Saturday, July 19, 2014

an auto moblizer : operating without a net

turn the safety net tax and transfer system into a mobilizer when FM is not spontaneous injected added demand thru jobbler households thru transfers from the earned dividend fund

Wednesday, July 16, 2014

Hymerizing PA ursprüngliche akkumulation

"The word primitive is here used in the sense of “belonging to the first age, period, or stage,” i.e., of being “original rather than derivative,” and not in the sense of “simple, rude, or rough.” Marx’s original term was “ursprüngliche akkumulation,” and as Paul Sweezy suggests, it would have been better translated as “original” or “primary” accumulation. But it is too late to change current usage, and the word primitive should be interpreted in a technical sense, as in mathematics, where a primitive line or figure is a line or figure “from which some construction or reckoning begins.” In economics primitive accumulation refers to the period from which capitalist accumulation springs. It was not simple, though it was rude and rough."

Tuesday, July 15, 2014

operating without a net

this Thoma screed is solid safety net progressive thought but we need perpetual full employment ? I suggest we push a tax and transfer system that can operate without a net using earned social dividends based on each citizens life time social security contributions

Monday, July 7, 2014


"The Mission of Socialism is Wide as the World": Speech at Chicago, Illinois -- July 4, 1901. Published in the Social Democratic Herald [Chicago], v. 4, no. 4, whole no. 158 (July 13, 1901), pp. 1, 4. "Ladies, Gentlemen, and Comrades: It is our good fortune, if we can boast, no other, to live in the most marvelous age of all the centuries, not contemplating the material progress of our time, which overwhelms and bewilders by its extraordinary achievements. Improvements have been accomplished as if by magic and we behold with wonder and awe the march of human conquest. The forces of nature which terrified primitive man, and before which the ancient world bent in superstition, have to a large extent been conquered and are the subject servants of man's desire. In this march of progress the brain and heart have been expanded, the one shedding light and the other life, without which civilization would turn back upon its axis. Fortunately for man, everything is subject to change, and all change tends to the development of the race and the advancement of human institutions. Institutions crumble in this march of time. All of were disregarded. They objected to taxation without representation. Their protests were scorned. Finally they revolted. They issued the Declaration of Independence and enunciated the proposition that men are created equal. But the founders of this republic had only vague conceptions of democracy. The working class as we understand it today were not represented in the Constitutional Convention. The founders of the republic in declaring that men were created equal evidently meant themselves alone. They did not include the negro, who had been brought here against his will and had been reduced to a state of abject slavery. The institution of chattel slavery was already securely established at that time. It was founded in iniquity, yet it did not seemingly disturb the consciences of the founders of the them have their periods of gestation, of birth, of development, maturity, decline, decay, and death. All of them come in their order. They fulfill their mission, they give birth to their offspring, and they pass away. A little over a century ago the inhabitants of this country were not citizens. They were ruled by a foreign king. They petitioned for relief. Their petitions republic. This institution was in conflict with the spirit of the Declaration, with the genius of free institutions, and yet it was incorporated in them. It steadily grew in power, and in course of time it controlled the country and the courts and the life of the people. On this day, commemorating the 4th of July, 1776, the Declaration of Independence was issued. Thousands of orators all over this broad land will glorify the institutions under which we live. In pride they will point toward Old Glory and declare that it is a flag that waves over a free country. In these modern days we hear very much about that flag and about the institutions over which it waves. I am not of those who worship the flag. I have no respect for the stars and stripes, or for any other flag that symbolizes slavery. It does not matter to me what others may think, say, or do. I propose to preserve the integrity of my soul. I will give you a transcript of my mind and tell you precisely what I think. Not very long ago the President of the country [William McKinley], in the attitude of mock heroics, asked who would haul down the flag. I will tell him. Triumphant Socialism will haul down that flag and every other that symbolizes capitalist class rule and wage slavery. I am a patriot, but in the sense that I love all countries. I love the sentiment of William L. Garrison: "All the world is my country and all mankind are my countrymen." Thomas Jefferson once said: "Where liberty is, is my country." That is good. Thomas Paine said: "Where liberty is honored, that is my country." That is better. Where liberty is not, Socialism has a mission, and, therefore, the mission of Socialism is as wide as the world. The framers of the Constitution of this country had no faith in the people. They did not suffer them to see the proceedings of the Convention. The insufferable institution of chattel slavery was compromised in the American Constitution. It was at this time a perfectly legal institution, but it was founded inn iniquity. It was doomed to finally disappear and the agitation against it began in a feeble way. Lovejoy was one of the pioneers of the revolt. He went to New England and then to Illinois, and with all the vigor of his intellect began to attack slavery. A committee called upon him. He said to them, "I can afford to die at my post, but I cannot afford to desert it." I take pride in paying to such a man the humble tribute of my gratitude and love. It is such men as he who have made it possible for me to enjoy some degree of liberty. I can only discharge my duty to him and to them to try to do something for those who are to come after me. In 1837 the mob took his office and destroyed it by fire, his printing press was thrown in the Mississippi River, and he was murdered. But to the greatest and noblest figure among those early pioneers was reserved the final act which culminated in the rule in which the institution of slavery disappeared from American soil. I need only mention his name, and although it is a very common one, you will at once recognize it -- John Brown. He was educated in no college, he graduated from no university -- he was simply a child of the people. He knew that is part in that struggle required the sacrifice of his life, and with a dozen men he attacked the so-called Commonwealth of Virginia. He struck the immortal blow. He was dragged through a mob trial, he was sentenced to death. On his way to the gallows he begged for a negro child and pressed a kiss upon its black face. He was strangled to death. His soul went its way to that bourne from which no traveler returns. John Brown was branded a traitor, a scoundrel, and a monster of iniquity. The whole country applauded the crime [of his execution]. In just 10 years, with the mellowing wings of time, John Brown was the hero of the people; enshrined in their hearts -- he had won immortality. Chattel slavery disappeared because in the development of machinery an improved form of slavery was required, and this new slavery must not be confined to the black race alone, but must embrace within its mighty folds all of the toiling children of men. Slavery in that form only became extinct and the people as such only rose against it when it became impossible; and just here it is in order to say that the development in every form is dependent upon economic conditions. We live today under a system that has the best code of morals and the best instruments of production and distribution. It has also the most destructive weapons of warfare. Commercialism not only requires the cheapest possible production, but it also requires the most murderous instruments of death, and in the full development of this system the world pays its highest tribute to that man who can devise ways and means that can murder the most men in the smallest space of time. If you go to the city of Washington tomorrow with some device that will enable you to kill one million human beings in the twinkling of an eye, your name will become famous. When the [Civil] war closed, modern machinery was developing very rapidly, the small workshop was beginning to disappear, being supplanted by the larger factory. The individual worked no longer by himself, for his tool had been touched by the magic of industrial evolution; the shop began to expand and the modern industrial revolution was on. Up to this time production was carried on largely for use in separate communities. There was no demand for a foreign market because there was no surplus production, and the worker's ability to consume was equal to his producing capacity. But with the advent of machinery, conditions were changed. If the workers had had intelligence enough to have retained the ownership and control of the tool -- that is to say, of the means of production, there would have been no such problems as now confront us. The women were formerly the queens of the homes, and the children were being sent to school and equipped for the battle of life. When labor began to supply so abundantly and the machine could be operated by the finger of a little child, we had an intensification of the struggle -- women competing with men and the child competing with all. No workingman is given employment that he may provide for himself and his family. It is only on condition that a profit can be extracted from his labor. If there is no profit he is discharged. His wife may suffer, his children may be on the street, no matter what the results, he cannot work. I have said again and again in this system there is nothing quite so cheap as human flesh and blood. It is in the power of a single individual sitting in New York to press a button that will send a message over the wire that will doom 50,000 willing men, women, and children. Concentration and cooperation are the master forces of this age. In the conflict that is going forward among the capitalists, the capital of the country is held in the hands of a few, and these few, though untitled and uncrowned, wield greater power than crowned kings and despots. The owners of the means of production are the real rulers of the American people and of all other people of other nations. Those who control the means of production, land, and capital, control all human institutions. Now, there are a great many men who believe that they have a voice in government. You workingmen have as much to do with the control of this government as if you inhabited Mars or some other planet. (Cheers.) You regularly deposit your ballot and suppose it to be counted. The will of the people is supposed to be registered. But what your votes register is the will of the capitalist class. The capitalist class rules absolutely in every department of our government. It controls every legislature. It controls both branches of Congress and the Supreme Court is simply its convenience. Why, it is not possible for a lawyer, whatever his attainments, to find his way to the bench of the Supreme Court unless he has given overwhelming evidence of his capacity to serve the capitalist class and his willingness to crook the pregnant hinges of the knee that thrift may follow fawning. Every judge who sits on the bench of the Supreme Court today is a tool of the capitalist class. I had an experience. (Great applause.) I think it was a good thing. I ought to have known better. The working class have no rights. I am not fond of denouncing the capitalist class. I am more inclined to find fault with the working class. Now, do you know that for every capitalist, large and small, in the United States there are about 10 workingmen? That is to say, you workingmen are in the majority, are in the clear majority of 10 to 1, and as long as you suffer the capitalist class to rule, you do not deserve to fare better. As Lincoln said: "If that is what you want, that is what you want," and as long as you are satisfied with the capitalist rule or misrule, you will have to submit to it. Now, a few workingmen realize that the old parties are simply two wings of the same capitalist vulture, and that every reform party is a straggling tail feather in that same bird. Socialism is after that bird, and if you look at it you can see the light between the wings. Some of that light is beginning to reach gradually the working class. They are beginning to realize, first, that their interests as workingmen are absolutely identical, that what is good for one is good for all, what it equal for one is equal for all. They are beginning to realize that there are trade unions in the year 1901 which fall short of requirements; that while organization is a necessity upon the economic field, it is vastly more important on the political field. There was a time when there was some efficiency in the strike. What difference does it make to you to go out on strike, even if you win a raise in your wages of 15, 20, or 25 cents per day, if the same class that employs and pays your wages has also the power to raise the cost of the commodities? In the wage system you and your children, and your children's children, if capitalism shall prevail until they are born, are condemned to slavery and there is no possible hope unless by throwing