tag:blogger.com,1999:blog-2098432983500045934.post748970712687253639..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Ch-Ch-Ch-ChangesThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2098432983500045934.post-5587276825516206652012-11-09T06:19:25.260-05:002012-11-09T06:19:25.260-05:00Yes, what would happen with the million $100 asset...Yes, what would happen with the million $100 assets if they all try to sell at once is the same as what happened in the crisis, when asset values fell suddenly, forcing even more people to try to sell their assets. It is an excellent analysis you have here. Reminds me of McCulley's <a href="http://www.pimco.com/EN/Insights/Pages/GCBF%20July%202008.aspx" rel="nofollow">The Paradox of Deleveraging</a>.<br /><br />RE your second paragraph, I don't view it positively, either. But I do not agree that this is a "natural" change. I see it as the result of bad policy -- policy that favors finance at every turn, at the expense of the productive sector. Literally, the expense.<br /><br />I have great difficulty accepting economic concepts that I have not seen for myself, like "hoarding" when I read about it in the 1970s, and this separation of MoE and MoA as Marcus in particular writes of it.<br /><br />http://thefaintofheart.wordpress.com/2012/10/31/two-kinds-of-money/<br /><br />(Marcus lived thru it, and he therefore DOES accept it.)<br /><br />I imagine that other people have the same difficulty I do with such concepts, and therefore see strange developments as "natural". I think we must be careful with that word. (The "natural" rate of unemployment comes to mind.)<br /><br />I have one more post written on the topic, and thought of another while reading your remarks just now.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-42255876102192685372012-11-09T05:47:30.726-05:002012-11-09T05:47:30.726-05:00Well the accountants are hired by the men of wealt...Well the accountants are hired by the men of wealth and those accountants are paid handsomely to tell the men of wealth just how wealthy they are. Rating agencies, accountants and others all exist to keep reassuring, or reconfiguring if necessary, the "accounts" to make sure Geoffrey Wellington Wadsworth III stays in the lead. MOA is all about scorekeeping as Mosler would say. There is private scorekeeping and then there is the public scorekeeper..... the Fed.<br /><br />While I do agree with Sumner that MOA function of money has come to dominate, I dont view that positively. Its natural I suppose as money becomes more electronic and everything has a price, but it is still a violation of fundamental market principles to treat an asset with a price tag of 100K$ as equivalent to a 100K$ bill, which is what banks and Sumner are trying to do in the name of liquidity.<br /><br />One of the flaws in our financial system I think is that our financial institutions take an asset like a stock that has a price or value of 100$, which there may be 1 million shares of, and they treat it in their accounting the same as they do a 100$ bill! So you have a million entities valuing that asset on their balance sheet at 100$ at the same time when in fact there is no way they could all get 100$ for that asset at the same time. Any attempt of ALL OF THEM to get 100$ for that asset would immediately drive that value towards zero. Only the earliest movers could get that price, the later guys are stuck with a 25$ asset ..... or less maybe.<br /><br />Keep going on this topic Art. I think its THE important one!Greghttps://www.blogger.com/profile/03139782404004492965noreply@blogger.com