silly economics

Yes, and the filmmaker, and the NYT. Google Grace Lee Boggs.

Rather than as one intentionally, systematically plotting to exploit human discontent to foment Marx's revolution (i.e., a community organizer), they all describe GLB as a heroine / tireless advocate for the down-trodden, women, the environment, and civil rights.

But even the doe-eyed filmmaker does, eventually, start getting a bit uncomfortable with the whole violent revolution thing, and particularly GLB's continued rationalizations that revolution / "change" is the only way forward, which GLB's preaching from the smoking ruins of the dystopian Detroit she'd created all around them. Cognitive dissonance writ large.

GLB's solution? More revolution, recycling, and community gardens!

Cheers, James Arthur

That's how Sharia Law and communism came to Detroit and made it impossible for Louis Gohmert to become Speaker of the House even though he represents the 1st congressional district of Texas and spent some time in the military.

Does anyone read the NYT besides the LGBTQ crowd and their Democrat sycophants ?>:-} ...Jim Thompson

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common people. If the banks are paid to take the money it is going where al l the other money they took went - into investments. It is not going to be loaned out for small business creation/expansion or house mortgages.

ks

Not very efficient stimulus, but if the Republican majoruty insist that all the pork barrels go to people who will vote for them, that's where the mon ey goes.

It's likely that that the policy-makers did expect it, but the the politica l situation means that they couldn't do anything sensible to anticipate it (blunt it's effect).

James Arthur guessing what policy makers might have thought does have its c omic aspect. James Arthur doesn't believe in Keynesian or neo-Keynesian eco nomics, and most policy makers are better educated (or less brain-washed).

Actually, it's Dubbya' deficit. If Dubbya had stepped in to deflate the hou se price bubble and the consequent housing construction boom in about 2005, there wouldn't have been a GFC, and Obama wouldn't have been stuck with pr oviding deficit-funded stimulus to stop the economy crashing into a re-run of the Great Depression.

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Any little old ladies silly enough to use savings accounts as interest earn ing investments need to be edited out of the gene-pool, along with any rela tives silly enough to let them persist in the behaviour.

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It isn't a direct tax. Ask any lawyer.

alking.

common people. If the banks are paid to take the money it is going where al l the other money they took went - into investments. It is not going to be loaned out for small business creation/expansion or house mortgages.

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That is the essential Keynesian insight. Dan Kahneman got a Nobel Prize for filling in the details of how it works.

There are idiots who share James Arthur's unwillingness to accept Keynes' i nsight. You do seem to be one of them. But you also think that anthropogeni c global warming isn't happening, and wouldn't matter if it did.

Do tell us that the earth is flat and was created 23 October, 4004 BC, com plete with a convincing set of evidence of earlier evolution. Become a comp lete idiot, rather than just nibbling around the edges.

insight. You do seem to be one of them.

Apparently there are a lot of those idiots that are well known economists

Dan

From Wiki.

Through the 1980s Keynesian macro-economics fell out of fashion as a policy tool, and as a field of study. Instead it was felt that combining economic s with behavioral science, game theory and monetary theory were more import ant areas of study. On the policy level it was the era of Margaret Thatcher and Ronald Reagan, who advocated slashing the size of the government secto r. However, beginning in the late 1980s economics began shifting back to a study of macro-economics, and policy makers began to look for means of mana ging the global financial network, which was increasingly interlinked.[cita tion needed]

In the 1990s the "uncoupling" of money supply and inflation caused an incre asing questioning of the original form of monetarism.[citation needed] The repeated failures of "big bang" marketization in the former Soviet Bloc hav e encouraged the recent revival in Keynesian ideas, with particular emphasi s on giving the Keynesian macroeconomic analysis theoretically sound founda tions in microeconomics.[citation needed] These theories have been called n ew Keynesian economics. The heart of the new Keynesian view rests on microe conomic models that indicate that nominal wages and prices are "sticky," i. e., do not change easily or quickly with changes in supply and demand, so t hat quantity adjustment prevails. This, according to economist Paul Krugman , "works beautifully in practice but very badly in theory."[6] This integra tion is further spurred by work of other economists which questions rationa l decision-making in a perfect information environment as a necessity for m icro-economic theory. Imperfect decision making such as that investigated[c itation needed] by Joseph Stiglitz underlines the importance of management of risk in the economy.

New classical economics relied on the theory of rational expectations to re ject Keynesian economics. Most well-known is the critique by Robert Lucas, who argues[citation needed] that rational expectations will defeat any mone tary or fiscal policy. But new Keynesians argue that this critique only wor ks if the economy has a unique equilibrium at full employment. Price sticki ness means that there are a variety of possible equilibria in the short run , so that rational expectations models do not produce any simple result.