over the capitalist and voting for Socialism. Now, what you want to do is quit every capitalist party of every name whatsoever. What you want to do is to organize your class and assert your class interests as capitalists do the interests of the class that is robbing you. It will not do for you to go to the polls and vote for some good men on some of the tickets and expect relief in that way. What can a good man do if he should happen to get to Congress? What could he do? Why, he simply would be polluted or helpless, or both. What we want is not to reform the capitalist system. We want to get rid of it. (Tremendous cheers.) Now, it is a curious thing to me that a great many workingmen will vote for a thing that will do them no good, a thing that they do not want, because they are dead sure of getting it; and they will vote against the thing they need, against the thing they want, because they reason that if they all vote for it they might get it. Every workingman in every community should assert himself on election day, totally regardless of what others do. Suppose you are the only Socialist in the community. Now, that might require a little more courage on your part, and if you lack it we cannot win. But if you have a little more courage and if you cast a Socialist vote, you will give some evidence of the final redemption of your community. If you cast that vote, someday you and your children will be proud of it; you will make a beginning and you will soon have company. Now, I would rather vote my convictions and vote alone than to vote against my convictions and be with the majority. What good is it to be with the majority of cowards, anyway? As a matter of fact, in the history of great principles, men everywhere have been wrong outside the minority. All of these great changes depend upon minorities, and in the march of time a minority becomes a majority and everyone applauds. In 10 years from now it will be very difficult in the city of Chicago to find a man who was not a Socialist 25 years ago. There has never been any democracy in the world. Political democracy in the United States, so called, is a myth. A single capitalist, upon whom 25 workingmen depend, has political power more than equal to the slaves in his employ, simply because he owns and controls the means upon which their lives depend, without which they are doomed to idleness and starvation. What good would it do if it were in my power to shut off the supply of life and heat; you would all vote my ticket, would you not? Your lives depend upon the control and ownership of the means of production and distribution. The owner of the slaves had to provide for them, he had to feed them, and he had to care for them in a way. It is not necessary to own slaves bodily today in order to exploit their labor. You simply have to own the tool, then they are completely at your mercy. To begin with, a slave cannot buy the modern tool. They are gigantic machines of great cost. The great mass of workingmen cannot buy them. They are compelled to present themselves at the door of the giant and humbly petition him for the privilege of using the tools they made for a share of what their labor produces. They are at his mercy, and not only this, but in the regular periods of depression that always follow periods of activity, it is even a privilege to be a slave, and thousands of so-called free Americans are denied that privilege. (Cheers.) If they go on voting the Republican ticket and the Democratic ticket, either party perpetuates the system that keeps them in fetters and their wives in rags and their children in hunger. Arouse, ye slaves! Declare war, not on the capitalist, but on the capitalist system, and if it should be your fate or your fortune to suffer in years to come, that suffering will not be the result of your own deliberate act. I am for the freedom of the working class. Though my heart yearns for the freedom of men, I am powerless. Only the working class itself can achieve its emancipation. The workingman who is not yet awakened, who has not yet realized all his class interests, is a blind tool, the willing instrument of his own degradation, and thousands of them on the 4th of July, when reference is made to the capitalist flag that symbolizes the triumph of capitalism only, thousands of these wage slaves will applaud their own degradation. What is wanted is not a reform of the capitalist system, but its entire abolition. Notwithstanding the boast that is often made that this is an era of prosperity, notwithstanding the statement that is made by capitalist politicians that the wages of workingmen are higher than ever in the history of the history of the country, I do not hesitate to declare, and I challenge refutation, that there never was a time when wages were so small in proportion to the products as now. Politicians assure us that we are extremely prosperous because our exports exceed the exports of all other nations of the world. What have you got to do with the exports? I think if you held a little interview with your stomach, you are more interested with import than export. Much money goes into the pockets of the capitalist class out of the product of your labor. You never receive notice from the government to get your share of the dividends, and as a matter of fact, in this system the more you produce the worse you are off. If you could produce as much tomorrow as you could in the next six months, you would be out of a job the day after tomorrow. (Loud applause.) I wonder how many of the workingmen of Chicago are enjoying today at the sea coast this summer, or how many of them are toying with icicles in the arctic region, and next September how many will go down to Florida and stop at the Palmetto Hotel? Not many of them. Only the man can afford these luxuries, can afford these enjoyments, who has nothing to do with the production of them. No man that has anything to do with building a Pullman car can ride in it. You show me a man who has to make a Pullman car, and I will show you a man who walks when he travels. If you have calloused hands, I will show you precisely what degree you mark on the social thermometer. I will locate you close to the zero point. A man has to be a master or a slave. He will have to either wield a lash or hold the plow. Socialism proposes to free them both and level them both up to the plane of manhood. Whatever walk of life, constant struggle is going forward, man is arrayed against man, nation against nation, and all due to the capitalist system. The survival of the fittest is a survival of cunning over conscience. Business means doing somebody else, and in the struggle the middle class loses in economic power. Men are driven to dishonesty in the system; they suspect each other, not because they do not know each other, but because they do. It is a mock civilization. Socialism will give humanity a new world. (Great cheer.) Business men attend the same prayer meeting, but they keep a business eye on each other. Business is business, and each one knows that the other is trying to do him. In the capitalist system we cannot give expression to the noblest sentiments of humanity; all success is born of failure and he who achieves the largest success succeeds in destroying the largest number of his fellow men. The revolution is under way, but, like all revolutions, it is totally blind. It is in the nature of great social forces that they sometimes sweep humanity down. Let us work so that this revolution may come in peace. Socialists are organized to pave the way for its peaceful culmination. We appeal first to the working class to come together in one class-conscious solidarity. We likewise appeal to the middle class who will day by day be forced down in the crowded ranks of the working class. We are asking them to open their eyes and see the new light. Their class is doomed and this debauched civilization is doomed to disappear with them. If I were in the middle class today, I would be a Socialist. I would be a socialist from a perfectly selfish motive. I would say to myself: "My class is to be crowded out, and my only hope is in the new social order; and although I may not live to see it, I may be doomed to die a slave, I will cast my lot with the man that proposes to make it possible for my children and the children of my children to enjoy life." But there are a great many who say that is all well enough, but we will not see it in our time. When a man talks so to me, I am inclined to think that there is something seriously wrong with him. Very often the case is that it is impossible to reach the intellect of such a man as this. It is questionable whether he has a thing that we can properly call by that name. So far as I am concerned it does not matter in the slightest whether it comes next year or next century, or in a thousand centuries -- that is not a question that concerns me. I simply know that the change is bound to come sometime and I know that it is my duty to do all I can to hasten its coming; and although I feel and indeed, I know, that I will be here to help celebrate its coming, to ratify its triumph, whether I am or not is a matter of the slightest consequence. I simply say that the capitalist system has almost fulfilled its mission. On every hand we behold the signs of change. It is disintegrating. It is to dissolve and pass away and you can prolong it if you wish and that is what you are doing if you war supporting the old parties. There are two fundamental principles that are in conflict with each other -- individualism and cooperation. Now there is perfect individualism among the beasts of the jungle. They do not cooperate, they compete, and the stronger competitor devours the weaker. You see a girl in the sweatshop only able to earn enough to keep her wretched soul within her shrunken body. Her pulled cheeks, her sunken eyes, her emaciated body testify to the poverty and horror of the competitive system. Hail the coming of Socialism! But in every nation, in every civilized nation,men and women are massing beneath the banner of Socialism, men and women, for in Socialism woman stands side by side with man, she has all the rights that he enjoys. We declare then, that the time has come when working men should open their eyes to the economic struggle, when they should have an intelligent understanding of Socialism and pave the way for its triumph and the abolishment of capitalism from the face of the world. Now I have a right to get rich if I can in this system. I scorn to get rich. I could get rich only by making someone else poor. Suppose I have sharper claws and keener fangs than some of the rest of you, am I justified in using them to prey upon your vitals? If I have any ability whatever, I can only prove it by using it for the benefit of my fellow man. John Rockefeller is as completely a slave as any coal miner in the anthracite region of Pennsylvania. He lives in a gilded cell, but he is serving a life sentence. He does not mingle with his fellow men, he does not enjoy the fellowship of the class he robs. He rules by the power of private ownership and he tries to ease the pangs of conscience by endowing universities. We do not want educational institutions in that way and when Socialism supplants capitalism, and when the wealth that is created is in the possession of the men who created it, when every man has not only plenty of what is required to supply his physical wants, but has leisure to enjoy, we will fill this country with educational institutions, we will make education universal; not only that, we will rescue industry from its cupidity. Then man shall stand erect in touch with his fellow man. He will be the monarch of his work. It will not be possible for one man to enslave another without forging fetters for himself. There is no release, there is no relief on any other line. It is Socialism or capitalism; as capitalism declines, Socialism follows it, so it is only a question of time. I like the 4th of July. It breathes a spirit of revolution. On this day we reaffirm the ultimate triumph of Socialism. It is coming as certain as I stand in your presence. Trials are not to be regretted. T hey are a part and a necessary part of the development. We may disagree. We may divide. It is possible that we shall quarrel and still be perfectly honest. The development demands it all. We are all subscribers to the same fundamental principles. We all stand upon the same uncompromising platform. We all have our faces turned toward the economic dawn. We are battling for the triumph of the producers of the world. We are in touch with the International Socialists of the world -- with our ears turned down, we can hear the thrones totter before the great march of the international hosts of Socialism. So do not be discouraged for a single instant. If you have the courage of your convictions you can face the universe. So far as I am concerned, if there were a million, I would be one of the million. If they should be reduced to a thousand, I would be one of a thousand; if reduced to a hundred, I would be one of the hundred; if a single one survive, I would be that one against the world. I want every one of you to be that one and if you find that you are not so constituted that you can be that one against the world, you have no place in the Socialist movement, but go to the old parties and stay there until you get ripe. We are educating, we are agitating, we are organizing, that is to say we are preparing for the inevitable. It is only a question of time when Socialists will be in the majority. They will succeed on a platform declaring for the social ownership of the means of production and distribution. Then the factory will no longer be a dismal den thronged with industrial convicts. Then for a' that and a' that, man to man the world o'er, shall brothers be for a'that "

