M
morganist
Holy COW.
You have no grasp of the subjects about which you write, nor (apparently) do you understand the internal contradictions you write in a single sentence, nor the contradictions you write into one post versus another. Again, rather than write blather, put your ideas into a simple algebra (D'ya remember the Quantity Theory Of Money? Fits algebraically into less space than writing "the Quantity Theory Of Money.") Such a maneuver might (might) counter your tendency to conflate micro and macro, fiscal and monetary mechanics, personal notion and (solid) theory.
I have the feeling that you've read this sort of response before, though....
The answer as to why I wourld write the Quantity Theory of Money rather than the algebra is because not eveyone will know the algebra, but they can read and understand the name Quantity Teory of Money.
Dude, YOU don't understand the Quantity Theory Of Money.
(Nor, apparently, can you write it.)
Hey -- we're done. (I'm done.)
M
morganist
I completely understand the Quantity Theory of Money that is the point. The increase in government spending is likely to lead to an increase in aggregate prices. The point I make is rather than increasing the interest rate when this happens, which is the central banks standard operation, pension policy can be used to control aggregate prices.
WRITE THE EQUATION TO PROVE YOU KNOW ANYTHING ABOUT ANYTHING!!
Obvs you'll just google it
M
morganist
WRITE THE EQUATION TO PROVE YOU KNOW ANYTHING ABOUT ANYTHING!!
Obvs you'll just google it
Which variation do you want?
I put forward my view of monetary values and money circulation in the book Euro Crisis Aggregate Demand Control is European Single Currency Weakness. I come to the conclusion that the increase in money supply generally only pushed prices up when resources are scarce or there is barely any unemployment or underemployment. Although massive increases in the money supply will most likely push aggregate prices up. There are other factors than money supply that impact aggregate prices the question is more how to control aggregate prices or whether to control aggregate prices at all.
I detected a hint of professional jealousy?
This is what I take issue with. I believe your thinking is fundamentally wrong, particularly with regard to what appears to be an oversimplified and naive macroeconomic model in which regulated complex markets under regulatory capture to various degrees, will spontaneously seek equilibrium in a trivial Adam-Smith-like way. It also seems to me that you have failed to properly take into account how the transition to fiat money has affected monetary practice.
Governments often spend in deficit not after borrowing, but before borrowing! There can be considerable lag between spending and borrowing, and, for most countries, there is no requirement that amounts spent in deficit be borrowed at all. For these countries, sovereign bonds give the appearance of the government borrowing in order to spend, but the actual purpose of bonds is quite different than it appears. When the government spends in deficit, on infrastructure projects for example, newly created money flows into the private sector and new infrastructure appears. If the government subsequently sells bonds, the sale of those bonds removes money from the private sector and replaces it with bonds which in the private sector act as an interest bearing storage of money. In fact, the money removed from the economy via this mechanism can be less, greater, or equal to the amount ,say, spent into the economy on infrastructure. This, of course, is nothing at all like private sector financing.
M
morganist
I feel you are missing my point that the government does not have to borrow money at all if it makes its own money. The government spending can be paid for at least in part with the government made money rather than borrowed money or future taxation that will pay the borrowed money back. In terms of inflation the pension saving mechanism is superior to interest rate control because it does not impact the lending and borrowing mechanism by altering the price of borrowing by increasing or decreasing the interest rate. The pension saving mechanism controls inflation or deflation in a way that it lets the natural or market force interest rate be set by supply and demand or by the risk element of lending.
In short the government can make its own money and should and the interest rate should be left to the market rate. You can control aggregate prices by changing the pension saving contribution payments, it seems to work see below.
http://morganisteconomics.blogspot.com/p/success.html
In my comments, I was in large part recalling the essence of remarks made in some of your prior posts that evidenced for me that you hold to economic theory that has been, as far as I am concerned, thoroughly discredited. For example, in your post above you write "...future taxation that will pay the borrowed money back." This certainly implies to me a misleading intermingling of a government prerogative, i.e., taxation, with a private sector obligation, i.e., paying borrowed money back. In essence, taxation simply removes money from the economy and helps to give money value, in so far as citizens are required to pay taxes. To be more specific I would have to go back and reread some of your earlier posts. I am not inclined to do that now, but perhaps later.
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