Thursday, February 28, 2013

hi fi squeeze out ...discovering hidden inefficient corporate rent sumps



recall this can be seen
as
a use of the greenwald stiglitz model

applied here in practice by the hi fi ers
to extract reproductively  un neccesary rents in the social market mediated  production platform

a rudolf meidner tax ?

the failure to implement this beuatiful tax
pretty well ended the swedish dash toward eden
at least by way of tax and transfer systems

under the paine soviet system
the commanding heights would operate with similar isle of Laputo savagery
 toward the underlying production archipeligo

difference ?

the extractions would get tossed in the general social surplus melder

bob solow on debt burdens

"Roughly half of outstanding debt owed to the public, now $11.7 trillion, is owned by foreigners"


". This part of the debt is a direct burden on ourselves and future generations. "


"Foreigners are entitled to receive interest and principal and can use those dollars to acquire goods and services produced here. If our government had used borrowed money to improve infrastructure or to improve the skills of workers, the resulting extra production would have made repayment easier. Instead, over the last decade, it used the money for wars and tax cuts. "

      
"The Treasury owes dollars, America’s own currency"
 
 
" So the Treasury can always make payments when due ... no foreign lenders
 realistically expect us to default. If they did, they would be insisting on higher interest rates,
which they aren’t."
 
.
"One way to effectively repudiate our debt is to encourage inflation. "
 
 
"When prices rise, interest and principal are repaid in dollars that are worth less than they were when they were borrowed. "
 
.
"Treasury bonds owned by Americans are different from debt owed to foreigners."
 
" Debt owed to American households, businesses and banks is not a direct burden on the future."
 
" Some of our grandchildren would be paying off others of our grandchildren;"
 
      
"The real burden of domestically owned Treasury debt is that it soaks up savings that might go into useful private investment."
 
" Savers own Treasury bonds because they are seen as safe, default-free assets, and the government can borrow at lower rates than corporations can. If there were less debt, and fewer bonds for sale, savers seeking higher returns would invest in corporate bonds or stocks instead. Business investment would expand and be more profitable. "
 
      
"But in bad times like now, Treasury bonds are not squeezing finance for investment out of the market"
 
". On the contrary, debt-financed government spending adds to the demand for privately produced goods and services, and the bonds provide a home for the excess savings. When employment returns to normal, we can return to debt reduction. "
      
"In the long run we need a clear plan to reduce the ratio of publicly held debt to national income. "
 

ahh dear old bob

like most neo classical synthetics

he adds nothing even as he clearly states everything

i would offend him by compressing this to:

"please ...just borrow all you want today today today


but bob what of  tomorrow and tomorrow and tomorrow ?

feel free my people
            to inflate as much as you please away away away  away

two post WWII "flation" motions

FedquarterFedmonth

Wednesday, February 27, 2013

dirty deed numero uno : winter 1951 THE ACCORD !!!

http://www.richmondfed.org/publications/research/economic_quarterly/2001/winter/pdf/hetzel.pdf






















"In April 1942, after the entry of the United States into World War II, the

Fed publicly committed itself to maintaining an interest rate of 3/8 percent

on Treasury bills. In practice, it also established an upper limit to the term

structure of interest rates on government debt. The ceiling for long-term

government bonds was 2 1/2 percent......
since its meeting on June 13, 1950, the FOMC had chafed

at the straitjacket imposed by the rigid regime of rate pegging......."



truman
"[T]he Federal Reserve Board should make it perfectly plain. . . to the New





















York Bankers that the peg is stabilized.. . . I hope the Board will. . . not

allow the bottom to drop from under our securities. If that happens that

is exactly what Mr. Stalin wants. (FOMC Minutes, 1/31/51, p. 9)"
"The prospect of a prolonged war created the likelihood of government
deficits and the issuance of newgovernment debt. Additional debtwould force
down the price of debt unless the Fed monetized it. That is, to prevent yields
from rising above the 2 1/2 percent rate peg, the Fed would have to buy debt
and increase bank reserves. Banks would then fuel an inflationary expansion
through increases in credit and the money supply"

2.


