Moody's Seasoned Baa Corporate Bond Yield (BAA)

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they don't come any better then this

bubble nomics revisited


by sammo request
chartalism it used to be called
this guy is one of the so called new chartalists
or modern monetary theorists

consequently he hasn't a worry about peak debt
a sovereign state with debt payable entirely  in its own costlessly augmentable  un gold tied currency
can never go bankrupt if it don't want to
this means he hasn't idiotic long run burdens of short term gaping deficits to drag down his mind
as it does even the best non party line non neo liberal/neo classical poli econs ie the new post samuelson eclectics  like joe stiglitz
chumps that  still retain unexamined attachments to prudent fiscal finance for uncle

mostly out of inflation fear of course

but he hasn't much else on  his mind either on that front
he's a one trick pony
"The greatest lie—endlessly repeated by neoliberal economists and uncritically echoed by the mainstream media—is the claim that if governments cut their spending, the private sector will “crowd in” to fill the gap. British Prime Minister David Cameron’s austerity campaign and President Obama’s foreshadowed budget cuts are built around these lies."

true enough but ...
oh ya there's this line you've seen  else

"In the past, real wages grew in line with productivity, ensuring that firms could realize their expected profits via sales. With real wages lagging well behind productivity growth, a new way had to be found to keep workers consuming. The trick was found in the rise of “financial engineering,” which pushed ever increasing debt onto the household sector"

that begs the question why not use uncle's transfer system as is done now ??

behind this is a notion of greed pushing ever higher the rate of exploitation
as if that itself is a cyclical animal spirit
some how subdued by the great depression the world at war and the subsequent  pax americana
i think it had more to do with changes in the global structure of capitalism
but that's for another day

i'll add
in the ike ewra rads claimed the chronic shortage of investment against nominal "acc\umulation"
 was relieved by kold war military budgets
that were nice  employment builders and effective demand maintainers

but no more that cry not after say 1975

this  type of  magic bullet crusader  usually fails to notice open systems like national economies
are operating in a web of trading nations and even if their currency is still taken in exchange for products
their foreign exchange rate and their inevitable  trade gap  creates another set of macro problems
often called de industrialization

 solving domestic under employment by simply stimulating demand thru massive deficit financing
 can often make this problem far worse

in fact you notice he does have inflation and possibly exchange rates in the back of his head
as he  pops in that pinko favorite

"I would introduce an open-ended public employment program—a Job Guarantee—that offers a job at a living (minimum) wage to anyone who wants to work but cannot find employment. These jobs would “hire off the bottom,” in the sense that minimum wages are not in competition with the market-sector wage structure. By not competing with the private market, the Job Guarantee would avoid the inflationary tendencies of old-fashioned Keynesianism, which attempted to maintain full capacity utilization by “hiring off the top” (making purchases at market prices and competing for resources with all other demand elements). Job Guarantee workers would enjoy stable incomes, and their increased spending would boost confidence throughout the economy and underpin a private-spending recovery. There is no reason the government could not afford this program. The labor is available for work, and the government can easily supply the jobs. There were no questions asked when the government, in the early days of the crisis, instantly provided billions for the banks. Let me repeat: the government has no financial constraint on its spending and should immediately allocate funds to a massive job-creation program."

yup ...the uncle job gulag

despite not needing it according to pure MMT
err in a closed system mate
but open -ness
it comes from a back door limit on market driven employment created here not by import explosion
 but by high job demand by firms leading to a wage price spiral ala the infamous  70's
birth place of the mass adherence to the nairu line taboo
which is buried in this bit of fandango

the gulag is kool because

" minimum wages are not in competition with the market-sector wage structure"
oddly he fails to notice making that gulag wage a living wage would indeed lift all market earned wages right ??

" By not competing with the private market," dubious point
" the Job Guarantee would avoid the inflationary tendencies of old-fashioned Keynesianism"

here it comes
" which attempted to maintain full capacity utilization by “hiring off the top” (making purchases at market prices and competing for resources with all other demand elements)."
this  conflates demand pull inflation something impossible  with the type of capacity slack thst would trigger macro policy in the first place
with wage push inflation which happens because of corporate price cost pass thru power
he is buying into the nairu gig
without admiting it if he even clearly understands it
nairu woulsd keep the market the rate of unemployment just high enough to prevent an acceration of wage rates
now as a good rad matey
billy boy here wants to soak up  the reserve army so he offers them a iron floor wage rate job
that he flat out guarantees won't set of a wage explosion
cause he's drawing form the bottom not the top

instead of injecting enough  purchasing power into the system thru the transfer system ala 12 cylinder macro ala wild bill vickrey
letting tight markets pull wages where they may thhis plan has uncle's contrived  jobster gulag soak up the surplus labor pool
wpa a go go
and all i repeat without triggering a wage boom

how ??
its possible but only by  making sure the jobster gulag is no place any one wants to be
both wage rate wise and i suspect  conditions wise

obviously the diect necessity here
is to design and imlement a mechanism with the ability to regulate inflation set the price levl quarter by quarter
as a key and essential  part of the full  advanced solution that this guy tries to run from
enter the mark up market along with the trade balancing dollar exchange rate

neither semms to be arrows in his quiver

 solve  the fear of run away inflation and de industrialization
 that  lurk like ghouls  in the hearts of white hats like joe stgilitz and paul krugman
and is why they never get to bill vickrey land

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
a certain purgatory trumps a perfect hell baby
pure preacher boy bull balls
paine said in reply to paine...
addicted primarily to 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 ...
paine said...
jump out of the mankiw pot now amerika !!!
rewrite the rule book
paine said...
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
--- as our anne faithfully points out
at every juncture --
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
talk about yer boiled frog !!!!!
why betwqeen 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

