tell us anything useful ??

 end of 2010:

look at portugal  and england
which one is in the tit twister now

long live the euro zone
 iron maiden of  piig misery

the wrong approach

"Why is wealth important? Like wages and income, overall wealth is central to a family’s standard of living. Wealth—particularly liquid assets such as savings and checking account balances and direct holding of stocks and bonds—can help families cope with financial emergencies that arise due to unemployment or illness. Wealth also makes it easier for families to invest in education and training, start a small business, or fund retirement"
EPI screed

that suggests job classers oughta be private wealth builders ..don't we know where that leads ??

so we need to sublate this process
socialize inter temporal allocations and whole to  part and part a to part b  transfer systems
  payment  systems 


look at the list ..cope with financial emergencies that arise due to unemployment or illness.
insurance eh ??

 invest in education and training, student loans ???



'start a small business, " biz loans

but final point
 fund retirement   that requires a real  national pension system

mankiw and peak debt

the mankiw piece is an addiction story eh
simple message drink that booze like you drink it now
for another 15 years and you'll have a pink elephant moment
and a 5 year turkey trot over thin ice
but cut that crap out now
sure the joy of the happy hour high will leave its cavity in the soul of your job day
but
a certain purgatory trumps a perfect hell baby
pure preacher boy bull balls

...

addicted primarily to ...living longer it would seem
and maybe a bit better too
err health wise
the theory behind starting now
not in 15 years ??

if you boil the frog slowly enough ...

...

jump out of the mankiw pot now amerika !!!
rewrite the rule book

...

we had one of these moments already
recall the moynihan greenspan payroll tax and benefit fix ??
that was so well slid in on us
it wasn't till twelve years or so ago
it begain to really bite
but you hardly feel what you miss all together
do we know today what that the trust fund build up
has cost us in additional burdens and forgone simple pleasures ??
well a couple trillion left in your pockets
you jobbled creeps
spread over 12 years or so
isn't the biggest alternative policy route
i can imagine
bringing the boys and girls in helmets home
and declaring peace with the world
exceeds that by a few times
but its still real money eh ??

there's more
there's the rampant
private health "CARE" sector !!!!!
go back to 65 and use the swedish or german trend cost rise
not ours
yikes
talk about yer boiled frog !!!!!
why between premiums and payroll taxes
the median gal in our job class has gone practically no where despite large gains in her per job hour value added
my my
no wonder the Dembos the party of the little people
has lost the faith of its base

when social liberal-progs collide over econ con

i see no "left-liberal " econ con
that doesn't oppose austerity NOW
while we're in a liquidity trap
they all want a fast and full recovery
on the jobs markets
only when facing say health costs in 2023
do we see this conflict arise between various "visions"
of how the whole system over time
really "WORKS

pk gallops back onto the field

"followup on my printing press post: I think one way to clarify my difference with, say, Jamie Galbraith is this: "
"imagine that at some future date, say in 2017, we’re more or less at full employment and have a federal deficit equal to 6 percent of GDP. Does it matter whether the United States can still sell bonds on international markets?"

but pk what in heavens name is the link left out here that could join your FE economy a 6% of gdp deficit
and an unhinged bond market ??
you gotta get there from here or at least from somewhere
give us a whole story ...please

"..the MMT position... the only thing we need to consider is whether the deficit creates excess demand to such an extent as to be inflationary. "
now the MMTers account for demand pull inflation
but i guess the missing links have other ways to send price levels soaring at full employment
but first why are we running this 6 % deficit at full employment
---trillion dollar plus ---
a health cost blow out ??
a nice war ???
a massive huckabee tax cut ???
a gigantic trade gap ??
"The perceived future solvency of the government is not an issue. I disagree. A 6 percent deficit would, under normal conditions, be very expansionary;"
"normal conditions" err other then an unhinged bond market
no no no
pk you gotta fill in the functions here
all the functions and nothing but the functions
of some damn model or other
(6% deficit )".. could be offset with tight monetary policy, so that it need not be inflationary."

" But if the U.S. government has lost access to the bond market, the Fed can’t pursue a tight-money policy "
checkmate !!!!
only this pk is an illegal move i think
U.S. government has lost access to the bond market,
its as if you took your queeen and say a rook
and placed it anywhere you needed to
once you have a 6 % deficit but no t bill or bond market
yup
you have either to print money or collect taxes
to fund spending
"a deficit that would be manageable with capital-market access becomes disastrous without"
we get that
but i repeat
how did you get us here pk ??
i ask you to get us here
piece movement by piece movement
starting from an intial condition
that we can evaluate for plausibility
i suggest you start with us today
since its what is always the point of departure for real policy
but that might be too restrictive
since "this has NOTHING TO DO WITH OUR CURRENT SITUATION"
i note your comnfidence in gentle ben

"the rapid growth in monetary base since 2007 has taken place because the Fed is trying to rescue the economy, not because it’s trying to finance the government — and that base growth can and will be reversed as soon as the economy gets anywhere close to full employment. "

i guess we might suggest the fed goes loco and refuses to reverse the process
the credit explodes and the price level along with it
and soon enough the t market nearly evaporates
along with the "real value" of all of uncle's outstanding debt
de facto default
i guess then we start all over like the weimar republic did
if the only way we can get from here to there is by way of a loco fed
i submit we need to start with other initital conditions
and try to figure out how we get to there from here
and then from there to our own weimar summer-fall of '23
renten-dollars !!!!!
hint:
weimar had a huge BOP problem
get us to that

