04:00Jazz, return on 'investment' has to be a r...Jazz, return on 'investment' has to be a return on all of the spending it took to get that return. Of course anybody could "fake" a good profit by not counting all the spending it took to make that profit, but such a policy would not be sustainable.<br /><br />Here's a definition of investment I just found, from <a href="http://www.naturalfinance.net/2012/05/economic-distinction-between-savings.html" rel="nofollow">Natural Finance</a>:<br /><br /><b>Investment, to deviate slightly from Wikipedia, is total business spending excluding financing cashflows. It is Expenses plus plant and equipment purchases. It is not financial holdings.</b>The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-32618329974798541502012-04-18T03:01:10.204-04:002012-04-18T03:01:10.204-04:00Greg,
From the PIMCO piece: "We know that Wa...Greg,<br /><br />From the PIMCO piece: <b>"We know that Washington D.C. is currently dysfunctional and that large deficit spending is ultimately unsustainable."</b><br /><br />There's the problem, right there: The things "we know", from which "we" draw immediate conclusions.<br /><br /><b>"Policy analysts of both parties know that long-term deficits are being driven by demographic changes and the long-term expansion of entitlement programs for our aging society."</b><br /><br />Ah, see? It's *my* fault, because I'm getting older. I guess it's true, because I was getting older even way back in the 1970s, and the economic problem goes back that far...<br /><br />Hey, PIMCO disagrees with the Kalecki equation: <b>"It is hard to see corporate profits, or stock prices, falling because of long-term fiscal discipline."</b><br /><br />Kurt Richebacker would probably agree with the part you quoted. His focus is different, but his theme is the same: <b>"The widespread measures that individual firms take to improve their own profits have, in the aggregate, the opposite effect on the profits of other firms. Business spending is the key source of business revenues, not consumer spending. A retrenchment in business spending cuts business revenues. Higher profits and higher prosperity cannot possibly come out of general cost cutting."</b><br /><br />I like that last sentence.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-62903371870251350192012-04-16T13:52:06.717-04:002012-04-16T13:52:06.717-04:00Where did all those profits come from?
How 'b...Where did all those profits come from?<br /><br />How 'bout govt deficits?<br /><br />http://www.pimco.com/EN/Insights/Pages/Equity-Focus-Newtonian-Profits-April-2012.aspx<br /><br />Here is a snippet form the article;<br /><br />"Some investors have used the Kalecki profits equation to break corporate profits into its fundamental macroeconomic elements, specifically:<br /><br />Profits = Investment – Household Savings – Government Savings – Foreign Savings + Dividends<br /><br />From this equation, investors can see that corporate profits have expanded to such a large share of GDP due to large government deficits. Therefore, if the government implemented a deficit reduction plan, corporate profits could suffer."<br /><br /><br />Read the restGreghttps://www.blogger.com/profile/03139782404004492965noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-33483265020242477552012-04-16T12:23:38.494-04:002012-04-16T12:23:38.494-04:00Art,
Look also at Dirk Bezemer's talk at INET...Art,<br /><br />Look also at Dirk Bezemer's <a href="http://www.youtube.com/watch?v=qvBuK8yQxbY" rel="nofollow">talk at INET</a><br /><br />Also John Kay's <a href="http://www.youtube.com/watch?v=RgneziqRQxU" rel="nofollow">talk</a>Clonalhttps://www.blogger.com/profile/18290009954839887975noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-69557610630408573752012-04-16T11:34:19.518-04:002012-04-16T11:34:19.518-04:00You reject gross private investment as a proxy for...You reject gross private investment as a proxy for investment, while using total expenses - salaries, utility bills, price of towels and gloves, bribes to regulators, etc - in fact all charges that are NOT investment as a proxy for investment.<br /><br />OK. Have it your way. Consider my teeth pulled.<br /><br />Now I'm going to go define beer as a roast beef sandwich and drink my lunch.<br /><br />JzB<br /><br />P.S. BTW, in case you haven't noticed, I don't consider the great growth in corporate profits since 1982 to be an especially good thing.Jazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-35189701309535412842012-04-15T21:37:19.815-04:002012-04-15T21:37:19.815-04:00Like pulling teeth to get you to face facts someti...Like pulling teeth to get you to face facts sometimes, Jazz.<br /><br /><a href="http://2.bp.blogspot.com/-xkn83T5UVr8/TepV8FgNW_I/AAAAAAAABUY/JDj1ksYqfLQ/s1600/corporate_roi_1939-2007.png" rel="nofollow">Corporate profits declined as a percent of corporate expenditure from World War II until the Reagan policies took effect</a> -- policies that YOU reject.<br /><br />Under the policies that you accept, Jazz, profits declined consistently for almost 40 years.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-66524255706878123872012-04-15T20:52:32.997-04:002012-04-15T20:52:32.997-04:00Oh, for Christ's sake.