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

how a leader of a cartel can control price

Sizeable Slack production

Size structure of firms

U.S. Firms and Establishments by Size, 2001
Size of Firm
Total Number of
Total Number of
Total Number of
Average Number of
Establishments per
Average Number of
Employees per
All firms
5,657,774 7,095,302 115,061,184 1.3 16.2
less than 20
5,036,845 5,093,660 20,602,635 1.0 4.0
less than 500
5,640,407 6,079,993 57,383,449 1.1 9.4
17,367 1,015,309 57,677,735 58.5 56.8
703,837 705,612 0 1.0 0.0
2,697,839 2,703,984 5,630,017 1.0 2.1
1,019,105 1,033,719 6,698,077 1.0 6.5
616,064 650,345 8,274,541 1.1 12.7
518,258 670,477 20,370,447 1.3 30.4
85,304 315,856 16,410,367 3.7 52.0
8,572 102,229 5,906,266 11.9 57.8
5,161 131,911 7,894,226 25.6 59.8
1,770 103,347 6,063,596 58.4 58.7
934 120,158 6,456,068 128.6 53.710,000+ 930 557,664 31,357,579 599.6 56.2

Screw u

adventures on the knife edge of i=g

recall neumann result
i=g optimally
that's fine because that is with an assumed full employment
no need for stablizing deficits or surpluses
would that our market system with its
firm level profit driven production system
could produce such a fine performance

back to the NRA ???

a comprehensive industrial policy at the national level...

the last time we had even close to one
             was the arsenal of democracy

-- some say the NRA was the only real full blown INDUSTRIAL POLICY ..
                                  .......fair enough ---

okay we had a partial policy
 after the kold war hit warp drive
post nsa 68

the point remains
 we as global hegemon have sublated
our narrow national interests for many decades

since 1945 uncle sam has more or less
operated official policy
with the larger earth wide interests of our multi national trans border corporations
upper most in his mind
in fact so much upper most
even secondary mnc concerns trump
                      primary domestic job class concerns

to pull this off
 within the formalities of a two party liberal democracy
is really quite a fete ??

housing a totalizing global security state
completely inside
a liberal  nation state

why it's like a matryoshka doll system

the mind gapes
and rattles itself with  an aweful trembling

food stamps are paultry

there's a program that oughta gallop these days eh ???

kalecki would laff at woody and gustoff

they don't come any better then this

Woody and gust off

We have argued that the key to dealing with a situation in which monetary
policy is constrained by the zero lower bound on short-term nominal
interest rates is the skillful management of expectations regarding the
future conduct of policy. By "management of expectations" we do not
mean that the central bank should imagine that, if it uses sufficient guile,
it can lead the private sector to believe whatever the central bank wishes it
to believe, no matter what it actually does. Instead we have assumed that
67 Tinsley (1999).
Gauti B. Eggertsson and Michael Woodford
there is no point in the central bank trying to get the private sector to
expect something that the central bank does not itself intend to bring
about. But we do contend that it is highly desirable for a central bank to be
able to commit itself in advance to a course of action that is desirable
because of the benefits that flow from its being anticipated, and then to
work to make that commitment credible to the private sector.
In the context of a simple optimizing model of the monetary transmission
mechanism, we have shown that a purely forward-looking approach
to policy—which allows for no possibility of committing future policy to
respond to past conditions—can lead to quite bad outcomes in the event
of a temporary decline in the natural rate of interest, regardless of the kind
of policy pursued at the time of the disturbance. We have also characterized
optimal policy, under the assumption that credible commitment is
possible, and shown that it involves a commitment to eventually bring the
general price level back up to a level even higher than would have prevailed
had the disturbance never occurred. Finally, we have described a
type of history-dependent price-level targeting mle with the following
properties: that a commitment to base interest rate policy on this mle
determines the optimal equilibrium, and that the same foim of targeting
mle continues to describe optimal policy regardless of which of a large
number of types of disturbances may affect the economy.
Given the role of private sector anticipation of history-dependent policy
in realizing a desirable outcome, it is important for central banks to
develop effective methods of signaling their policy commitments to the
private sector. An essential precondition for this, certainly, is for the central
bank itself to clearly understand the kind of history-dependent behavior
to which it should be seen to be committed. It can then communicate
its thinking on the matter and act consistently with the principles that it
wishes the private sector to understand. Simply conducting policy in
accordance with a mle may not suffice to bring about an optimal, or
nearly optimal, equilibrium, but it is the place to start.
The Numerical Solution Method
solution discussed in the first section of the text. This same method can
a solution method for the optimal commitment208

john taylor

experiences from the 1970s raise serious doubts about the political and operational feasibility of  discretionary fiscal policy.

In a simple Keynesian model, all the government has to do to combat a recession is quickly increase government purchases,

 but the difficulty with doing so in practice is one of the classic arguments against discretionary fiscal policy.

" Small or unreliable multipliers, the legacy of increased debt, the unpredictability and temporariness of such policies are some of the other arguments. Using dynamic models with expectations and incentives, I have found very small multipliers (around .5)

For these reasons I argued in the November 2008 article which Krugman cites that a better fiscal policy would be to rely on the automatic stabilizers and enact more permanent reductions in tax rates (or at least pledge not to increase tax rates in a recession).

Dexter white on stag jams

(a) Let the Government spend the minimum necessary to keep men alive and to prevent social disturbance; or
(b) Let the Government spend on such a large scale as to provide a positive powerful stimulus to recovery.
This second alternative is often formally embraced by those who in practice support the first position. That is, the actual scale of expenditures that they propose, while sufficient to bring about a serious derangement of the budget, is not sufficient to exert an adequate stimulus to recovery. In consequence, depression conditions tend to be frozen over a considerable period.
Harry Dexter White, 2/26/35

cannon on party building trot style

 “We were utterly isolated, forced in upon ourselves. Our recruitment dropped to almost nothing ... Then, as is always the case with new political movements, we began to recruit from forces none too healthy ... Freaks always looking for the most extreme expression of radicalism, misfits, windbags, chronic oppositionists who had been thrown out of half a dozen organizations-such people began to come to us in our isolation, shouting, ‘Hello Comrades.’ I was always against admitting such people,. but the tide was too strong.”


the credentialing sector was once a unified body in han culture

chit chat on the zone drones

Killing the Euro, by Paul Krugman, Commentary, NY Times: Can the euro be saved? Not long ago we were told that the worst possible outcome was a Greek default. Now a much wider disaster seems all too likely..., even optimists now see Europe as headed for recession, while pessimists warn that the euro may become the epicenter of another global financial crisis.
How did things go so wrong? The answer you hear all the time is that the euro crisis was caused by fiscal irresponsibility. Turn on your TV and you’re very likely to find some pundit declaring that if America doesn’t slash spending we’ll end up like Greece. Greeeeeece!
But the truth is nearly the opposite. Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending in Europe as a whole. And their efforts to fix matters by demanding ever harsher austerity have played a major role in making the situation worse. ...
Warnings that this would deepen the slump were waved away. “The idea that austerity measures could trigger stagnation is incorrect,” declared Jean-Claude Trichet, then the president of the European Central Bank. Why? Because “confidence-inspiring policies will foster and not hamper economic recovery.”
But the confidence fairy was a no-show. ...
At this point, markets have lost faith in the euro as a whole, driving up interest rates even for countries like Austria and Finland, hardly known for profligacy. And it’s not hard to see why. The combination of austerity-for-all and a central bank morbidly obsessed with inflation makes it essentially impossible for indebted countries to escape from their debt trap and is, therefore, a recipe for widespread debt defaults, bank runs, and general financial collapse.
I hope, for our sake as well as theirs, that the Europeans will change course before it’s too late. But, to be honest, I don’t believe they will. In fact, what’s much more likely is that we will follow them down the path to ruin.
For in America, as in Europe, the economy is being dragged down by troubled debtors — in our case, mainly homeowners. And here, too, we desperately need expansionary fiscal and monetary policies to support the economy as these debtors struggle back to financial health. Yet, as in Europe, public discourse is dominated by deficit scolds and inflation obsessives.
So the next time you hear someone claiming that if we don’t slash spending we’ll turn into Greece, your answer should be that if we do slash spending while the economy is still in a depression, we’ll turn into Europe. In fact, we’re well on our way.
    Posted by Mark Thoma on Friday, December 2, 2011 at 12:33 AM in Economics, International Finance