The

threat of a major, protracted war created the real possibility that the bond rate

would rise to its 2 1/2 percent ceiling. Life insurance companies, which held

the bonds, then had an incentive to sell them immediately to avoid a capital

loss as bond prices declined.

12 The Fed did not want to monetize an avalanche

of bond sales. For that reason, it wanted to eliminate the above-par price on

the bonds. The Treasury, in contrast, saw the problem as one of the Fed’s own

creation. If the Fed would only publicly commit to maintaining indefinitely

the current price of bonds, it believed, bond holders would no longer have an

incentive to sell.
New York Times



: “[L]ast  Thursday constituted the first occasion in history on which the head of the


















Exchequer of a great nation had either the effrontery or the ineptitude, or both,

to deliver a public address in which he has so far usurped the function of the

central bank as to tell the country what kind of monetary policy it was going

to be subjected to.”
Truman had compelling reasons to freeze interest rates. On January 25,

1951, he froze wages and prices, apart from farm prices. Raising the cost of

borrowing, especially on home mortgages, while freezingwageswas poison.


14

















More important, in January 1951 Truman confronted the possibility of world

war. Treasury communication with the Fed referred to a possible Soviet attack

on the United States “within the foreseeable future” (FOMC Minutes, 3/1/51,

p. 119). Truman and Snyder wanted to keep down the cost of financing the

deficits that would emerge from a wider war
Truman and the leadership in Congress believed that deficit financing

had caused the World War II inflation (Goodwin and Herren 1975, p. 70;

Donovan 1982, p. 325). At the urging of the Administration, Congress raised

taxes sharply in September 1950 with the Revenue Act of 1950 and again in

January 1951 with an excess profits tax (Goodwin and Herren 1976, p. 71).

However, if the war widened to include China and possibly the Soviet Union,

there would be government deficits


eccles january 51

"As long as the Federal Reserve is required to buy government securities

at the will of the market for the purpose of defending a fixed pattern of

interest rates established by the Treasury, it must stand ready to create

new bank reserves in unlimited amount. This policy makes the entire

banking system, through the action of the Federal Reserve System, an

engine of inflation. (U.S. Congress 1951, p. 158)"


--------------------------------------------------------------
exchange  congressman patman / eccles












Patman: Don’t you think there is some obligation of the Federal Reserve

System to protect the public against excessive interest rates?

Eccles: I think there is a greater obligation to the American public to

protect them against the deterioration of the dollar.

Patman: Who is master, the Federal Reserve or the Treasury? You know,

the Treasury came here first.

Eccles: How do you reconcile the Treasury’s position of saying they

want the interest rate low, with the Federal Reserve standing ready to

peg the market, and at the same time expect to stop inflation?

Patman: Will the Federal Reserve System support the Secretary of

the Treasury in that effort [to retain the 2 1/2 percent rate] or will

it refuse?. . .You are sabotaging the Treasury. I think it ought to be

stopped.

Eccles: [E]ither the Federal Reserve should be recognized as having some

independent status, or it should be considered as simply an agency or a

bureau of the Treasury. (U.S. Congress 1951


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

more eccles

"We are making] it possible for the public to convert Government securities

into money to expand the money supply.. . .We are almost solely

responsible for this inflation. It is not deficit financing that is responsible

because there has been surplus in the Treasury right along; the whole

question of having rationing and price controls is due to the fact that we

have this monetary inflation, and this committee is the only agency in

existence that can curb and stop the growth of money.. . . [W]e should tell

the Treasury, the President, and the Congress these facts, and do something

about it.. . .We have not only the power but the responsibility.. . . If

Congress does not like what we are doing, then they can change the

rules"
---------------------------

ny fed president and major mephisto sproul










"[T]he Committee did not in its operations drive securities to any price or

yield.. . . [M]arket forces had been the determining factor, and that only

in resisting the creation of reserves had the committee been a party to

an increase in interest rates. That. . . was the result of market forces, and

not the action of the Committee. "
 