Steep rise in non-fina...Oh, for Christ's sake.<br /><br />Steep rise in non-financial corporate profits.<br /><br />http://research.stlouisfed.org/fred2/graph/?g=6tK<br /><br />Steeper rise in total profits.<br /><br />http://research.stlouisfed.org/fred2/graph/?g=6tI<br /><br />Non finance fraction declining - making finance more attractive - sure.<br /><br />http://research.stlouisfed.org/fred2/graph/?g=6tL<br /><br />But not because non finance profit wasn't growing - it was growing dramatically.<br /><br />You need to find another root cause.<br /><br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-69091060656997211042012-04-15T18:01:40.364-04:002012-04-15T18:01:40.364-04:00Jazz,
Your first comment above quotes me comparing...Jazz,<br />Your first comment above quotes me comparing profit of the financial and non-financial sectors. You reject my view without distinguishing financial from non-financial profits. Your later remarks continue to consider profit without comparing financial versus non-financial.<br /><br />Robert Brenner says: "In 2001, the rate of profit for U.S. non-financial corporations was the lowest of the postwar period, except for 1980." (quoted <a href="http://newarthurianeconomics.blogspot.com/2010/10/heart-of-crisis.html" rel="nofollow">here</a>)<br /><br />See my <a href="http://newarthurianeconomics.blogspot.com/2011/06/corporate-profit-in-context.html" rel="nofollow">Corporate profit in context</a> for a general decline in profits all through the Golden Age and right up to Reagan.<br /><br />re your FRED 6tt graph:<br />I would not expect profit/GPDI to be a good proxy for Return on Investment. I have used (corp profit) / (total corp deductions) where deductions serve as a proxy for spending. Not only "investment" but every dollar of corporate spending is a cost against which profit must be measured. (Could be wrong; I developed this approach myself; and yes, I am aware of what the "I" stands for in "ROI".) See my <a href="http://newarthurianeconomics.blogspot.com/2011/06/corporate-profit-context-data.html" rel="nofollow">Corporate profit context data</a>.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-57153084656946072232012-04-15T16:55:02.478-04:002012-04-15T16:55:02.478-04:00Sackerson,
Keen: "The endogenous creation of...Sackerson,<br /><br />Keen: <i>"The endogenous creation of money by banks means that the level and rate of change of private debt play crucial roles..."</i><br /><br /><a href="http://newarthurianeconomics.blogspot.com/2012/03/private-debt-2012-13-per-dollar-of.html" rel="nofollow">Yes!</a><br /><br />Every time I click a blank area on Keen's blog -- something I evidently do rather too often -- it brings up a different page than the one I was reading. Keen should remove that feature from his blog.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-39148158636182028462012-04-15T16:45:08.283-04:002012-04-15T16:45:08.283-04:00Art -
Forget about the GDP comparison and focus o...Art -<br /><br />Forget about the GDP comparison and focus on the corporate profits log scale chart.<br /><br />Corporate profits have achieved super-exponential growth in the post WW II period.<br /><br />I don't know where you can get aggregated ROI data. Profits/Gross Private investment should be a reasonable proxy.<br /><br />http://research.stlouisfed.org/fred2/graph/?g=6tt<br /><br />Pretty steady until the beginning of the Reagan admin. Then after a drop, through the roof.<br /><br />I don't think you can make any kind of a case for profits declining.<br /><br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-67157414741159120072012-04-15T14:51:04.538-04:002012-04-15T14:51:04.538-04:00Hi Art, seen this?
http://www.debtdeflation.com/b...Hi Art, seen this?<br /><br />http://www.debtdeflation.com/blogs/2012/04/16/inet-presentation-minskian-perspective-on-instability-in-financial-markets/Sackersonhttps://www.blogger.com/profile/17284329249862764601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-69151801982379183212012-04-15T14:18:31.420-04:002012-04-15T14:18:31.420-04:00"Data says otherwise."
The people who m..."Data says otherwise."<br /><br />The people who make decisions based on their profits do not measure profit relative to GDP but as ROI.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-22413396185367399722012-04-15T13:55:33.127-04:002012-04-15T13:55:33.127-04:00I'm pretty confident that finance grew because...<i>I'm pretty confident that finance grew because productive-sector profits were declining, making finance relatively more attractive. </i><br /><br />Data says otherwise.<br /><br />http://jazzbumpa.blogspot.com/2012/01/where-has-all-money-gone-pt-i-corporate.html<br /><br /><i>If we -- the nonfinancial sector -- use half as much credit, the financial sector will shrink. The easy way to use half as much credit, without hindering growth, is to pay off old debt. </i><br /><br />Catch 22. How can we use less debt when we have less income? Only by spending less, which is an economic drag. If we devote resources to paying down debt, then doubly so.<br /><br />You also have to consider this.<br /><br />http://research.stlouisfed.org/fred2/graph/?id=FICTCMDODFS<br /><br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.com