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    neelzito said...
    Paul,it's not about austerity for its own sake but countries have to restructure in order to restore competitiveness. And if the US does not achieve that, then they will turn into another Greece, Greeeece! That is the concept of Globalization.
    reason said in reply to neelzito...
    Struth! (Some people just don't pay attention do they!)
    Don't you get the idea that competitiveness is BETWEEN countries - you can't ALL become more competitive.
    neelzito said in reply to reason...
    I see, so you're solution is too become less competitive than the rest? Sounds very smart. The Chinese will be happy to hear about it.
    reason said in reply to neelzito...
    but competitiveness can be easily restored by changing the exchange rate. But not what that does to other countries? It makes more sense to increase global demand so all countries benefit rather than playing zero sum games.
    neelzito said in reply to reason...
    When has the US changed their exchange rate the last time in order to achieve that?
    From an altruistic point of view you are right, that countries increasing their competitiveness against others is a race to the bottom and should not be done. However it is reality. If you choose not to do it, you will not survive unless there is a global solution.
    paine said in reply to reason...
    excellent points reasonable one
    even a round of competitive devaluations
    would ramp up global inflation itseelf an important step toward a more rapid recovery of global production
    and that forgets the basic principle of effective demand management within a currency zone
    obviously the ECB backs all existing zonal sovereign debt first
    then sees to it
    national borrowing rates rapidly converge toward some target rate
    regardless of short run full employment
    national fiscal policy
    if at the time of full recovery and converged rates
    some member states have chronic structural problems
    deal with it then
    not now
    basically the trading surplus nations inside the zone need to accelerate y on y
    final demand and wage rate increases
    --relative to deficit euro member national systems --
    the key is obvious
    to simultaneously
    lower the real debt burden throughout the zone
    while adjusting intrazone wage rates
    requires rapid over all nominal growth PLUS relatively more rapid nominal growth in ...well the teutonic national systems
    ilsm said in reply to neelzito...
    Lots of liquidity for banksters, nothing to iunvest in internal productivity.
    Competition is rooted in efficiency, how does austerty address efficiency and productivity?
    How do you make your economy efficient if no one is addressing the monetary issues? Or the insolvency of the banking system?
    There is no austere approach to resolving bad debt, which is hidden behind all the recent and inept liquidity facilities to forestall runs on the insolvent banksters in Europe and Wall St.
    paine said in reply to ilsm...
    "I hope, for our sake as well as theirs, that the Europeans will change course before it’s too late. But, to be honest, I don’t believe they will. In fact, what’s much more likely is that we will follow them down the path to ruin."
    pure hysterics !!!!
    pk at rock bottom silly
    Peter K. said in reply to paine...
    Yes before Krugman would write that he couldn't see the European elite allowing the euro to fail and and the same time he couldn't see how they would be able to fix things in time.
    This is the first column were he says he doesn't believe they will pull the plane up before hitting the ground. And he adds that he believes the U.S. will follow Europe down. Happy weekend!
    Krugman has followed international economics for a while so he could be right.
    Would the 6 central banks have acted in concert if it wall just kabuki theater for getting club med to take its austerity-deflationary medicine?
    anne said in reply to paine...
    "I hope, for our sake as well as theirs, that the Europeans will change course before it’s too late. But, to be honest, I don’t believe they will. In fact, what’s much more likely is that we will follow them down the path to ruin."
    -- Paul Krugman
    pure hysterics !!!!
    PK at rock bottom silly
    [The problem that Paul Krugman has been worried about is minimal growth in much of Europe for years to come, and that problem is being realized through the bent to austerity programs with has been fierce and is evidently strengthening. I find the worry important and the worry applies to a lesser extent to America.]
    anne said in reply to paine...
    pure hysterics !!!!
    PK at rock bottom silly
    No, the issue is not the Euro, which will simply not be abandoned by prominent EuroZone political leaders, but the problem is growth with austerity program being pushed in Euro countries and beyond in Europe as in Britain.
    ilsm said in reply to paine...
    suppose Cassandra became hysterical as the gates opened to roll in the wooden horse..........
    chriss1519 said in reply to neelzito...
    Please explain. How does restructuring (I assume you mean paying down debt) restore competitiveness? Lowering interest rates? We've already seen that austerity doesn't achieve that.
    Eric said in reply to chriss1519...
    the fact that you automatically assume that restructuring means paying down debt, is in my opinion proof for the narrow view I find on Anglo saxon boards that there is only limited methods to improve competitiveness and that's monetary/fiscal, or otherwise leave it to the exchange rate. I think this view is dominant in market economies, but European economies are mixed economies. Stakeholders like government, companies and unions play a major part in Europe in steering the economy. So in the European view, restructuring means things like labor reforms, labor plans, government reforms, government investments in education, innovation, etc.
    paine said in reply to Eric...
    " labor reforms, labor plans, government reforms, government investments in education, innovation"
    sorry too too slow and for that matter not complete
    germany needs higher relative wages greece and the rest of club med lower relative wages
    ( germany on a faster nominal gdp growth )
    the entire zone needs lwer relative wages vis a vis asia
    (forex forex forex )

    the entire zone needs a nice bout of 5 %
    product price level inflation
    ie 8 % in germany and 3% in the combined club meds
    euro corporatism alone at its solidarity induced best will only piece out the hunger rations more equitably
    totally un necessary

    paine said in reply to paine...
    high handed lecture on the virtues of papist corporatism and teutonic social marketeering
    seems odd given your zones evident prime problem de jour
    a complete establishment wide knuckling under
    to a completely irresponsible purely
    pro corporate --in the anglo saxon sense--
    anti job class ECB
    Eric said in reply to paine...
    Too slow? I believe in long term strategies, not quick fixes based upon fiscal or monetary tricks.
    Germany and the other Northern European countries have record low unemployment and high exports, so they do not have to change their economic model that has served them well for decades. Why should they? It's the south that needs to catch up. And before you point out the imbalances: the trade imbalances, which were mainly caused by housing bubbles and reckless bank lending, are disappearing fast and have not changed the export or unemployment numbers in the North, as their recent export growth is in large part based upon the rest of the world. The eurozone is competitive vs the rest of the world, the eurozone does not have a trade deficit. The unemployment in a country like Spain is high, but was equally high before they joined the euro, they always had high unemployment, remember that these countries came from an impoverished past with distributorships only ending in the 70s and made large steps in the past decades! Their solution to improve their economies is structural reforms and no more get rich quick schemes like housing bubbles.
    At this moment I see the USA and UK having trade deficits, record unemployment (if you add the unfortunate who stopped searching) and record budget deficits that are unsustainable.
    Sure, the eurozone has debt problems and needs growth, but who doesn't, and what can the eurozone exactly learn from the Anglosaxon economic model?
    That model is bust in my opinion, and the part the eurozone did follow, low interest rates and more lending, has only contributed to the debt problems.
    paine said in reply to Eric...
    a compost heap eric
    " I believe in long term strategies, not quick fixes based upon fiscal or monetary tricks..."

    "Germany and the other Northern European countries
    .... they do not have to change their economic model.."
    if you actually believe germany can ride out
    a euro crash
    maybe you need to review your position
    job sharing is no triumph
    its simply clever rationing system
    where no hours rationing ought to be necessary
    if germany now ran full employment fiscal deficits
    and increased intrazone imports
    raised nominal wages etc
    the zone would hold together and med misery combined with absurd pointless sucker bait self discipline by the teutonic job class
    --- why sacrifice for your corporations ???---
    and yes the euro needs to deval
    obviously not against the anglo saxon currencies
    but against the now undervalued eastern european
    and asian currencies
    --- if germany needs to rapidly increase nominal wages and remain globally competitive the euro must fall ---
    even the vaunted german export machine
    needs a lower euro to sustain exports

    as to anglo saxon models
    which ones ???
    the washington consensus ??
    or those mongrel ops
    the ones implemented by our present unmatched pair
    of ramheaded regimes in the UK and the US ??
    ukus suckus !!!
    who's suggesting that here ????
    the recipe pk offers for "your zone "is far far from the policy here and now in the ukus-reichs
    Peter K. said in reply to Eric...
    "is in my opinion proof for the narrow view I find on Anglo saxon boards"
    As opposed to what, European boards?
    American commentators do tend to forget that, for instance, Germany has better labor policies like work sharing and a tighter labor market than the U.S. so inflation may be more of an issue than the U.S. But in general I agree with pangloss paine on solutions but agree with Krugman's hysterics on the spiraling European Feedback Cycle of Doom.
    ken melvin said in reply to neelzito...
    'Scalled the race to the bottom.
    Winston Smith said in reply to neelzito...
    It's not just about competitiveness (that is, getting a bigger piece of the pie). It's about growing the world economy (that is, getting a bigger pie). Once we are in what Krugman calls "the liquidity trap", then if everybody's getting more competitive than nobody is, and if we continue trying than the whole planet will spiral down.
    That is why Germany--which, until a few weeks ago, was considered the gold standard of competitiveness--is starting to hurt. They've managed to stay on top of the European heap, but the heap is sinking rapidly.
    paine said in reply to Winston Smith...
    this fails to see the positive effect of deval competitions ..they accelerate inflation
    just what the global market system needs right now
    anne said in reply to neelzito...
    Paul,it's not about austerity for its own sake but countries have to restructure in order to restore competitiveness. And if the US does not achieve that, then they will turn into another Greece, Greeeece!
    [What is to fascinating about Austrian economists, not referring to the people of Austria just to the economists, is how hopelessly mindless they are. Fortunately any time I find an Austrian economist, I know paying attention will cost me money and I turn away even though the fascination with mindlessness is there.]
    anne said in reply to anne...
    Understanding why Austrian economists are so mindless and will cost you money, by the way, simply takes looking to the bond market and understanding how profound a long term bull market in bonds we have experienced, especially how profound a bull market these last 10 years and even more so these last 3 years. Paying attention to Austrians, the economists and not the people of Austria, would have been to have missed the profound bull market in bonds while waiting for the America to become "Greeeece!" (No offense to the Greek people, though the Greek government deserves no sympathy.)
    paine said in reply to anne...
    full name of the culprit cretin gang