 
 
"the FOMC’s letter to Senator O’Mahoney. The

initial substantive paragraph began with the famous quote from John Maynard

Keynes: “[T]hat the best way to destroy the Capitalist System was to debauch

the currency” (FOMC Minutes, 2/14/51, p. 87). The letter expressed hope for

an agreement with the Treasury, but ended by saying that if such agreement

were not possible “[W]e will have no defensible alternative but to do what, in

our considered judgment, is for the best interests of the country, in accordance

with our statutory responsibilities” (FOMC Minutes, 2/14/51, p. 89)."
The Fed then forced resolution of the dispute. It informed theTreasury that

as of February 19, it “was no longer willing to maintain the existing situation

in the Government security market” (U.S. Treasury 1951, p. 266). Sproul

(1952, p. 522) recounted that the Fed informed the Treasury that “unless there

was someone at the Treasury who could work out a prompt and definitive

agreement with us. . . we would have to take unilateral action.” At the time,

the Treasury faced a sizable need to refund existing debt. For the first time,

it also faced the prospect of issuing new debt. To quiet uncertainty in the
markets, the Treasury believed it had no choice but to end the public dispute
On the morning of February 26, McCabe and Sproul attended a meeting

in the White House with the President and other government policymakers.

(Snyder remained in the hospital.) Truman read a memorandum stating that

“Changing the interest rate is only one of several methods to be considered for

curbing credit expansion.” He then asked the Fed chairman and other policymakers

“to study ways and means to provide the necessary restraint on private

credit expansion and at the same time to make it possible to maintain stability

in the market for government securities” (FOMC Minutes, 2/26/51, p. 102).

As an alternative to a rise in interest rates, Truman asked for selective credit

controls (“direct Government controls”) to limit credit extension (FOMC Minutes,

2/26/51, p. 102). When Chairman McCabe “commented on the situation

created by the continued purchase by the System of. . . bonds,” Treasury Under

Secretary Foley countered “that the proposed action by the Federal Open

Market Committee might cause a crisis which should be avoided.” While the

meeting was underway, the White House released the contents of the President’s

memorandum to the press.

The Treasury maintained the position that direct controls on credit were

preferable to increases in interest rates (FOMC Minutes, 3/1/51, p. 117). However,

the Treasury also believed that an end to the dispute with the Fed would

restore market confidence and allow it to continue to sell bonds at 2 1/2 percent

(FOMC Minutes, 3/3/51, p. 153). Moreover, as became apparent later,

the Treasury still had another weapon to use.

When Snyder went into the hospital, he left negotiations with the Fed

in the hands of the Assistant Secretary of the Treasury, William McChesney

Martin.


22 Martin notified the Fed that he desired negotiations based on the






FOMC’s February 7 letter. He reestablished staff contact between theTreasury

and the Fed, which Snyder, as Leach recalls, had forbidden some years earlier.

William McChesney Martin and Fed staff members Robert Rouse, Woodlief

Thomas, and especially Winfield Riefler, negotiated an agreement between

the Treasury and the Fed (FOMC Minutes, 2/26/51, p. 93; FOMC Minutes,

3/1/51, pp. 112–13).

As presented to the FOMC on March 1, the resulting agreement reflected

Riefler’s original ideas. The Fed would keep the discount rate at 1 3/4 percent

through the end of 1951. The Treasury would remove marketable bonds

from the market by exchanging them for a nonmarketable bond yielding 2 3/4






22


Martin had exceptional qualifications. In 1938, at age 31, he became president of the






New York Stock Exchange. Newspapers called him the “boy wonder of Wall Street.” After the

Army drafted him in World War II, he helped run the Russian lend-lease program. In 1946, he

became head of the Export-Import Bank. In December 1948, Treasury Secretary Snyder, a fellow

Missourian, convinced Martin to join the Treasury. Finally, Martin’s father had been Governor of

the Federal Reserve Bank of Saint Louis.