-----

bop problems and/or
no ability to adequately tax
the two headed cobra of hyper inflation

-------------------

obviously
pk is thinking about a gap
that the congress won't close
with tax increases
one might as well assume no taxing powers then
i don't think MMTers believe uncle can spend away
with new money
but i do think
pk hasn't yet worked out the vague potential crisis ahead
where health costs etc explode
and taxes stay at present % of gdp yields
or the trade hole continues
to gush
demand out of the system

what would a wall street guided fed do anyway
under the regime of paying uncle's bills
with new treasury notes ?
well
they'd sell treausry bonds till they had none left
soak up as much as they could and then what ???

up required reserves
sterilize this stuff
at the point where reserves equal outstanding loans
then what ??
pay what ever rate of interest on reserves that made banks indifferent at the margin between
holding loans and reserves
reserves keep going up
oh i'm sure this has many conflicts
with any serious set of assumptions i'd start with
going to extremes like this is jestor stuff eh ??

 --------------

the up shot
you can use the fed to control price level movements
but you'll get shortages
ala the soviet system
demand is always exceeding supply
so the system
rations by waiting line not price

---------------------------

"Who's waiting in line, the workers demanded or the consumers supplied?"

not sure i follow that construction johnny


i'm simply talking about
chronic excess final demand without
adequate price rationing
--- the soviets locked prices ..all the better for secondary illicit arrangements
here the banking system would drain off
money equivalent to
the stream of new gubmint cash as it entered
the system--
what breaks down the price rationing mechanism ??
not relative price adjustments they'd continue
as simply a lid on total non state purchasing power
this to keep money scarece
ie preserving
the value of gub printings of new money

households would absorb
the cost of gubmint purchases
by delays in desired purchases of their own
"the quality "
of labor services might decay though eh ???
ration books as the new source of entitlement would be introduced
only uncle with an open ration book
could get to the front of every line

.

this run out of consequences
by me is pure horse feathers of course
totally faulty i'm sure
and no doubt
as i mentioned above
full of self contradictions
reminds me of nick rowe
the point is to sit down take a model off the shelf and
"run the numbers " thru it
i'm too old and too lazy for that
get that egghead kiid from iceland


-------------------------------
if he lets exchange rates adjust the trade gap will close in time and with suffering
btw none of this
looks like fun eh ??

but one has to flesh out initial conditions to get there and they seem to HAVE to be headed for
a state that is even worse then this "cure"
unfortunately we're talking about
theoretical surgery
where the patient and her condition
aren't fully known

if he lets exchange rates adjust the trade gap will close in time and with suffering
btw none of this
looks like fun eh ??

but one has to flesh out initial conditions to get there and they seem to HAVE to be headed for
a state that is even worse then this "cure"
unfortunately we're talking about
theoretical surgery
where the patient and her condition
aren't fully known

 
earlier pk:
the point where monetizing starts to cause inflation
is when the economy has ".. returned to more or less full employment without needing deficit spending to keep it there."
so why the 6% of gdp deficit ???
yup
"At that point, money that the government prints won’t just sit there, it will feed inflation,"
again must be a structural budget gap
too much health cost or warfare and or too little tax yield
"we don't need no stinking taxes "
if "..that’s why " u pk "..don’t accept the idea that deficits are never a problem"
is that really what the MMTs are claiming ??
i don't think so
i think they say
they use taxes precisely to address this point
their state would use taxes to control inflation


"and the government will indeed need to persuade the private sector to make resources available for government use."
persuade ie
voluntary submission
you are removing the legal
taxing requistioning and drafting power
of "the state"pk
are you saying MMTers claim the state
doesn't need these powers
it only has to print money to fund itself ??
again i think not
if "..that’s why I don’t accept the idea that deficits are never a problem"

---------------------

 

mandarins and mandarins

spence seems to like
wallowing in his soft brand
of aging mandarin cruise control fatuity
in these days i guess that beats strident idiocy
like say
john roach taylor or bobby barro

pk and me with others

pk's narrative is not wonky its honky tonky
its a piece of fast talk bs
--hey i agree with pk there's a price level "issue" here
that is trumped by a liquidity trap
remove the liquidity trap
and like opening pandora's box ...

at any rate here it is...
set up phase :

"suppose that we eventually go back to a situation in which interest rates are positive, so that monetary base and T-bills are once again imperfect substitutes;"
under specified what else is up here pk ??
what has pulled interest rates up into the positive regions ??
return of corporate spending
for what new us production capacity ??
how about
haywire increases in lending to households ??
for what house lot bubble ups ??
are we facing up to our trade deficit ???
or has it bulged out grotesquely

"also, we’re close enough to full employment that rapid economic expansion will once again lead to inflation."
ya just toss that in
but what are the mechanics of this bubala ??
are you really relying on this hand wave here ??
---------
attempt to use "numbers" to add precision

