Wednesday, June 6, 2012
We. Need two targets ..at least in a closed system prolly 4 or more
This battle of the optimal target is perhaps instructive but futile
Thesis
Target price movements or output movements or any one of their several proxies
And you leave uncertain key variables
If you target an aggregate of the two either rate of change wise or level wise
Obviously the y= price index x output index
Leaves an infinity of combos
a hyperbolic function built of a continuum of equal area rectangle
Yes I can see the use for trend line navigation over rate of speed
However
Knowing the targets in each trend is necessary not simply their multiplicative
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Ya two targets imply a task of consistency
But so be it
Assume a closed system for simplicity****
Thesis
A price level target and a real out put target can both be reached
By the right macronautics
Price level of course requires a mark up market
Output a automated injection extraction system
Credit rations and terms remain passive in this set up
Thesis
A credit ration and terms driven stabilizer
prolly reaches the same aggregates
by other means
and with a significantly different
distribution of micro outcomes
**** in the short run leaks to the surrounding system in an open economy
can be compensated by upping the injections or extractions
Long run ..that's where other macro targets come in
Forex to balance trade and interest rates to reward or punish rentiers etc