R. L. Hetzel and R. F. Leach: New Narrative Account 51

percent.


23 To make those bonds liquid and thus more attractive to the market,






the Treasurywould exchange them upon request for a 1 1/2 percent marketable

five-year note. During the exchange, the Fed would support the price of the

five-year notes. That support was central because the value of the nonmarketable

bonds depended upon the price of the five-year note. However, the

Fed made no commitment to support the note’s price beyond purchases of

$200 million.

On March 1, Martin presented the compromise to the FOMC. The minutes

make clear that he displayed the charm for which he is legendary. He began by

saying, “Iwant to say for the Treasury people we could not have had pleasanter

or more frank or more open discussions” (FOMC Minutes, 3/1/51, p. 118).

The main sticking point for theFOMCwas whether theTreasury had accepted,

during the bond exchange, a limitation both on the duration and dollar amount

of its intervention in support of the five-year note (FOMC Minutes, 3/1/51,

p. 136). Also, theFOMCwanted to make sure that its commitment to maintain

“orderly markets” did not imply a rate peg.

The FOMC met again on March 3, 1951. Chairman McCabe said that

Mr. Murphy, Special Counsel to the President, had inquired on behalf of

President Truman whether long-term bonds would drop below par. McCabe

had replied to Murphy that he could not say. During the meeting, Riefler

received a telephone call from Martin informing him that Secretary Snyder,

who was still in the hospital, had accepted limitations on Fed support during

the exchange of the marketable for the nonmarketable bonds. However, Martin

requested that there be no written record of that point (FOMC Minutes, 3/3/51,

p. 158).

The FOMC then voted to ratify the Accord and to issue the following

statement the next day: “The Treasury and the Federal Reserve System have

reached full accord with respect to debt-management and monetary policies

to be pursued in furthering their common purpose to assure the successful

financing of the Government’s requirements and, at the same time, to minimize

monetization of the public debt” (FOMC Minutes, 3/3/51, pp. 156, 163).
The FOMC then voted to ratify the Accord and to issue the following
statement the next day: “The Treasury and the Federal Reserve System have
reached full accord with respect to debt-management and monetary policies
to be pursued in furthering their common purpose to assure the successful
financing of the Government’s requirements and, at the same time, to minimize
monetization of the public debt” (FOMC Minutes, 3/3/51, pp. 156, 163).
The Administration had one more hope that it would prevail.

24 While in
the hospital, Snyder conveyed to Truman the message that he felt he could no
longer work with McCabe. Without a working relationship with the Treasury,
McCabe could not function as Chairman of the Board of Governors. McCabe
sent in a bitter letter of resignation, but resubmitted a bland version when asked
to do so by the White House. McCabe, however, conditioned his resignation
on the requirement that his successor be acceptable to the Fed. On March 15,
23

About $40 billion in 2 1/2 percent bonds were outstanding (U.S. Treasury, 1950 Annual
Report,


Table 17).
24

Donovan (1982, p. 328) wrote, “Truman forced McCabe out as chairman of the Board of
Governors.” This paragraph summarizes Donovan (1982, p. 331).
52 Federal Reserve Bank of Richmond Economic Quarterly
the President appointedWilliam McChesney Martin to replace McCabe. The
Senate confirmed Martin on March 21. McCabe left office on March 31, and
Martin took office April 2.
Leach recalls that the initial reaction both among Board staff and onWall
Street to Martin’s appointment was that the Fed had won the battle but lost the
war. That is, the Fed had broken free from the Treasury, but then the Treasury
had recaptured it by installing its own man. However, as FOMC Chairman,
Martin supported Fed independence. Some years later, Martin happened to
encounter Harry Truman on a street in NewYork City. Truman stared at him,
said one word, “traitor,” and then continued.