    the austerian-austrian-apian axis
    paine said in reply to paine...
    the best thing possible right now would be a bond market in full retreat before a wave of national inflations

    humans can learn to control inflation
    much as they learned to control fire
    abba lerner said that...errr ..more or less
    umh least he implied it ..kinda
    but its true baby gloriously paradozically true
    controled national inflations
    are the future of the future
    why if we had that we could have
    one world currency !!!!!
    Peter K. said in reply to paine...
    "why if we had that we could have
    one world currency !!!!!"
    Like Jean-Luc Picard has on Star Trek.
    EMichael said in reply to Peter K....
    Lots of things on Star Trek became reality. And more to come, so who knows!
    paine said in reply to Peter K....
    believe me
    selling a global currency is childs play compared
    to the national/regional mark up cap and trade markets
    that would need to be in place prior to implementation of global money
    Darryl FKA Ron said in reply to paine...
    "the best thing possible right now would be a bond market in full retreat before a wave of national inflations"
    So, are you still convinced that the calvary will arrive in time?
    I get that you are and partially understand why, but then the US turned its back on the black swans in a state of denial in 2007-08. Most likely the Bush administration did not want to take action and get blamed for any fallout, since they would get not credit for the disaster that was avoided. So, the nagging question is really whether such an analsyis paralysis compromises the ECB? That is do they fear most the consequences of inaction or action?
    Missed ya - ya stinking commie!
    Affectionately Yours
    The strutting Burkean peacock.
    BTW: My long run political self-label was "millitant moderate" which might have been more appropriate than traditional or Burkean conservative, which were centrist labels that I was unaware of until just a couple years ago. The New America Foundation call themselves "radical centrists," which I kind of like and am aligned with better than most. I also like the little "Modern Whigs" embryonic political party founded by veterans returning from Bush's wars, but they are too sincere to draw any hedge fund financial backers and have not gotten any traction so far.
    So, for now I am a recalcitrant liberal.
    paine said in reply to Darryl FKA Ron...
    the september 08 shocks have not as yet had toime to forgotten
    the cavalry (ECB) will come
    there will be no hi fi calvary II
    hell we job class pikers
    aren't down off the crosses
    we got nailed to
    during calvary I
    Doctor Why said...
    Higher inflation and high budget deficits can be used as a short-term (countercyclical) or a long-term (structural) solution. Their countercyclical use can be justified within a simple Keynesian framework; however, if you want to recommend them as a structural solution, you need a long-term framework incorporating demographics, international division of labor, natural resource constraints and other factors.
    Krugman does not have a long-term framework (for example, he has only recently become interested in the long-term evolution of private debt, though it is a key to understanding the current crisis), so he just stretches the definition of “short-term” and keeps making the same Keynesian argument – and that’s very disappointing.
    Doctor Why said in reply to Doctor Why...
    ...especially considering his work on Japan more than a decade ago.
    ilsm said in reply to Doctor Why...
    You should know more of what Krugman says.
    paine said in reply to Doctor Why...
    you combine this sweet light
    "Higher inflation and high budget deficits can be used as a short-term (countercyclical) or a long-term (structural) solution. Their countercyclical use can be justified within a simple Keynesian framework"
    with this goulash that sums to a useless gibberish
    "as a structural solution, you need a long-term framework incorporating demographics, international division of labor, natural resource constraints and other factors"
    let us dissect
    "as a structural solution, you need a long-term framework "
    fair enough long term solutions require long term frameworks
    "incorporating demographics,
    international division of labor,
    natural resource constraints ..."
    really ??
    i suspet one needs to notice these features of any national plan
    but macro targets for an open subsystem like
    a national economy or production platform
    require no such detail only
    a target path for employment
    balanced trade wages
    an optimal tax and transfer system
    and an acceptable real total debt burden

    "and other factors"
    a list that wants to enlighten needs to be conmplete
    unless these "other factors"
    are of marginal impact only
    Doctor Why said in reply to paine...
    I think we already went over all of this a couple of years ago.
    The simplest way to extend the original Keynesian framework is to replace loanable funds with financial assets in general, and explicitly model supply and demand in the financial markets.
    For example, on the demand side we should take into account:
    1) Baby boomers saving for retirement
    2) Impact of income inequality on saving rates
    3) External demand (oil exporters sovereign funds,
    other countries' FX reserves)
    and so on.
    On the supply side our model should include:
    1) Nominal interest rates/inflation
    2) Current level of private debt
    3) Collateral prices
    4) Budget deficit/level of government debt
    and so on.
    In other words, if you want to make the original Keynesian framework useful for a long-term analysis you should model both stocks and flows and add important constraints such as availability of collateral.
    That's obviously not the only way to build a long-term framework, but it is a natural extension of the basic Keynesian model.
    Doctor Why said in reply to Doctor Why...
    Obviously, the impact of globalization and resource constraints is not limited to the financial markets, e.g.:
    - globalization increases structural unemployment in the developed countries, and increaeses demand for natural resources
    - higher resource prices may feed through into core inflation.
    paine said in reply to Doctor Why...
    you have all the pieces
    but not the patterns
    that fits them together
    forex and balanced trade
    price level and debt load
    there is no reason to make this inevitable
    " globalization increases structural unemployment in the developed countries"
    with effective fiscal policy
    we can maintain full employment
    at all times
    even as global integration
    forces job mix change
    yes skill scrap heaps tend to grow faster
    but that
    is a task for compensation systems
    -- think premium wage insurance ---
    as for resource prices ya they may surge
    if resource utilization efficiencies lag
    but that has happened b4
    in fact over all resource prices
    and raw commodity prices
    are too low now
    relative to product prices
    " higher resource prices may feed through into core inflation"
    not necessary
    yes real wages will get a squeeze
    that and or profit margins
    but again controled inflations combine with an adequate transfer system
    and earned social dividends
    can deal with these challenges quite nicely
    anne said in reply to paine...
    you have all the pieces
    but not the patterns
    that fits them together
    forex and balanced trade
    price level and debt load
    there is no reason to make this inevitable
    [These comments on the Euro matters are terrific, add significantly to them when possible.]
    Doctor Why said in reply to paine...
    You chose to focus on the secondary plot line. The main strory is that we are dealing with a structural shortfall in aggregate demand caused by several long-term trends. However, some of those trends will eventually reverse and our policies should anticipate this reversal. For example:
    1) Baby boomers will retire and start spending their savings.
    2) The world will eventually make transition to a post-oil economy, which will dramatically decrease official demand for financial assets.
    Doctor Why said in reply to Doctor Why...
    To expand on the second example:
    - globalization increases incomes in the developing countries, which leads to a higher demand for natural resources
    - resource importers (in particular, China) are forced to build up FX reserves to ensure future access to oil and other natural resources (given that their oil demand grows by 1bpd every year)
    - Oil exporters are forced to save a large part of their revenues in order to ensure a smooth transition to a post-oil economy.
    ilsm said in reply to Doctor Why...
    financial assets is what got this depression going.
    more productive assets are needed
    as well as more revenues either form growth, protetcion or across the board taxing financial assets.......................
    Doctor Why said in reply to ilsm...
    From a Keynesian perspective, it's rather inadequate supply of financial assets that got this depression going.
    DrDick said in reply to Doctor Why...
    From a rational perspective, it was an excess of speculation and excessive diversion of financial resources into nonproductive speculative investment (which is what I think Keynes would actually say). In other words, the big banks blew the whole paycheck for the world in a crap game.
    Doctor Why said in reply to DrDick...
    I think Keynes would first of all say that it is always a bad idea to try and deflate a (real estate) bubble with higher interest rates (sorry for the long quote):
    "It would be absurd to assert of the United States in 1929 the existence of over-investment in the strict sense. The true state of affairs was of a different character. New investment during the previous five years had been, indeed, on so enormous a scale in the aggregate that the prospective yield of further additions was, coolly considered, falling rapidly. Correct foresight would have brought down the marginal efficiency of capital to an unprecedentedly low figure; so that the “boom” could not have continued on a sound basis except with a very low long-term rate of interest, and an avoidance of misdirected investment in the particular directions which were in danger of being over-exploited. In fact, the rate of interest was high enough to deter new investment except in those particular directions which were under the influence of speculative excitement and, therefore, in special danger of being over-exploited; and a rate of interest, high enough to overcome the speculative excitement, would have checked, at the same time, every kind of reasonable new investment. Thus an increase in the rate of interest, as a remedy for the state of
    affairs arising out of a prolonged period of abnormally heavy new investment, belongs to the species of remedy which cures the disease by killing the patient."