"The last time we were in that situation, the monetary base was around $800 billion."
------------------
now comes the clinker
despite full employment and real rates of interest
"Suppose.. we ... find ourselves back in that situation .." ie real rates nairu employment levels
wait for it
"with the government still running deficits of more than $1 trillion a year, say around $100 billion a month. "
make me see this in complete numbers paul
we've doubled back here
why are we running these big deficits
particularly if we've restored NAIRU levels
of employment ???
again trade gap ???
why is that not being addressed directly ???
yes you gotta close the trade gap for sure
then the magic moment
".. for whatever reason, we’re suddenly faced with a strike of bond buyers — nobody is willing to buy U.S. debt except at exorbitant rates."
what has created this moment ???
you gotta make it possible if not plausible
give us a scenario

"...for whatever reason..."
don't cut it here
if its a sky hook
if ou can't anchor this flight/panic
on a context that coheres ...
this really really needs
a historical analogy

-------------------------------
okay so far so stinky but
at any rate i swallow that for sake of argument
So then what?

"The Fed could directly finance the government by buying debt, or it could launder the process by having banks buy debt and then sell that debt via open-market operations; either way, the government would in effect be financing itself through creation of base money."
ya ya ya
so the trick is set
and sprong
our leg is caught in the teeth of it
" the first month’s financing would increase the monetary base by around 12 percent. And in my hypothesized normal environment, you’d expect the overall price level to rise (with some lag, but that’s not crucial) roughly in proportion to the increase in monetary base. And rising prices would, to a first approximation, raise the deficit in proportion."
but putting aside the melodramatics
what does this seem to suggest
dynamically that we could model ??
its comp stat talk
almost quantity theory of money
talk
and despite that
pk's pretending to play dynamics here
yet another big hand wave
the rest is artificial catastrophe
"So we’re talking about a monetary base that rises 12 percent a month, or about 400 percent a year."
oddly not satisfied with that
pk adds gas to the flames
"Does this mean 400 percent inflation? No, it means more — because people would find ways to avoid holding green pieces of paper, raising prices still further. "
the point:
show me
why macro policy is "...still running deficits of more than $1 trillion a year" ???

------------------..

what i DO agree with is this
we will need a mechanism to control price level movements
 if we want to use macro policy to reach
hyper employment without a price blow out
and of course restore balanced trade
that hole creates a structural demand for big fiscal deficits

------------------------------

"We want to control price level movements because they create inefficiencies"
yes
that is the usual point
but robust inflation might well improve
the dynamic efficiency of a market system no ??
to talk of control here may not mean reduce
but more centrally
a desire to manage inflation
i use the analogy to fire
now inflation in its wage push form
is like a wild fire
we try to put it out before it gets rolling
i think we oughta design and implement a social mechanism to control inflation
master it make it our tool
hence my endless and apparently solitary
flogging of a mark up or value added
cap and trade system
at least for our big outfits with obvious
bruce wilderesque "market power"
or for a rampant price rising sector
like health care
or duldrumous price contracting sector
like commodity production
---we kinda have these already but no where near as stream lined and self emerging as a mark up market could produce
produced by many small powerless producers

----------------------------------------.

" tie price levels to unemployment through a job guarantee at a fixed price
No more inflation, no more unemployment."
creating uncle's job gulag
is widely supported on the left
and it ought to be squashed
in my considered opinion
---we oughta get into that here somewhere btw---
but the job gulag
only puts a floor on market wages right ??
how does it put a ceiling on em ??
by opening the gulags gates ??
they're always open eh ??
by intentionally letting the gulag "real wage " shrink to dastardly non livable levels
mark my words
the dynamics of any job gulag would parallel the welfare system circa 65-95
ie slow misery inducing strangulation by agent demagogues
of the corporate plutocrats

---------------------------

running deficits for ever
is not the issue here is it ??
the issue is unhinging the bond markets
by expectations of such things as weimar
hyper inflation
and/or devaluation with its import price tsunami
lerner marshall day II
i note hyper inflations are the result of a tax system brake down combined with a BOP crisis
ie
its an open system problem
above pk
never addresses this "reality"

-------------------------------

"unemployment is the most egregious inefficiency."
amen

"Look at any chart of wealth distribution and you can easily see which class figured it out first"
not so sure
after all the gold system at full flood around the victorian era
certainly skewed wealth much as reagan dynamics skewed wealth
but i agree you can't run a real deindustrialization like we've seen here post nixon wimdow slam
quite so well
with a gold dollar link
like keynes-white designed at bretton woods
chronic trade deficits work better backed by a limitless unchecked dollar mine

-------------------

min
you give the vulgar street talk version of mmt
too much credit
pk albeit sloppy about the execution
is correct to throw up this caution sign
i think he was stung by dean baker

http://www.cepr.net/index.php/blogs/beat-the-press/krugman-is-wrong-the-united-states-could-not-end-up-like-greece?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29
and side steps dean to wack a mole of another ilk
a particularly dumb mole that thinks
final answers grow on money trees
money trees that are endlessly and costlessly
currency baring

-----------------------------------

i'm wrong
timing of posts suggests pk
had this wiggle walker out
b4 dean swept in on the earlier
column hyperbolics

it however suggests something is eating at pk
he rarely shores up a position
no one has fired at
but maybe he was here merely guiding
the flock of independent thinking innocents
away from that particular cliff edge

-------------------------------

"I do think that there are real differences between Krugman's views and MMT.."

