tag:blogger.com,1999:blog-2098432983500045934.post8657251173011561909..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Miscellaneous afterthoughtsThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-2098432983500045934.post-79971976660881362272011-09-14T03:01:41.070-04:002011-09-14T03:01:41.070-04:00Jazz,
Yes I did mean the post Volcker era after 1...Jazz,<br /><br />Yes I did mean the post Volcker era after 1978, and not before that.<br /><br />for references to the other data, see the article by Trader's Crucible - <a href="http://traderscrucible.com/2011/09/06/2354/" rel="nofollow">Monetary policy and Human misery</a><br /><i><br /><br /></i>Clonalhttps://www.blogger.com/profile/18290009954839887975noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-71961270443061425912011-09-13T09:45:30.818-04:002011-09-13T09:45:30.818-04:00Clonal -
Lots of meat in your 12:37 post. I will ...Clonal -<br /><br />Lots of meat in your 12:37 post. I will take some time and thought to digest.<br /><br />From other data, it is apparent, that for the bottom 80%, improved living standards have come not from increasing real wages, but rather from increasing household "for pay" working hours, and trading future income for current spending (borrowing)<br /><br />This is true post 1980. I think not for 1950 - 197x.<br /><br />In the 70's, women reentered the work force. Now, it takes my kids two incomes to achieve he standard of living that came from my income from 1968, through my long career.<br /><br />What is the other data you mention?<br /><br />Cheers!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-15960486260873579242011-09-13T06:14:01.727-04:002011-09-13T06:14:01.727-04:00Clonal,
"The direction of causation to explai...Clonal,<br /><b>"The direction of causation to explain inflation as postulated in the quantity theory of money is in reality reversed: it is not growth in the money supply causing inflation and wage rises, but wage rises and rises in factor input costs financed by business credit/debt from banks that cause money supply growth."</b><br /><br />I like Keen a lot.<br /><br />But if the quantity of money is not permitted to rise, then "wage rises and rises in factor input costs" will <i>hold each other down</i>.<br /><br />Costs ARE rising (and have long been rising). The Federal Reserve *accommodates* rising costs by allowing inflationary increases in the quantity of money. Not too much, but usually enough to keep the economy growing.<br /><br />Our views differ, as you said.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-15217679848562425192011-09-13T01:47:13.178-04:002011-09-13T01:47:13.178-04:00Also from Steve Keen today via Lord Keynes
Quote:...Also from <a href="http://www.debtdeflation.com/blogs/2011/09/12/behavioral-finance-lecture-06-the-travesty-of-neoclassical-macroeconomics/" rel="nofollow">Steve Keen today</a> via <a href="http://socialdemocracy21stcentury.blogspot.com/2011/09/steve-keen-on-behavioral-finance.html" rel="nofollow">Lord Keynes</a><br /><br />Quote:<br /><i>Some interesting facts:<br /><br /> (1) M1 and M0 (the monetary base) do not lead the business cycle: they both lag it.<br /><br /> (2) M2 – M1 represents credit money. This leads the cycle. That is, changes in credit money precede the cycle.<br /><br /> (3) The velocity of money is quite volatile. It is not essentially stable, as assumed and required by the quantity theory of money.<br /><br />These data do not support the orthodox theory of exogenous money or even the orthodox explanation of inflation via the quantity theory of money. Instead, they confirm the Post Keynesian endogenous money theory (Palley 2002; Moore 1988), and the view that credit dynamics are a major cause of business cycles, as argued in Hyman Minsky’s financial instability hypothesis.<br /><br /><b>The direction of causation to explain inflation as postulated in the quantity theory of money is in reality reversed:</b> it is not growth in the money supply causing inflation and wage rises, but wage rises and rises in factor input costs financed by business credit/debt from banks that cause money supply growth.</i><br /><br />But I do not think that Steve appreciates the negative correlation beween M2/MZM and CPIClonalhttps://www.blogger.com/profile/18290009954839887975noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-33578803456864952362011-09-12T22:02:36.871-04:002011-09-12T22:02:36.871-04:00The Secret Economist would be Robert F. MartinThe Secret Economist would be <a href="http://www.federalreserve.gov/research/staff/martinrobertf.htm" rel="nofollow">Robert F. Martin</a>Clonalhttps://www.blogger.com/profile/18290009954839887975noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-11255834950311387082011-09-12T12:44:31.860-04:002011-09-12T12:44:31.860-04:00Typo - I meant to say 1970's stagflation and n...Typo - I meant to say 1970's stagflation and not 1980'sClonalhttps://www.blogger.com/profile/18290009954839887975noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-91328115831320775172011-09-12T12:37:37.990-04:002011-09-12T12:37:37.990-04:00Here is another graph for you
Annual % Change in ...Here is another graph for you<br /><br /><a href="http://i.imgur.com/6rMxy.jpg" rel="nofollow">Annual % Change in CPI, M1, M2 and MZM</a><br /><br />the graph has monthly observations starting at Jan 1 1960 and ending in June 30 2011.<br /><br />The spikes in inflation are always associated with real events like the OPEC Oil Crisis and the Iranian Crisis. High inflation leads to lowered savings, and that depresses M2 and MZM. So my observation is that real shortages cause inflationary episodes which determines the excess income available for saving. The differences in MZM and M2 appear to be interest dependent. If interest increases .above a certain threshold, people will put more money in time deposits - willing to take the risk of interest penalties if withdrawn early.<br /><br />However the entire 50 year history makes it clear (at least to me) that inflation is always driven by supply constraints, and not by the money in the system. Once an individual, household or business's consumption needs are met, any excess income gets saved. The saving decision is independent of the interest rates. Once the decision to save has been made, the interest rate and the risk profile determines the financial instrument in which to put the money.<br /><br />From other data, it is apparent, that for the bottom 80%, improved living standards have come not from increasing real wages, but rather from increasing household "for pay" working hours, and trading future income for current spending (borrowing) The post 1984 low inflation period had nothing to do with "monetary policy" but rather probably was an artifact of improved technology and cheaper oil that made possible very low cost manufactured items. One of the costs of this was "outsourcing" that has led to stagnant real wages for the bottom 80% in the US. The net result has been increasing wealth and income disparities inside the US.<br /><br />So Art, my take on inflation is somewhat different from yours. The 1980's stagflation issue was a different one. My proposed solution would have prevented the stagnation, but probably not the higher prices in the short run. In fact Reagan did just that by his large deficit spending. The large deficits were entirely Reagan's personal ideas - as <a href="http://web.archive.org/web/20070825111249/http://www.parida.com/reaganomics.html" rel="nofollow">stated by Pierre Rinfret</a> - But they worked. I do not totally agree with Reagan's priorities, but the large deficits worked.<i><br /><br /><br /></i>Clonalhttps://www.blogger.com/profile/18290009954839887975noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-60368123512224048472011-09-12T11:13:20.521-04:002011-09-12T11:13:20.521-04:00And then, the new saw would be: Lending money caus...<i>And then, the new saw would be: Lending money causes inflation.</i><br /><br />I, too, am somewhat resistant to new ideas. But you have a coherent narrative that is getting harder to resist.<br /><br />In the PDF it was stated that single year data didn't correlate money supply and inflation, yet Clonal's graphs indicate actual negative correlations.<br /><br />I now believe that PDF to be quite a dishonest piece of work.<br /><br />Who ya' gonna' trust?<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.com