    economonium said...
    neelzito, please explain to us how the US, a country with its own central bank, and its own currency that sets its own interest rates etc can turn into another Greeeeece? Because for the life of me, I don't see any comparison here, especially since the US is the world's reserve currency. Please use the graphs of the last 5 years worth of US interest/bond rates in your analysis. Include debt to GDP ratios, size of the public sector, trends in public sector employment, and total personal indebtedness in your analysis also.
    And while you're at it, explain where the confidence fairies have been since the first time "inflation is coming" has been mentioned. Include the amount of time in months people have been screaming "inflation!" and what the figures are for that entire period, and what the market is telling us it is likely to be in the future.
    reason said in reply to economonium...
    Where do these people come from? They haven't been reading this blog for long clearly, because they don't seem aware that there arguments have been repeatedly debunked.
    neelzito said in reply to economonium...
    I think you misunderstood my post as my argument simply was that Paul was oversimplifying Europe's reason for austerity measures. Paul claims it is simply to get rid of sovereign debt whereas it is really about restoring competitiveness (I agree they are not doing a very good job at it).
    Of course the US will not become Greece in the sense that their funding cost will increase dramatically. However, the US have a problem in regards to competing with other countries. This is why unemployment has increased (jobs went to china). Of course you can just increase spending but that will make you even less competitive in the long run.
    reason said in reply to neelzito...
    Don't you get that China deliberately keeps its exchange rate against the US low? If US costs fall, you can bet China will push the US currency up.
    Eric said in reply to reason...
    exchange rate does not improve competitiveness, it's a cheap fix to deal with loss of competitiveness, with negative side effects like inflation and lower living standards.
    reason said in reply to Eric...
    As against pushing down nominal with negative side effects like deflation and lower living standards.
    Gee - can't you do better than that. Yes will all like Apple Pie and motherhood (oops structural reforms to increase productivity) but we don't have a chronic problem here we have an acute emergency. Its like proscribing diet and excercise as the immediate response to a stroke!
    Eric said in reply to reason...
    I doubt if exchange rates changes do much in economic emergencies these days. Let's look at the dollar: the US products I do buy in the eurozone are mostly limited to clothing and electronics. They are all made outside the USA, mostly Asia, and as since the internet I can compare prices online, I pay the same amount in euros here as American consumers pay in dollars in the US. So please explain how a drop in the dollar is doing much for competitiveness, the products don't change in price here.
    reason said in reply to Eric...
    The difference is called VAT.
    reason said in reply to reason...
    And if the prices aren't changing in response to exchange rates, you aren't looking in the right places (i.e. you are looking at administered prices not market prices).
    paine said in reply to Eric...
    dead wrong
    reason said in reply to neelzito...
    You really should read Paul Krugman regularly. He deals with these sort of arguments every couple of days.
    DrDick said in reply to reason...
    "He deals with these sort of arguments every couple of days."
    For all values of "deals with"=runs through the wood chipper.
    paine said in reply to neelzito...
    " Paul claims it is simply to get rid of sovereign debt"
    no he doesn't at all
    " it is really about restoring competitiveness"
    pk has often made this precise point
    you might read him first comrade
    b4 continuing this iron ignorant critique
    paine said in reply to paine...
    marshall a few exempla from pk's blog
    Steve said...
    Shouldn't have put so much of the economy under control of the Government in the first place, really: When a large chunk of the economy is run by a single organization, it is inevitable you're going to feel pain when that organization runs low on cash.
    reason said in reply to Steve...
    But the government has a printing press - other organisation don't. Don't you get it that all organisations have less cash than they want (we know that because they are not spending what they have). I don't understand how people can be so thick! Seriously!
    reason said in reply to Steve...
    I guess the real answer would be:
    my God you're right. We should start breaking up big corporations!
    reason said in reply to Steve...
    And another answer is to point out that the Government is not "a single organisation". It is in fact of collection of quite distinct organisations. It makes just as much sense to call "the banks" a single organisation, they are also closely connected, and the banks is also a collective word.
    reason said in reply to reason...
    Sorry, for everybody who thinks I just should ignore this sort of sloppy thinking. But there are always new readers who need to have the flaws in this sort of argument pointed out.
    paine said in reply to reason...
    and its jolly fun to thrash em too eh ?
    reasonable one !!!
    paine said in reply to Steve...
    you might consider the difference between a state
    and say a country club or a school or a credit union
    Julio said in reply to paine...
    I started to look for differences between the US and a country club but I'm stuck.
    reason said in reply to Julio...
    Look, your complete lack of insight says nothing about reality. Try issuer of currency for a start. Try universality versus exclusivity for another. Try right to tax for another.
    ilsm said...
    Go where the money is. In the US 20% of federal outlays are for war profiteering.
    Austerity. What splurging needs cut.
    The cutting frenzie is used as anti New Deal agitprop, just a continuation of the post WW II anti New Dealers. That is why the Greece false analogy comes up in US austerity screed.

    Compared to the Eurozone the US spends three times share of its GDP occupying military sink holes around the world.
    US austerity must start at closing down the corporatists' military machine.
    beezer said...
    After a decade, or two, or three, of serious malinvestment we need to redirect hundreds of billions of frightened, hoarded dollars into massive projects that will employ millions.
    That's the only way forward that makes any sense. The other way, austerity (a misnomer, liquidation is more accurate), offers only destitution for a majority of citizens.
    Employment is the only metric to consider right now. Everything else, including deficits and debt, are useless distractions.
    ken melvin said...
    Was the great Depression a recalibration of debt?
    paine said in reply to ken melvin...
    excessive borrowing is the original sin of petty capitalism
    ilsm said in reply to paine...
    it was usury and making money on the poor
    both prohibited in the old testament
    which is no interest to the current religious zealots
    they only go to the bedrioom the boardroom is free of inquiry and john the baptist's moralizing
    Dan Kervick said...
    "Why? Because “confidence-inspiring policies will foster and not hamper economic recovery.” "
    It's truly incredible that so many important public officials, like Trichet, have talked themselves into this kind of superstitious voodoo - and have actually bet on it as the main tool of policy in a major recession.
    Imagine that all of the developed world's public health officials, faced with a major epidemic, had suddenly concluded the thing to do is to order up truckloads of leeches and subject their countries to a regime of massive bleeding. Some of these officials believe that bleeding is medically effective. Others only believe that since some folks believe bleeding is materially effective, we can count on the placebo effect alone to end the epidemic.
    And all the while cases full of effective medicines sit unopened on pallets in the government warehouses.
    Both the true believers in bleeding and the true believers in the omnipotence of the placebo effect should be flogged.
    paine said in reply to Dan Kervick...
    "It's truly incredible that so many important public officials, like Trichet, have talked themselves into this kind of superstitious voodoo "

    not if it effectively conceals their real motives
    to intervene in your analogy
    what if the leeches are the health officials
    Robert Asher said...
    Even if Prof. Krugman is wrong about long term policy, you should not ignore the fact that he is dead on target in his call for short term stimulus. I don't see the American political system (dominated by big money, where every Congressional committee chairmanship is BOUGHT with millions of campaign contributions) permitting the kind of restructuring I think is necessary. But if we had liberal Democratic President (instead of the current moderate Republican) there would be a chance of a substantial stimulus. Look at the data: the last stimulus WORKED. It just was not big enough. A President who really campaigns for a policy, in alliance with liberal groups, can accomplish a lot.
    Look at the way John F. Kennedy linked up with Norman Cousins and SANE to turn around public opinion on the atmospheric nuclear test ban treaty. Its a matter of genuine commitment to a cause.
    jim said...
    " the real problem is too little spending in Europe as a whole."
    And what does Germany and France (and other countries in Europe) spending have to do with PIIGS spending? I doubt that more spending with 7+% yields on government debt would be positively received. Printing money may temporarily lower interest rates but that really doesn't seem to be the PIIGS problem does it? They didn't get a mountain of debt because of Germany, France, etc.
    paine said in reply to jim...
    you ask the right question