25 Leon Keyserling (1971, p. 11),
chairman of the Council of Economic Advisers from 1950 through 1952, said
later: “[Truman] was as strong as any President had ever been in recognizing
the evils of tight money.. . . He sent Martin over to the Treasury to replace
McCabe. Martin promptly double-crossed him.”
In his speech accepting an appointment to the Board of Governors, Martin
(1951, p. 377) said:
Unless inflation is controlled, it could prove to be an even more serious
threat to the vitality of our country than the more spectacular aggressions
of enemies outside our borders. I pledge myself to support all reasonable
measures to preserve the purchasing power of the dollar.
The Treasury’s offering of the new 2 3/4 percent nonmarketable notes in
exchange for the 2 1/2 percent marketable issues took place from March 26
through April 6. During this period, as provided for in the Accord, the Fed
purchased the five-year notes as needed to support their price. However, the
Fed spent the entire amount agreed to in the first three days. “[D]ismayed
Treasury officials asked for continued support. The request was refused, and
there was nothing more the Treasury could do about the matter” (Hyman
1976, p. 351). The Fed just said “No.” Thereafter, the Fed bought only small
amounts of the bonds to prevent “disorderly conditions in the market.” Their
price went from around 100 3/4 before the Accord to around 97 in the last
half of the year “when the bond market was on its own” (Board

1951 Annual
Report,


p. 5).
Under its new leadership, the FOMC had issued its ultimate challenge to
the White House. Why did Truman finally walk away from the conflict? For
Truman to triumph over the Fed, he would have had to prevail in Congress;
however, his precarious political position in early April 1951 made that impossible.
Truman’s political popularity had plummeted in part because of scandal.
Earlier that year, Senator Fulbright (D. Arkansas) had released a report
25

Telephone interview, Robert Mayo, April 10, 1998.
R. L. Hetzel and R. F. Leach: New Narrative Account 53
accusing two directors of the Reconstruction Finance Corporation (RFC), one
a politically well-connected Democrat, of favoritism (Donovan 1982, p. 333).
More important, shortly after the conclusion of the Accord, a much more
serious and long-simmering crisis boiled over: the tension between President
Truman and General Douglas MacArthur. MacArthur had opposed Truman’s
policy of limited war, saying that it amounted to “surrender.” Truman had
made the decision to seek peace in Korea through its partition at the 38th
parallel rather than to engage China in a wider war, which he feared would
involve the Soviet Union and atomic weapons. On February 13, MacArthur
called Truman’s policy “unrealistic and illusory.”

26
On March 24, MacArthur claimed that he could defeat China if only
Washington would stop restricting him militarily. He even offered “to confer
in the field with the commander-in-chief of the enemy forces.” His statements
sabotaged secret negotiations to settle the war. Representative Joseph (Joe)
Martin (R. Mass.) advocated the use of Chiang Kai-shek’s forces in Formosa
to open a second front against China. MacArthur supported Martin in a letter,
which included the phrase “There is no substitute for victory” (Donovan
1982, p. 352). On April 5, Martin read MacArthur’s letter in the House of
Representatives.
On April 10, four days after the end of the bond exchange, Truman fired
MacArthur. Truman biographer Robert Donovan (1982, p. 358) wrote that
Truman “knew well enough that he would awake in a political climate raised
to a pitch of hatred and recrimination so severe that it could not fail to stain the
remainder of his term in office. Of all the storms he lived through as President,
the one about to break was the worst.” To aggravate Truman’s problems,
MacArthur learned from the radio that Truman had fired him. The

Chicago
Tribune


wrote in a front page editorial: “Truman must be impeached and
convicted.. . . [H]e is unfit, morally and mentally, for his high office” (Donovan
1982, p. 359).
Subsequent events gave the Fed time to incubate its fragile independence.
Inflation abated sharply. CPI inflation averaged just over 3 percent from
1951Q2 through 1951Q4 and just less than 1.5 percent in 1952. Also, Dwight
D. Eisenhower, Truman’s successor and President from 1953 through 1960,
and his Treasury secretaries shared the Fed’s goal of price stability (Saulnier
1991).
3. CONCLUDING COMMENT
The March 1951 Accord marked the start of the modern Federal Reserve
System. Under Chairman Martin, the Fed’s overriding goals became price
stability and macroeconomic stability.
26

This paragraph and the next are from Donovan (1982, pp. 349–51).
54
The Administration had one more hope that it would prevail.