all the differences are worth excavating eh ??
but i think the nub is pk's tax talk
i submit pk 's line partly alibis
the austerians when he suggests
"we need new taxes "
his implication:
there is such a thing
as a finite fiscal borrowing space
but he has never suggested a rule for it
he prolly has in his head something like
a federal debt outstanding
( ie not in some pair of gubmint hands
or the fed's )
at 200% of gdp
once he pins that down
then extended high deficit regimes
like the present one
become problematic immediately
since the very form of the argument
allows say
a simple johnson or ken roguenutz
to set the bar at 100% of gdp
and cry wolf ......right now !!!
the trap he falls into by this debt burden ceiling
is of course he ends up calling for
a higher total tax yield
this gets opposed by the hoi polloi
now in year 30
of the take home median wage's rollicking ... snail rate of growth
whereas those un afraid of any debt limit
can suggest the system needs only to shift
a large measure of the existing
"full employment " extraction rate
( ~20% of gdp)
off theshoulders of the payroll class
and onto those of our upper wealth and passive income bracketeers
both new brackets and deeper cutting brackets

-------------------------

"they point out that historical cases of hyperinflation have always had some economic dislocation ...."
exactly so
pk needs to build a possible scenario
he hasn't done that

since '07 ...... 9 million jobster MIAs

235 million working age pop

since '07  the national employment ratio  has dropped from 63% to 59%

4% x 235 = ~ 9 million lop offs

look at this ..do you see speculation ???

see any spec here ??



you're not supposed to

notice however the shape and timing
don't explain the two different amplitudes  here made to look similar by use of old trick
two differently calibrated scales the commodity prices moved much more %/%

falling back on elasticity still needs a price amping response mechanism to translate eh ??


but how about this....???



spec drivers live !!!!
just fooling and pretending..  under all those briary motion lines
the vertical QE commencing line here persuades ...not ...maybe


but consider this:

 crude oil prices are being "moved  " by the middle east tussles

if so ...how ???

if there is a complex pricing  mechanism at work here
that can translate changes in expectations of supply/demand
into changes in prices
then the commodity markets are not just registering changes in supply/demand

why couldn't specs manipulate these complex mechanisms ???

at least in a conducive  expectational environment

slow up in start up- WSJ

.

The Census Bureau on Wednesday said that 403,765 new firms were started in the 12 months ended March 2009, down 17.3% from a year earlier and the fewest on records that begin in 1977.


. Firms less than a year old employed 2.3 million people in March 2009 whereas as a year earlier start-ups employed 3 million people.

.
number one reason  fewer companies got started in the most recent recession ....
 the availability of financing dried up.

and will it continue to fall ???

 

 

from below 60% in the great society  to  the clinton miracle apex plateau of 67%

 

now down for a decade ..and  only down  ahead ???

the big picture flogged for trots

but to the main point

i think looking only here at the outcomes of policy on say the safety net occupants or our battered ever more post industrial mcshit job wage class
in the final analysis fails to capture the main driving motives of "organizations "that play their great game on a global stage
global free range profiteering today requires a stagnation...requires it ..the other options reduce global profits
in this key sense i doubt the target is local american job class opporession...we are just part of the collateral damage


----
if u start with a simple premise:

hi fi TNCs run the Fed and can have their way when necessary with the budget

but these banks are global
like so many isles of laputa they fly over the planets market systems making things happen for the great MNCs

they think globally and use uncle hegemonic pretty much as they please come a crunch
they clearly didn't want a run away contraction but they didn't want a full and fast recovery either
hence the half hearted fiscal measures

these chaps can repeal elements of the new deal but they can't repeal the laws of trade and finance

the US's chronic import gap has reached nasty levels unsustainable levels
we could devalue but like britain it would be against the euro zone and not against the emerging asian "partners"
ie
not effective
we won't devalue against the asians because that is where the big and growing profits come from

the forex tilt is a key part of the cross border arbitrage
the trade gap it creates however needs to be manzaged
and if you can't devalue or "protect"
you have to slow absorption by slowing domestic income
read romney robinson its that old hat

i submit the recent credit crisis was not wasted by the MNCs and their bankers
that crsis became the perfect pretext for a programatic stag policy

btw
if you look at the US economy as if its a closed system
even if run by trans nat corporations
all this global reality becomes an annex to domestic considerations
ie
turns the tail into the dog and the dog into the tail

trade gap story.... buffet's answer

.
"Buffett's plan proposes creating a market for transferable import certificates, (ICs) that would represent the right to import a certain dollar amount of goods into the United States. These transferable ICs would be issued to US exporters in an amount equal to the dollar amount of the goods they export and they could only be utilized once. They could be sold or traded to importers, who must purchase them in order to legally import goods into the USA. The price of ICs are set by (free-market) forces, and are therefore dependent on the balance between entrepreneurs' willingness to pay the ICs market price for importing goods into the USA and the global volume of goods exported from the USA, (i.e. supply and demand).
Proceeds from the sale of ICs would encourage exporters (who would gain that extra money in addition to the proceeds of their exports) and discourage importers (who would need to pay the additional cost to acquire ICs as well as the cost to acquire the goods they are importing). This system would essentially create a broad-based tariff on imports to the United States, and subsidy for exports – compare cap and trade, which creates a similar market in pollution"

mecca ski !!!!!

who's this becky wilder to question the profiteers caution ???

her majesty in demo mode :

"It's not structural unemployment, it's the corporate saving glut!