    And what does Germany and France (and other countries in Europe) spending have to do with PIIGS spending"
    one word exports
    more spending in the rest of the common market
    the piigs exports to those countries
    germany must grow much faster then the piigs for a spell
    or the piigs have to contract faster then germany
    you choose ??
    anne said...
    December 2, 2011
    Profligate Zombies
    By Paul Krugman
    Dean Baker has a series of posts * about bad reporting on the euro crisis; he is evidently, and with good reason, upset at the way just about every report states as a fact that excessive borrowing caused the crisis.
    This is another one of those zombie ideas that permeate our discourse; it’s part of the narrative, and no amount of evidence can kill it or even stop reporters/editors from stating it as a fact.
    So, one more time, here are some data (from the IMF World Economic Outlook database). Debt as a % of GDP for Spain and Italy:
    [Gross debt as percent of GDP for Italy and Spain, 199-2011]
    Before the crisis Spain had low and declining debt. Italy had high debt inherited from the past, but it was steadily working that debt down relative to GDP. Neither country was being profligate — that’s just not what happened. Since the crisis debt has been rising relative to GDP, but that’s what happens when you have an economic crisis.
    Yes, Greece. But Greece is now a tiny part of this story. As I said in today’s column, Greece (GDP of about $300 billion) is roughly Greater Miami ($270 billion). Italy and Spain are the big stories, and they were not, repeat not, fiscally profligate.
    Eric said in reply to anne...
    but that doesn't change the fact that Italy is in the dangerzone with debt above 120%. Historic research by economist Rogoff has shown that when countries get to these kind of debt levels, default risk increases significantly. The solution proposed by Dean Baker and others that the ECB should simply buy Italian debt, so rates come down and all is solved is not credible. Confidence will not come back, all that will happen is that investors dump their Italian debt at the ECB and the other eurozone countries will eventually have to pay for this.
    paine said in reply to Eric...
    eric rogof is playing partisan in the class war
    his findings are useless
    its like a history of bacterialinfection pre
    the era of effective anti biotics --keynes-kalecki --
    yes we now notice resistent strains as a new and relevent history
    but today the problem as stated nicely above
    non use of the anti biotics we have
    we don't employ the "anti biotics"
    beause ...
    just read this
    Julio said in reply to paine...
    Very good linked article.
    I would be curious to know your take on the financing of debt via a tax on capital (footnote 2): is that a necessary component of the scheme?
    paine said in reply to Julio...
    missed this sorry
    excellent question
    quick answer
    kalecki was not into playing with the nominal gross product ie inflation as an instrument of real debt reduction
    i am
    and therefore debt service becomes to pronged
    inflation taxed and rate controled
    besdies actual interets payments
    i think those oughta come out of some sort of wealth like tax base
    paine said in reply to Eric...
    eric if the structural problem is the high rates themselves
    bring them down solves the problem eh ??
    if you are a german
    which seems implied now and again
    you strike me as exceedingly undilligent
    in your thinking
    must be bavarian or swabian
    Eric said in reply to paine...
    I think Rogoff was thinking of you when he decided on the title of his book: this time it's different!
    paine said in reply to Eric...
    that applies to the hi fi risk takers
    not the transfer system gosplaners like me
    anne said in reply to anne...
    December 2, 2011
    Bailout Economics for David Brooks
    David Brooks tells us * that he is very concerned about the demands that value-less technocrats are imposing on the people of Germany to bail out the heavily indebted countries of southern Europe. He is worried that the bailout will be very costly and also that it will remove the link between effort and reward.
    Both sides of this picture need a little further examination. First, let's take a look at that big cost story. What is needed first and foremost in this bailout is a guarantee of debt from a deep-pocketed entity that can make this guarantee credible. That would be the European Central Bank (ECB).
    Guarantees can in principle be costless to the guarantor. Our political establishment and their followers in the media have been anxious to tell us how the government and the Fed made money on the TARP and related Fed bank bailouts. This is true. Of course we still gave enormously valuable subsidies to the beneficiaries of the bailouts.
    The way this works is that the money lent to the banks had very little cost to the government. The guarantees have no cost to the government, if they are not actually drawn upon. This means that if we get even nominal interest payments, the goverment comes out ahead.
    This is largely the case with the ECB right now. If it guarantees the debt of the troubled countries then the runs on these countries' bonds will stop and their debt burdens will be sustainable. This means that the net cost to the ECB is likely to be close to zero and it could even led to a profit. Furthermore, the ECB can print as many euros as it wants, just as the Fed can print as many dollars as it wants.
    All of this means that the tax burden on those hard working Germans should at the end of the day be a mind blowing -- hold your horses -- ZERO!
    Okay, there is a small issue here. The ECB will have to abandon its worship of the number 2, as in 2 percent inflation. If the ECB is prepared to provide the support necessary to get southern Europe back on a healthy growth path then it will be necessary to have a somewhat higher inflation rate in Germany, perhaps 3-4 percent. Is that too troubling for the German people? Maybe we can have inflation adjustment therapy sessions to allow Brooks' hard-working Germans to cope with this situation. (We should send the bill to the profligate southern Europeans.)
    Now that we have explained to Brooks that there will be no crushing tax burden on the Germans let's turn to the "effort-reward" story. There is a logical counterpart to every reckless borrower known as a reckless lender. Lenders are supposed to know the creditworthiness of their borrowers. That is what is supposed to distinguish a successful bank from an unsuccessful bank.
    To some extent the lenders can perhaps be excused in the case of Greece, since the country did outright lie about its budget situation. (Some people more familiar with the world of high finance than me insist that the lenders knew that Greece was lying.) However, the trillions of dollars of loans that fueled housing bubbles in Spain, Ireland, and elsewhere were freely made by very well compensated bankers who were supposed to have some clue as to what they were doing.
    In the world where effort is linked to reward, all of these reckless lenders should be out on the street, sent to the bottom rungs of society for their incredibly destructive greed and incompetence. That has not happened, nor is Brooks calling for it to happen.
    Instead, Brooks wants to see the people of Spain, Portugal, Italy and elsewhere suffer, because their leaders were no more competent than the people at the ECB or the banks making loans in Germany, France and elsewhere. He thinks that they should endure long periods of high unemployment, see big cuts in the pensions for which they worked decades, and have education spending for their children reduced.
    I'm looking really hard, but I don't see any connection between effort and reward in Brooks' vision. Maybe he can clarify the link in a future column.
    -- Dean Baker
    Julio said in reply to anne...
    Excellent points. It's easy to lose track of the fact that the entities being rescued are banks that made bad loans, and that the "crisis" is that they threaten to take others down with them.
    Shine said...
    We need World War 3 then to start everything from cents and restructure everything.
    Squidward said...
    "..the economy is being dragged down by troubled debtors — in our case, mainly homeowners. And here, too, we desperately need expansionary fiscal and monetary policies to support the economy as these debtors struggle back to financial health."
    I can't disagree with the gist, getting back to robust growth. But growth for debtors to get back to financial health or austerity to pay off debts is still the same.
    I'm afraid that we are going into a global lost decade with a yoke of ever increasing debt because we are more concerned that bankers get paid than creating jobs and real growth.
    It is just one funding mechanism after another, do we need more loans and debt or less? What is it actually paying for? Not jobs and growth in meaning full sectors of the economy.
    It's time for a debt jubilee. It's been more than 50 years.
    EMichael said in reply to Squidward...
    " But growth for debtors to get back to financial health or austerity to pay off debts is still the same."
    This makes my teeth hurt. The beatings will continue until morale improves.
    paine said in reply to Squidward...
    "growth for debtors to get back to financial health or austerity to pay off debts is still the same. "
    no if we run a rate of nominal gdp higher
    then the rate of debt service we are shrinking
    the national debt burden without aying off one cent of it
    we can roll it over indefinitely
    that is why we talk about primary deficits
    ie curent spending versus current revenue
    exclusive of debt servic payments
    italy faces too high debt service payments unless the rate they borrow at doesn't subside from the 7 range
    to say the 4 range
    if the fear of default premium on existing italian sovereign debt
    is removed by a blanket ECB guarantee
    the 4 's become nearly certain
    even if inflation spec leads market forces
    to lift german rates off the bed rocks
    at the same time
    paine said in reply to paine...
    The Burden of the Debt and the National Income,
    1944, AER
    this is the locus classicus its by the darling fellow e evsey domar
    i regret the link to it i know of
    is toll boothed by the jestor
    Squidward said in reply to paine...
    Agreed, if we could have a higher run rate of nominal GDP than debt service.
    We still wait for Ben to target nominal GDP, hopefully it will the next iteration of policy. The Eurozone is further behind and debt continues to snowball.
    A large devaluation works as well, transitioning to a global currency (at least for central bank transactions) could have the same effect as FDR revaluing gold in 1933. Pay down old debt with new script.
    I remain concerned that we are headed to a global lost decade; inadequate expansion of fiscal and monetary policy coupled with a dampening effect of higher oil prices. Debt burdens becoming too painful in a low growth environment.
    Decisive action needs to be taken before it gets worse.
    DrDick said...
    At this point, I think that the Euros is already dead and we are just awaiting the official funeral. As Krugman has repeatedly pointed out, a unified currency without an unified monetary/fiscal policy is a certain recipe for disaster. That the Euro core is in the thrall of idiot Austerians like neelzito, has greatly compounded the damage.
    paine said in reply to DrDick...
    wrong my friend
    the euro is too big an MNC run set of card tricks
    to be allowed to spontaneously erupt
    too clever to fail
    Winslow R. said...
    U.S. dollars ( created by European banks) are being 'freed' from the European banking system through Fed intervention and allowed to flow towards U.S. institutions. Those dollars want to be repatriated before the Euro collapses.
    Where is that tax holiday?
    Winslow R. said...
    Is it stalled or just waiting for the last possible moment? My guess - it will be traded for a payroll tax cut extension.

    Repatriation Tax Holiday to Be Proposed by Hagan, McCain