24 While in






the hospital, Snyder conveyed to Truman the message that he felt he could no

longer work with McCabe. Without a working relationship with the Treasury,

McCabe could not function as Chairman of the Board of Governors. McCabe

sent in a bitter letter of resignation, but resubmitted a bland version when asked

to do so by the White House. McCabe, however, conditioned his resignation

on the requirement that his successor be acceptable to the Fed. On March 15,






 
Sproul

About $40 billion in 2 1/2 percent bonds were outstanding (U.S. Treasury, 1950 Annual




eccles

 



 


 
martin

"Unless inflation is controlled, it could prove to be an even more serious

threat to the vitality of our country than the more spectacular aggressions

of enemies outside our borders. I pledge myself to support all reasonable

measures to preserve the purchasing power of the dollar."

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

"Some years later, Martin happened to

encounter Harry Truman on a street in NewYork City. Truman stared at him,

said one word, “traitor,” and then continued.

25 Leon Keyserling (1971, p. 11),

chairman of the Council of Economic Advisers from 1950 through 1952, said

later: “[Truman] was as strong as any President had ever been in recognizing

the evils of tight money.. . . He sent Martin over to the Treasury to replace

McCabe. Martin promptly double-crossed him.”



 





 

Fed Debt service burden ...if the FED plays patty cake


"Interest alone could rise  from a current  $224 billion
to a possible  $857 billion 10 years from now"


but why ?

we need
 a bout of financial repression
 when  this snail paced recovery from the job  slump ends

Tuesday, February 26, 2013

corral comparative wage rate change

the ECB contrived spreads

nine fold master of monetary policy

fiscal flop and yet steady expansion

tysons corner




"The US remains the global leader in R&D investment, spending an estimated $400 billion in 2009 – higher than China, Japan, and Germany combined. in terms of R&D spending as a share of GDP, the US ranked only eighth in 2009 (at 2.9% of GDP). " defense accounted for more than 50% during the last 25 years." " The defense share of R&D – less than 10% in the EU and less than 5% in Japan in 2009 " "between 1999 and 2009, global R&D spending grew at an average annual rate of 7%, accelerating to 8% during the last five years, despite the global recession. " "Over the decade, the US share of global R&D fell from 38% to 31%, the EU share fell from 27% to 23%, and Asia’s share rose from 24% to 32%. Within Asia, R&D spending in China grew at an astounding 20% annual pace – twice the country’s GDP growth rate – and by 2009 China had surpassed Japan to become the world’s second-largest investor in R&D. Spending on R&D also grew rapidly – about 10% annually – in South Korea. By contrast, R&D spending grew by 4% in Japan, 5% in the US, and roughly 6% in Europe." ", In 2009, business accounted for 75% of R&D funding in Japan, 73% in South Korea, 72% in China, 67% in Germany, and 60% in the US, " " multinational companies, whether headquartered in the US or elsewhere, accounted for about 84% of private (non-bank) R&D investment in the US in 2009," "US multinationals locate about 84% of their R&D activities in the US this share has declined during the last decade, as US multinationals have shifted some of their R&D from the US and Europe to Asia in response to rapidly growing markets, ample scientific and engineering talent, and generous subsidies." "global competition for multinational companies’ R&D activity, and for the local benefits that it brings, is likely to intensify in the future, with many countries already offering sizeable tax credits and extended tax holidays. The Asian economies have been particularly aggressive in the use of such incentives. And, recognizing that the availability of a workforce with the necessary skills is a key determinant of where businesses locate their R&D activities, many countries are increasing their investments in tertiary education and training in science, engineering, and technology." "Engineering accounts for only 4% of all bachelor’s degrees in the US, compared to 19% in Asia" "Many countries are changing their immigration laws to make it easier to attract highly skilled workers, especially scientists and engineers, who are increasingly mobile." "Meanwhile, immigration policies in the US and Europe are making it more difficult to attract and retain such workers, compelling companies to shift R&D abroad to find the talent that they need."