In the end, many[citation needed] macroeconomists have returned to the IS/L M model and the Phillips curve as a first approximation of how an economy w orks. New versions of the Phillips curve, such as the "Triangle Model", all ow for stagflation, since the curve can shift due to supply shocks or chang es in built-in inflation. In the 1990s, the original ideas of "full employm ent" had been replaced by the NAIRU theory,[citation needed] sometimes call ed the "natural rate of unemployment." This theory pointed to the dangers o f getting unemployment too low, because accelerating inflation can result. However, it is unclear exactly what the value of the NAIRU is - or whether it really exists or not.

For a relatively open economy this simple Keynesianism must[why?] be comple mented by considerations of foreign exchange markets, exchange rates, and t he balance of payments. Also needed is an understanding of issues of long-t erm growth of potential. The open economy considerations which were the bas is of the conservative or neo-liberal revival of policy, were then codified by Keynesian economists.[citation needed]

Banks are not there 'for the common people'. Negative interest rate makes perfect sense for the banks and can be forced on the common people by outlawing cash payments 'to combat terrorism'. Instead of paying an albeit meager interest on the money the average joe deposits with them without asking any collateral for the money they actually loan from you, they can gain more when you also have to pay to deposit it with them. It's one of the examples where the law is written for the corporations and against 'the people'.

You mean speculation.

Of course not. Too risky, too little gain.

joe

It has nothing to do with Obama. Obama does what his puppet masters tell him. And if they tell him to reduce the USA to 3rd level, then the next president will continue on that path.

People are soo gullible, they still think they can influence politics just by voting, while it is overly clear that the tree of freedom must be nourished with the blood of the freedom fighters from time to time.

By the way, any idea what happened with that billion or so in campaign funding that the Koch brothers promised a year or so ago to spend for these elections?

Sanders? Trump?

joe

I can only refer you to Russ Roberts' general work - he's done more of aggregating the facts of this for close to ten years now. When I say it was a "non-event" I mean that nobody has a clear understanding of when or how the Fed balance sheet might become a problem.

Indeed, most world events indicate it won't be. At least not in my lifetime. Through no action within the United States, just the sheer level of uncertainty mounting in the rest of the world raises the strength of the dollar.

The underlying purpose was to reduce the uncertainty in reserves of banks. It may have been sold as "stimulus" but that's part of a general disease of language problem.

It didn't stimulate anything. It was designed as a set of flying buttresses to keep the cathedral of credit standing.

I don't agree. I've just seen too many people leave far too much money on the ground to buy that.

I don't consider stock buybacks as arbitrage. I consider them as a sign the management team has no way to calculate the risk of actual growth.

It's eating your children for a growth company. It's de riguer for a hidebound dying one.

There's nothing to arbitrage unless you mean purely arbitraging the value of the currency itself, in a deflationary way. But no; it's an across the board failure to understand and price risk.

He, first of all, B. is no big spender. I understand that's B.O.'s message but his behavior is fully counter to that.

I'm not defending him; I just think this very idea is pernicious and should be treated as toxic because it sets an understanding of the current economy askance.

I'm quite sympathetic. But it's they who are the root cause:

Sorry; I didn't understand that that is what you were referring to. I thought you meant the Fed itself was unconstitutional.

I think calling all this "a direct tax on savings" is disingenuous at best. It happens because of market conditions. And it's an emergent phenomenon that nobody advocates for.

Nice phrase :)

Or, more simply, that the management team hasn't got any good ideas for how the company should use the money to grow/change/prepare for the future. Which means the management team should change.

Seen that too many times.

Yup.

He's probably the least likely candidate to fit this description you could have found. He funded his run for the Democratic presidential nomination wi th lots of small donation from a huge number of contributors, He doesn't ow e any single puppet master anything - probably less than an any other US po litician.

When he got the job, he found that he could do a lot less than he would hav e liked, but he has done what he could.

Reagan started it, and no subsequent president has been able to stop the pr ocess. Obama recognises that the US needs to stop becoming more unequal, bu t hasn't got any levers to pull. The founding tax evaders did too good a j ob of creating a constitution that looked democratic, but left the people t hat owned the country free to run the country,

The blood of freedom fighters can get rid of whoever it was running the cou ntry, but the chaotic situation this sets up can too easily be exploited by others. In Russian it was the Bolsheviks, in revolutionary France, the Jac obins.

Marco Rubio has apparently received more money than anybody else, but not a ll that much. Presumably they'll put in serious money when the crowd of rig ht-wing nitwits gets thinned out a bit.

s' insight. You do seem to be one of them.