The chart below illustrates a simple univariate regression of the unemployment rate on the corporate saving glut. The correlation is very strong, 71%, and suggests that the structural unemployment rate is less than 5.8%. Furthermore, while the unemployment rate seems to be perpetually higher than normal (the upper-right circle), that perfectly coincides with a high corporate saving glut.

If the corporate excess saving glut just equaled zero, i.e., firms invested and saved at the same rate, the unemployment rate would be 5.8%. Now, if the corporate saving glut fell below zero to -2%, i.e., firms reinvested in the economy by way of capital investment in excess of saving, the simple model implies an unemployment rate of 4.7%.

The government doesn't need to add jobs, per se, the government needs to figure out how to get corporate America to drop the saving glut and re-invest in the economy."

take that bobby reich

from above 80% to below 76 %  naughty ???


piling on:
"Economic Policy Institute briefing paper points out, the unemployment rates might “underestimate the severity of the labor market problem for young college graduates because they do not indicate whether they are employed in a job that matches their skill level.” "

the Le Chatelier trap ???

if you start  your wonderland  closed  multi-market system  in equilibrium 
are you using inadvertantly   the best of all possible magic tricks
 ie
  a move that precedes the trick's actual performance

take this formulation:

" Any change in status quo prompts an opposing reaction in the responding system"

the system works to restore itself eh ???

okay
now  you make this good 
by  assuming  the state that is the status quo is a state of equilibrium
and equilibrium is the best of all possible states

   what the fuck if the initial set of conditions  ISN'T an equilibrium ???

what if equilibrium doesn't rank particularly high on the  list of pareto prefered states ?? 
 

laws of policy motion

the motions of land values
are the secret history of local politics
just as
the motions of security values
are the obvious history of national politics

bubbles versus booms

exactly the correct distinction

bubbles form out of scheinvert inflations
infrastructure out of tied in boomings
in real production
thus booms versus bubbles

sort of a castor and pollux  operation

castor:
house lot value
the result of a  bubble


 pollux :
housing construction
the result of a boom

yes booms hault
but bubbles burst
the boom and bust gets its sting ...its real sting
from  the bubble burst  part
the minsky moment
is pure financial "overlay"
tyhe incubus of financing past
once the bubble proves pure scheinvert
the conjoined infrastructure boom is over
 but that boom leaves real useable products

a sector boom only gets
that sector too far ahead of the rest of the product sectors
to justify existing relative prices

key point
 there would be no real loss
on past activity
only on future activity

without the historic legacy
 of
debt left behind now not "supportable "
by the current revenue flow of
any over built systems ...with quick market clearing price adjustments
the sector could proceed with production

answer
socialized debt
a debt "ownership structure
that of the whole people
which  can adjust easily and immediately to market shifts
and the inevitable "discovery" of its own "sub optimal" proportional development
by the purblind proceddings of any market system
as it gropes myopically along and around
in this hyper "uncertain " hyper changing and surprising
evolving "world " of ours

infra structure built by private undertaking
largely on credit money
widely sourced but private
debt and equity is of course most exposed to the whims of uncertainty
---like any vast fixed cost undertaking --
winners win bigger losers lose bigger

------------------------------------------ 

farm land lot value
as the "capitalized "
residual value of uncertain change
in final demand for field crops
ought not to exist in private ownership hands
the simple georgist movement oughta boom as the land lot values boom
at least lets socialize the inevitable scheinvert
into a tax revenue stream
china with its politbureau system
has the proper unaccountable despotic power
to begin the transition to total location rent value extraction
by means of taxation
thus no debt leveraged off lot values
ie potential bubble fountains
probably too late now
thesis:
the privately appropriated rent stream
from china's ongoing lot boom
is already too deep and too pervasive
to be reversed or re-socialized now
a georgist policy would probably
topple the existing
vanguard/leading party system ....
and what a topple that might be eh ??

mere eating

burden of mere subsistence

pricing banality

Kinked‐Demand Theory of Oligopoly

always worth renoting

"There is no denying that bourgeois society has for the second time experienced its 16th century, a 16th century which, I hope, will sound its death knell just as the first ushered it into the world. The proper task of bourgeois society is the creation of the world market, at least in outline, and of the production based on that market. Since the world is round, the colonisation of California and Australia and the opening up of China and Japan would seem to have completed this process. For us, the difficult question is this: on the Continent revolution is imminent and will, moreover, instantly assume a socialist character. Will it not necessarily be crushed in this little corner of the earth, since the movement of bourgeois society is still, in the ascendant over a far greater area?"
   letter to fred
                 october 8 1858

a randon slap

"Why should I trust any organization that has an explicit agenda?"
trust only if you share their agenda
all think tanks have an agenda or they wouldn't exist
if you don't think you have an agenda
get one
nothing is more stupid and tedious then
an independent
thinking for itself mind
primarily because in truth
its neither
and its quest for the truth in these class cloven waters is futile
like looking for a shark that acts like a porpoise

theories of primary surplus populations

 the bulk of any primal surplus population
   is  of course
 up rooted  wanna be subsisters 
( culled from all forms of  peasants from yeoman thru tenant share cropper to peon  bondsman slave and    tribal cultivator  herdsman hunter fisherman )
and to a lesser extent
traditional artisans
  back pack  traders and 
any other socially useless anachronistic "retainers "

these millions once cut "free " of the land  with the disintegration
   of  traditional  modes of product and exchange
become in time
the source of industrializations prolery
that is  if  they cCAN  be absorbed
by market based local  wages systems

if not ??