Saturday, February 23, 2013

Friday, February 22, 2013

win with Wynne

The main conclusions are as follows. Consider an economy in which neither inflation nor the balance of payments is a constraint on output, so that any permanent increase in demand leads to an equal and permanent rise in output. In such an economy, tax cuts or additional government expenditure are eventually self-financing. They lead to some increase in government debt, but not to an explosion, since this debt will ultimately stabilise. The factor stabilising the debt is the behaviour of output. Following a fiscal stimulus, output will rise and tax revenue will automatically increase. Moreover, the expansion will continue to the point where additional tax revenue is sufficient to halt government borrowing and stabilise the debt. In an inflation-constrained economy, the expansionary process will lead to an unsustainable inflation and the government will be compelled to half the expansion before tax revenue has increased sufficiently to stabilise the government debt. In a balance of payments constrained economy, the government debt will grow without limit because the output multiplier will be too small to generate the tax revenue required to stabilise government debt. The counterpart to expanding government debt will be an expanding national debt to foreigners.

we need to make greenwald stiglitz etc into a concrete wonder land

these unstable markets  in particular
that have adverse selections
and inadequate dynamic demand to sustain innovations

shirker markets

reputation rents

rationed credit

inter linked firm financing

list goes on

add your favorites

agents and synthetic modeling fine but....analytic models are abductive too

fine
both contrast with inductive radicalism

play at this open  mind crap
oppose it to practice

a passive mode of  discovery

so long as our rudely empirical types
respect their tools of extraction
act upon the data
and
impact decisively the "findings "
   they  wrench out of the telemetry of any real markets

negative rates or inflation?

adjusting the real value of fixed  nominal obligations requires
use of inflation
of  product prices and of course wage rates

negative or positive changes in  rates of interest
not limited by the zero line
call them in general  occasional real value realigners
could accomplish these adjustments instantaneously

in any closed market system
inflation is meaningless unless its non proportional

ie
 some nominal values move  differently then others
more or less
 including
      in  opposite directions


open systems are inter linked by forex rates
where congruent or just  similar  or  for that matter
contrary adjustments can be made

Thursday, February 21, 2013

Linearization and commercial arithmetic

The scale here is critical After all short enough linear intervals in all relevant dimensions Oughta capture the decisions of agents using arithmetic to calculate their actions And reactions
x_n :

  x_{n+1}=f_\mu(x_n)=\begin{cases}
    \mu x_n     & \mathrm{for}~~ x_n < \frac{1}{2} \\ \\
    \mu (1-x_n) & \mathrm{for}~~ \frac{1}{2} \le x_n 
    \end{cases}

Tuesday, February 19, 2013

Work sharing in the GD

NBER Working Paper No. 18816 Issued in February 2013 NBER Program(s):   DAE During the Great Depression of 1930s, changes in the workweek drove a larger portion of changes in total labor input than in other decades. Work-sharing policies appear to be responsible. Hoover created various work-sharing committees lead by key industrialists, which pushed for shorter workweeks and Roosevelt’s President’s Reemployment Agreement called for sharp cuts in weekly hours. The hope was to spread available work amongst more people. While between 50 and 90 percent of declines in labor input were accommodated by falling hours during these periods, in recent decades employers have primarily relied on layoffs to achieve the same end. During the Great Depression of 1930s, changes in the workweek drove a larger portion of changes in total labor input than in other decades. Work-sharing policies appear to be responsible. Hoover created various work-sharing committees lead by key industrialists, which pushed for shorter workweeks and Roosevelt’s President’s Reemployment Agreement called for sharp cuts in weekly hours. The hope was to spread available work amongst more people. While between 50 and 90 percent of declines in labor input were accommodated by falling hours during these periods, in recent decades employers have primarily relied on layoffs to achieve the same end.