They do want to get one of those endowed professorships.

Most economists are neo-Keynesians. The Keynesian insight means that nice s imple mathematical models of the economy haven't got a hope of working, and the grown-ups have learned to live with that. There's still a lunatic frin ge that thinks that the perfectly rational agent in a a nice simple mathema tical model can get you publications, even if it can't predict anything.

Dan is silly enough not to have noticed what's actually going on.

Not really. Sloman is just stupid to make absolute statements.

Dan

News flash! Policy makers are idiots.

Stock buybacks are a rational way to return profits to shareholders. Dividends are taxed twice, at corporate and then individual tax rates; stock appreciation is taxed once, at the capital gains rate.

Tax policy, and tax avoidance, dominate the world these days. The effects are perverse.

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The Chair of the Fed Board of Governors is a statutory position, created to satisfy various elements of the public and government when the Fed was created. Rather than a government run central bank, we have this quasi public/private entity. Yellen's job is to blow smoke up the collective butts of Congress while the member banks sit back and actually run the thing behind the scenes.

Greenspan was the master of this smoke-blowing act. As anyone who actually tried to decode his b.s. realized.

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alking.

common people. If the banks are paid to take the money it is going where al l the other money they took went - into investments. It is not going to be loaned out for small business creation/expansion or house mortgages.

ks

Sorry, I'm just not moved by euphemisms and narratives. We have, by issuin g money, suggested that it can be traded for valuable goods and services that do not, and will not exist.

The Fed issued it, and the Federal government spent it. The people who took the money in trade received, in that medium of exchange, a promise for goods that cannot and will never be delivered.

No obfuscation alters that fact, merely muddles the reckoning.

stock.

You don't have to agree--that's what they thought, and that's what they did. They decided the risk/reward ratio of repurchasing shares was more attractive than expanding their businesses.

I consider taking advantage of artificially-low interest rates (i.e., an inefficiency imposed on the market) a form of arbitrage. YMMV.

His behavior is not counter to that--you're talking to someone who has followed it by detail from the start. I've followed his budgets, passed and proposed, and his proposals. You're dead wrong.

The new Congress held him at bay after the Tea Party Election of 2010. Full stop.

Maybe you need to review Obama calling for a trillion dollars for "shovel-ready jobs" that didn't exist, spending the money, then recently calling for another trillion ... for the same thing!

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Oh what hogwash. Old ladies living off their retirement savings aren't to blame for any of this. And I find the writer's suggestion offensive.

"But if we want to change the behavior of the polity, it's not enough to argue over clever policies that, if implemented, might do the trick. We've got to change its preferences..."

It's none of his damn business "chang[ing]" the polity's "preferences" by squeezing them out of their retirements.

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That's a quibble without a cause. I was being generous calling it a 'tax,' otherwise it's an expropriation, a proscribed 'taking' without just compensation. (Vth Amendment.)

In neither case is one un-elected bureaucrat constitutionally authorized to take x% of your life savings per year. That violates separation of powers to its core, allowing someone not even technically in the government to take property without being liable to the elected government, or the voters. And it's an unlimited power--if she can take 1%, why not

Allowing one individual the power to confiscate your life savings--by one cut or a thousand--is effectively the despotism our founders took such pains to prevent. They'd be mortified.

by

Cheers, James Arthur

Bill's convinced that if a government takes a dollar from someone and gives it to one of their friends, that now we've got two dollars instead of one. Possibly three dollars, if the recipient is a PhD.

Cheers, James Arthur

Banks are convinced that if someone lends them a dollar, they can lend N dollars to other people, i.e. they have "created" (N-1) dollars.

IIRC after the Great Depression N was fixed at 8, but since banking regulation liberalisation N has not been fixed and has risen beyond all sense (to 54 in one basket case (Northern (c)Rock)).

That's our fractional reserve system.

The federal regulators set the reserve requirement, and Before The Fall(tm) it was only 3%, IIRC. Even lower for the Gubmint's BFFs F&F. Nutty.

But Yellen playing with the money is no substitute for people having jobs, actually making and doing things. The Masters of the Universe, entranced with their models and their Big Knobs, lose sight. They've got a hammer, and we look like a nail.

People need a reason to work, and the ability to do that without undue obstacle. We've done the opposite, and shoveling money from hither to yon doesn't fix it, piling on more expense doesn't help, nor does borrowing today what we'll owe back on Tuesday.

John's right, they're idiots. Or, in sympathy, not really, they're just tasked with the impossible, by politicians, to wave the national magic wand and make it all go away.

Cheers, James Arthur