they turn outlaw ....but all too infrequently
rather more commonly
they drift urbanward
where they are drafted  into various forms of  the  great and venerable
 army of   mass misery of getting by somehow
nimbling at the margins of "emerging cities"
with the occasional
famines
pandemics
civil wars
  genocides
gulags etc etc etc

out lets ???
migrations
mostly unauthorized mass migrations
ie
they morph into
 the  utterly unwelcome easily exploited
undoc millions
producing and serving away
                   in the advanced world

great depression

the stig paradigm means gosman is a job class prefered institutional arrangement

the  array of market limitations incpompleteness failures  flaws blind spots irrationalities perversities etc etc
modeled by the stig generation of micro theorist between 1970 and  1990
spells  centrally coordinated wholisticall interconnected
  heavily monitored in great detail  even if  final decisions are taken by "informed" or centrally re-certified  decentralized components

 a  gosmanaged  national economy

markets need ever more redesign and lacing together
more central staffing more integrated bottom up /top down plan processes 

let ten thousand multipliers bloom

blanchard suggested
macro needed to disagregate management by building ---in ones mind-- many policy instruments
to manage a complex of many many interacting subsystems each requiring co ordinated sectoral intervention

paine translation

GOSPLAN II

peckerhead institute conference sum up

credit policy for decades has  focused on one track
 inflation effects of credit on  product prices and one policy
the inter bank interest rate

in fact  this amounted to only  wage rate control
 
ie  wage inflation was THE inflation
not the n inflations ie price level changes
in paper assets
 land
commodities
and yes industrial products and services etc

blanchard in his chat
essentially grasps the depth and detail of  any real control management of the credit system
many targets many instruments

something very real but questionable given FIRE sector interests
the FIRE brigade struck a tacit deal with the rest of the corporate community
we'll control  your wages and provide the financial bridges to the entire planet
  if you let us run amok
hence
the cyclops theory and
  bubble up  practice

keep
wage level change as target
and the bank's own inter-rate as steerage
ie
 de facto laissez allez to the entire FIRE sector

 

..

stig  mumble bumbles with the usual gems

sum up in paine think

sometime in the dark 70's
we had a shift in cognative capture

after 30 years  or more of chicago school  capture
of  mass taught and assumed micro

those sterile notions were used to capture
macro by the fire sector interests
ie destroy the keynesian reformation
yup
by re  founding macro on utterly wonderland  chamber of commerce micro
and this just when guys like stig akerloff and spence
were in the process of liberating cutting edge micro
from years of academic stagnation
-- the samuelson-arrow era ---

irony hey???

i love stigs line

we founded macro on the wrong micro

putting the last two posts together

note the requirements of development in dani

 competitive exchange rate
protect traditional sectors

the study chinn sites
"while aggregate output is not strongly affected, export growth falls significantly after appreciation shocks. Import growth remains by and large unchanged resulting in the observed deterioration in external balances."

and

" As aggregate economic growth is much less affected, our results point to a positive domestic demand response following appreciation episodes. "
is appreciation

 in that context

    a zap to development  ???
does the short run violate
dani's competitive currenct proviso
or is the zap to exports a re shift away from low employment high productivity sectors
toward low productivity high employment sectors
apparently not to growth
or to export competing domestic industry
 no import rate flab-alanche
only export  rate shrink

not on top of this yet

dani and the bi forcation of development

"...countries with a strong comparative advantage in natural resources are particularly prone to fall into the trap of growth-reducing structural change. For these countries, globalization is a mixed blessing. The natural-resource industries that globalization promotes have limited capacity to absorb employment out of traditional sectors. Globalization therefore entrenches dualism, rather than helping to overcome it.
Appropriate policies can help. One lesson is to avoid premature collapse of import-competing industries that employ substantial numbers of people before sufficient employment opportunities have emerged in more productive industries. Asian countries, for instance, have typically liberalized at the margin (through export subsidies or special economic zones), spurring new export industries without pulling the rug from under the rest.
Second, the exchange rate is vitally important. Competitive currencies promote and protect modern tradable industries that employ a substantial share of the labor force. We found in our research that countries with competitive currencies were much more likely to experience growth-enhancing structural change.
Finally, flexible labor-market policies seem to be important, too. Legal requirements that significantly increase the costs of hiring and firing labor discourage employment creation in new industries.
Structural change does not automatically accelerate economic development. It needs a nudge in the appropriate direction, especially when a country has a strong comparative advantage in natural resources. Globalization does not alter this underlying reality. But it does increase the costs of getting the policies wrong, just as it increases the benefits of getting them right."

appreciating appreciation

"     The study shows that currency appreciations can help to a certain extent in reducing global imbalances, and that it can go along with a shift from a mainly export-based model of growth towards a model with internal sources of growth. The cost in terms of growth would be very limited in the case of developed countries, but somewhat larger for developing countries.