Class assignment : evaluate Paul k's blog

How much did he get right as a Merlin How much did he teach as a mentor All evaluation is relative And requires a numeraire I'd Use brad Delong as numeraire Why I'm I assigning this to u not to moi ! Slow reader lazy compiler Better you absolute comp advant me Use my quick negative thinking and flawless pattern recognition to review your findings I give you till march first

Over looking cost cutting investments in a time of stagnating real demand

Why not look at the return to investing in cost reducing processes ? If your loaded up with cash Hence the fairly reasonable corporate spending on new software and equipment Green field investing of course is utterly absurd and kaputniki

To be the forward guidance equivalent of an All seeing fed ? All power sufficient

What would the fed need to be to be a reliable forward guide? That is the assignment for all institutionally constrained progressive job class oriented macro reformers

Uncle provided and required Lot insurance

Why not ? The premium would be a george tax

Dropping the AS IF

Think of the. " by an invisible hand " or as if money ...whatever that might be framed into Has something well captured by the word velocity for that matter any of GT Keynes aggregates like Y I C N Trying to drop the " as if " and plowing into making policy can take you right down the rabbit hole On the other hand retaining the "AS IF" brackets Suggests you set up some pretty sharp real time info feed back systems Of course in the public square chatter dropping the as it's can be like playing catch with a Bowie knife

Monday, February 18, 2013

dachs XL at regatta

Dachsund and Regatta

rescue dachs

Rescue Three Dachshunds

thanx brad.... i'll visit again...some day

brad clips GT keynes and bashes the Moor

"I agree with [Silvio] Gesell that the result of [our] filling in the gaps in the classical theory [with our approaches] is not to dispose of the [free-market] ‘Manchester System’,"


" but to indicate the nature of the environment which the free play of economic forces requires if it is to realise the full potentialities of production. The central controls necessary to ensure full employment will, of course, involve a large extension of the traditional functions of government…. "


"But there will still remain a wide field for the exercise of private initiative and responsibility. Within this field the traditional advantages of individualism will still hold good."


"Let us stop for a moment to remind ourselves what these advantages are."


" They are partly advantages of efficiency
 — the advantages of decentralisation and of the play of self-interest."

" The advantage to efficiency of the decentralisation of decisions and of individual responsibility is even greater, perhaps, than the nineteenth century supposed; and the reaction against the appeal to self-interest may have gone too far. "



"But, above all,"

here it comes sports fans


"  if it can be purged of its defects and its abuses,"

the good old angelization assumption


 " individualism  is the best safeguard of personal liberty in the sense that, compared with any other system, it greatly widens the field for the exercise of personal choice"

"It is also the best safeguard of the variety of life, which emerges precisely from this extended field of personal choice,"

 the loss of  personal choice  is the greatest of all the losses of the homogeneous or totalitarian state."

" For this variety preserves the traditions which embody the most secure and successful choices of former generations; it colours the present with the diversification of its fancy; and, being the handmaid of experiment as well as of tradition and of fancy, it is the most powerful instrument to better the future…."

personal choice "the hand maiden of experiment "!!!!!

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back to reality

"[I]f… demand is deficient, not only is the public scandal of wasted resources intolerable, but the individual enterpriser who seeks to bring these resources into action is operating with the odds loaded against him. "


"The game of hazard which he plays is furnished with many zeros, so that the players as a whole will lose if they have the energy and hope to deal all the cards."


" Hitherto the increment of the world’s wealth has fallen short of the aggregate of positive individual savings; and the difference has been made up by the losses of those whose courage and initiative have not been supplemented by exceptional skill or unusual good fortune."


" But if effective demand is adequate, average skill and average good fortune will be enough."
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back to liberal dog  barking


"The authoritarian state systems ...solve the problem of unemployment at the expense of efficiency and of freedom. "

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punch drunk sum up:
\
"It is certain"

" the world will not much longer tolerate the unemployment…."

" But it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom…"

the ghost of  future '78
              rises to laff