U.S. Economic Myths

As soon as someone is using Riech as their source, you know not to bother. I mean, that is if you value your time.

Debt. Banks - ordinary banks - create money out of thin air through loans.

This is a great set of articles:

It. Depends.

We call it "currency". So it's flow is like "current". Rather than electrons per second or Coulombs per second, it's dollars per second.

If we have a case where there's not enough current, it may make sense to increase the machinery that supplies current.

Unfortunately, we have Austrian economists, and Austrian economists tend to remember that one time people got "electrocuted" by too much current, even though it never happened again ( really - most cases of hyperinflation since were actually failed states - and Wiemar may well have been a failed state as well) .

They're not wrong *in general* but if conditions don't match the story, then you get lots of unnecessary panic. And disentangling the conditions is very difficult. Did the Wiemar State cause hyperinflation specifically to defeat reparations? Good question.

What we need to do is decide how it should work, then build a "regulator" that enforces that. Sorta like the Taylor Rule, only maybe slightly different.

Right now we're guessing "current" by seeing how fast a "capacitor" charges. Not only is that hard to do, it's wrong - voltage charges caps. The analogy breaks down quickly ( voltage is always related to current in a circuit ) but in the economy, this is not as true.

So a guy named Scott Sumner, who works in the place in economics that Milton Friedman built, says "regulate to constant current." Make NGDP

- the sum of RGDP and inflation - increase at a constant rate.

That (multiplier) comes second. The multiplier has to have a base (multipl y 0 and get 0). The typical contemporary first step (in the US): the Treas ury sells securities (debt) on the open market. The Fed buys that debt on the open market by writing a check in dollars. The amount of the check rep resents an increase in the base. I do not believe there is any intention t o ever extinguish a substantive amount of the Treasury debt that sits on th e Fed's balance sheet. They can contract the base by selling the debt---th ey simply do not do that much these days.

Yet that's where we are.

pathetic situation:

The "we" in this context being krw and Robert Baer. John Larkin probably qu alifies as well, for the depth of his insight into the Uganda economy, but he does have the idea that Uganda exists, which elevates him by at least on e level. Not that the right-wing baseline is exactly elevated.

Sowell's a national treasure. The left hates his color, his brilliance, and him, for speaking from experience, heart, *and* brain.

He'll be sorely missed.

Cheers, James Arthur

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Google doesn't think that he is dead yet. It does think that he is 84, whic h is presumably close enough to being dead for James Arthur to admire him. He's also on the right, which means that parts of his brain have to have di ed years ago.

He's currently Rose and Milton Friedman Senior Fellow at the Hoover Institu te, Stanford University, and is presumably obliged to share Milton Friedman 's irrational faith in the perfection of the untrammelled free market, whic h does required selective inattention to quite a lot of inconvenient counte r-evidence, a skill which James Arthur has mastered, albeit at a rather low er level.

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ich is presumably close enough to being dead for James Arthur to admire him . He's also on the right, which means that parts of his brain have to have died years ago.

tute, Stanford University, and is presumably obliged to share Milton Friedm an's irrational faith in the perfection of the untrammelled free market, wh ich does required selective inattention to quite a lot of inconvenient coun ter-evidence, a skill which James Arthur has mastered, albeit at a rather l ower level.

Thomas Sowell still publishes regular columns full of lifetimes' worth of wisdom, scholarship, and common sense, so it would surprising if he were dead, and unsurprising you'd not be interested. He's not Al Gorax.

Cheers, James Arthur