The general results are illustrated by the impulse response functions:

Figure 1 from Kappler et al. (2011).
The effects are more pronounced when restricted to an emerging market/less developed country sample.

Figure 3 from Kappler et al. (2011).
From the conclusion:

Using data for 128 countries between 1960 and 2008, we have found 25 episodes of large sustained exchange rate revaluations, which we define as both nominal and real effective exchange rate appreciations of 10% (and more) within a two year window (or less). Studying the institutional context of each individual episode in detail, we identified 14 cases of appreciation shocks that occurred not as a result of discretionary policy action, but were passively linked to the appreciation of the anchor currency in the context of an exchange rate peg. We argue that these cases represent instances of exogenous appreciation shocks that we can use to estimate the macroeconomic impact of large appreciations and assess the robustness of estimates based on a wider definition of appreciation and revaluation events. Using a dummy-augmented autoregressive panel model we could indeed show that such large appreciations episodes have strong macroeconomic effects. Most importantly, we established four key stylised facts that can prove useful in the ongoing debate about the role of exchange rate adjustment for global rebalancing.
First, the current account balance typically falls strongly in response to large exchange rate revaluations. Three years after the revaluation, the current account balance deteriorates by about 3 pp. relative to GDP. This is due to a reduction in aggregate savings without a concomitant fall in investment. The effect on the current account balance is statistically significant and robust to variation in the country sample and the definition of appreciation events.
Second, the effects on output seem limited. Our point estimates suggest a negative effect of output growth, albeit of relatively small magnitude: on average, the aggregate level effect on output amounts to about 1% after six years. The confidence intervals are also considerably wider than for the current account. The output effects are statistically not significant.
Third, while aggregate output is not strongly affected, export growth falls significantly after appreciation shocks. Import growth remains by and large unchanged resulting in the observed deterioration in external balances. As aggregate economic growth is much less affected, our results point to a positive domestic demand response following appreciation episodes.
Fourth, these effects seem to be more pronounced in developing countries. The sensitivity of the current account balance to revaluation shocks is higher. The effect reaches almost 4 percentage points of GDP after three years and is statistically significant. But also the potentially negative effects on output are larger. Our point estimates indicate a loss in output of 2% over ten years. But confidence intervals remain wide, so that these results miss statistically significant levels. Why these effects are stronger in developing countries will be an important question that we aim to address in future research.
In sum, the historical record of large exchange rate revaluations that we have studied in this paper lends some support to the idea that large exchange rate appreciations and revaluations have an impact on the current account as they lead to marked changes of savings and investment within countries. Appreciation shocks impact external balances, but this effect potentially comes at the cost of a reduction of dynamism in exports. While the domestic economy seems to pick up some of the external slack, leaving overall growth relatively unaffected, the prospect of sharp decelerations in export growth will remain a concern for policy-makers and bears watching especially in the context of developing countries.

It is interesting to consider these results in the context of other studies. In particular, Eichengreen and Rose (2010) conducted an study of "...what happens to economies when they exit exchange rate pegs that are resisting appreciation. Data from 27 cases suggest that growth slows but only modestly, and there is no evidence of economic and financial damage as a result -- certainly nothing like the fears that China's next decade could look like Japan's lost decade." [pdf].
Eichengreen and Rose find a detectable growth decrease, but hardly a collapse --, using a different approach to identifying appreciation episodes. Taken together, research seems to suggest that a substantial growth slowdown in the wake of a large currency appreciation is unlikely."

Posted by Menzie Chinn at March 10, 2011 08:05 AM

mark up (mu) optimum with mark up warrent markets

where the change in mu over the change in units sold
equals
 the change in warrent price over the change in units sold


not  formal similarity to both credit ration and efficency wage model

nairu follies episode 10k plus 13 ....err ...u*

"  apply the canonical Diamond-Mortensen-Pissarides model ... to the aggregate data on unemployment and vacancies.... the model and data do not provide a definitive measure of u*. Unemployment insurance benefits have increased since December 2007. Firms expect higher taxes and higher input prices. It is possible that these changes in labor market conditions may have been sufficiently large to generate a big increase in u* in the past three years. "
-num num lakota-

good times just around the corner ?? ..yup ....was this january report the bottom of the bottom

Bureau of Labor Statistics, via Haver Analytics

"During the recession, the source of problems in the job market was the widespread shedding of existing employees. Today, the number of layoffs and discharges is very low — in fact, layoffs are at their lowest level since the Labor Department began collecting this data in 2000. Today’s problem instead is the very slow pace of job creation.
The number of nonfarm job openings fell again in January, by 161,000. That is the biggest monthly decline since July 2009, and places overall job openings about 36 percent below the level when the recession began three years ago."

turn up coming ??
led by manufacturing ???
or can the faultering  pub sec drag us back ???

will exports continue to dance ??

will imports squander any income rise  ???

stay tuned

the perils  of norte amigo are at a cross roads

--when aren't they  pal ---


“Generally speaking, all the data seem to suggest that if you already have a job, the labor market probably doesn’t seem so bad, but if you’re looking for a job, there’s been almost no job market improvement over the last few years....Keep in mind that these figures are from January, and a more recent Labor Department release for February showed widespread, if still not robust, hiring."

socializing the producer rents

management needs a socially acceptable reason to not distribute the full profits of enterprise to the firms job force

if we grant markets for stocks serve a social useful  function
that we have no better way to perform...

still whatever entity can hold a stock  oughta  be legitimate social functionals
not just idle coupon clippers

endowments for foundations ???

one has to have a market for founders to cash out into ...eh ???
evn if they can't directly hold any other stock they oughta have a way to deversify their "holdings"
away from their own enterprise

founders might be allowed to hold on to equity by cashing in their founder shares and putting the cash in part or in whole into a foundation
that can hold stocks

closed market systems can only owe themselves

this insight joins the other insight

 only the actual  storage levels of real products  defines
   the legacy of the past
as it rises or falls

otherwise its all about building productive capacity
the system of investment has only this simple "real time" impact

synthetic securities

this in epitome is the heart of financialization's a go go moment
the construction of derivative  products
was it all just  elk antlers for contemporary corporate systems
or is it really  a better fuller  marketizing
de facto socializing  of  the portfolio of lenders  ??

both !!!

like everything else in the end
two polar aspects contend
the ever more pervasive credit system
itself quickly revealing the irrational stage of the private firm

once society can immortalize a corporation
make it a for as long as necessary operation
 how is it like the classic
 self contained limited credit line  firms of yore
how can the spontaneous selection process
called bankrupcy
                  retain its faithful following
when reserection powers exist thru the holy ghost called fed streaming credit
from the magic fountain

the credit system is by stages fillig in its missing linkages between various types of "enterprise"

a model oughta be able to show the improved dynamics of this process

a few  insights  not fully digested institutionally

credit is unlimited

prices and obligations are best if maximally  elastic
but only if that elasticity expresses itself
  in co ordinated movements
ie
price level and debt load need to move together
no fisher effects because the rate can't go negative

a negative rate socializes ..spreads fully the impact of debt /price level adjustment
smooths it out
rids the system of its  anachronistic  reliance on  defaults  to clear off excess debt loads

existing debt  vs new debt is  system wise
   merely an accidental distribution of  fixed nominal obligations
an optimal means of modification
of any existing  array of obligations
requires both price level management and full range interest rates
that could  both discount hunks of nominal debt and  decrease debts  real "value"
by use of both or either instrument

the lifting of the payment system off the shoulders of operating companies
would remove this burden of past actions on foward looking management
thus the obligatory universal default insurance system covering all obligations

derviatives are part of the slowly self assembling  hommunculus of this future universal system

nep can we really say we're beyond that now ???

digesting the last 80 years of capitalist development
might not get us to a new 5 year plan paradigm
the massive failure of faith that swept away the stalin model
in the 70's and 80's
may not have thrown out that big or robust a gos-baby with the gos -bath water
after all  the origination
the conception of that gos baby
on the fly in the late 20's
never did seem all that much beyond
two parts  fond good faith hope
mixed with one part  nasty brutal necessity
and once conceived
a "living system " becomes quite hard to alter eh ??

yes maybe  now 
we might conceive a better genetics for the next gos-baby
but are we really free of market spontaneity
    as best practice
that is
 in its more odious aspects
ie the"quasi  independent"  corporate form
with a vast over arching hi fi commanding heights super structure ???

my toying with tranched equity
suggests i'm far from clear on this

we work from both ends
from firm/market up
and
from central plan down

five chambered equities

default if fully socialized might not lead to a best guided
 development of a social production system

maybe we need to retain  agent/player/trader   risk
why not require publically traded issues to
come on market
in  composite form
each stock offereing  in five  20% of total tranche packettes
like the titanic

initial assumptions

one point often over looked
is the intial condition assumption

what impact does it have to always "start" the system at equilibrium ??

in fact why assume anything more then
certain  dynamic mechanisms
certain in media res "conditions"
and
a relevent "store of history" in the agents

--of course make em  heterogenious as to stores of history
 and time to act bounded
even if all agents have identical choice mechanisms we call
                                   rational deciders --


sure eventually once the raft of internal inconsistencies gets unknoted
and if ....if
   " external shocks cease"
things might indeed
wind down ... err settle on a path of sorts
but so what


"time enough "??
really ...when will that be relevent
and at least because
"external shocks cease "
is impossible
even if only the "wealth effects " of out of "equilibrium trading occur  ..must occur

what of economic fairness
if much is wind fall gains and losses

not to notice
agent "life span "
as in
 out out brief candle

too much to chew here admittedly
but i didn't cut the bite sizes eh ??
we see these assumptions and narratives everywhere

okay
i'm into realytics
i'm armed with lerner / vickrey
not the harvard yard /infinite corridor ivy teeter totter
i can brush off these idiotic assumptions

they are not in my paradigm

one i suspect quickly gets to the conclusion
for policy considerations
an initial steady state is beyond convenient
to irrelevent  and utterly pernicious

even if analytic beauty arises with such a consideration
the slant of realism is lost hopelessly and to only one advatantage
laissez faire corporate clown car ops

buy --among other things --
an up front assumed "real " existence of such a mental contrivance
and you are doomed to vindicating
corporate hegemony

how's that for hyperbolics