Asymptosis: Always Approaching

Category: Economics

  • Lending, Velocity, and Aggregate Demand

    JKH likes this line in Keen’s response to Krugman: The endogenous increase in the stock of money caused by the banking sector creating new money is a far larger determinant of changes in aggregate demand than changes in the velocity of an unchanging stock of money.” It struck me as an empirical question: how do…

  • Keen Answers Krugman

    I think Steve handles it admirably, and admirably briefly, so in this case I’ll simply point you over there. On bank lending’s creating deposits and Paul Krugman’s response | Credit Writedowns. Cross-posted at Angry Bear. Related posts: Defining “Reserves” The Central Flaw in Krugman’s Argument Against Keen One Place Where Mankiw Makes Absolutely No Sense…

  • The Central Flaw in Krugman’s Argument Against Keen

    The key failing in Krugman’s response to Steve Keen’s response to Krugman’s paper (PDF) is here: If I decide to cut back on my spending and stash the funds in a bank, which lends them out to someone else, this doesn’t have to represent a net increase in demand. Krugman assumes here that people have to save (spend…

  • Steve Keen Flexes His Muscles

    Super Corporate Heroes: Truth, Justice, and How Much Does It Pay?   Related posts: How Corporations Became People The Real Delegate Count: Ignoring the Super(fluous) Delegates Is Honesty a Conservative Moral Value? S&P 500 Earnings: The Most Depressing Graphic I’ve Seen This Year Why Libs and Cons Should All Love Milton Friedman’s Corporate Tax Proposal

  • Thinking About the Fed

    JKH has magisterial post up on the recent dust-up over Saving as perceived in various sectoral models — one-sector (global, for instance, or government- and trade-balanced domestic private sector); two-sector (government and private including international); the most common MMT construct, the three-sector model (government, domestic private, and international); the rather uncommon four-sector model (government, international,…

  • It’s a Spending Problem, Right?

    Well if so (something I’m not asserting), it’s a Republican spending problem: Economist’s View: Per Capita Government Spending by President. Cross-posted at Angry Bear. Related posts: Saving and “Government Saving” You Gotta Give Reagan Credit Rules? In Knife Fight?! Now (Also) Blogging at Angry Bear Why Economists Don’t Understand Accounting, or Business

  • When Do Humans Want to Share the Wealth?

    Jonathan Haidt reports an interesting experimental result: Two three-year-olds walk up to a marble-delivery machine that has two bins. Each stands in front of one bin. Three scenarios: 1. One bin has three marbles in it, the other has one: the winner is unlikely to share to equalize the takings. 2. There are two ropes…

  • Business Roundtable Proposes Obamacare to Restore American Competitiveness

    Or: You Just Can’t Make This Shit Up “Health Care Costs Put U.S. at Significant Disadvantage Compared with Global Competitors” I’ll let you read the details, but short story: Whodathunkit? And what do they recommend? Creating greater consumer value in the health care marketplace by using health information technology and empowering consumers with more information…

  • Where’s the High Point on the Laffer Curve? And Where Are We?

    Anti-taxers love to haul out the legendary napkin-inscribed Laffer curve to demonstrate that lower taxes would yield more government revenue. But this ploy only works because they assume that we’re at or past the high point — that higher taxes would move us down the right slope. (Note the cross-marks-the-spot in the image here?) But where…

  • More on Interest on Reserves

    I did a couple of posts a while back asking (and concluding) what would result from the Fed ending their interest on reserves policies. (Not suggesting they do so — just wondering what the effects of that one change would be.) I got a lot of good answers and discussion, but nobody mentioned the very…

  • Public vs. Private Debt: The Long View

    Poking around in FRED while thinking about money created by banks and by government, I came up with the following graph, which I found to be pretty eye-popping: Federal Debt Held by the Public as a Percentage of Total Credit Market Debt Owed That’s a pretty profound secular shift. But far from delivering any obvious…

  • 14 Ways an Economist Says I Love You.

    I’ll just share two of these. HT Yoram Bauman.   via 14 Ways an Economist Says I Love You. Cross-posted at Angry Bear.       Related posts: Economics is the Study of Human Reaction Functions Keynes: Pragmatist. Hayek: Utopian. Who Sez? Now (Also) Blogging at Angry Bear It’s a Spending Problem, Right? Labor Power…

  • Why the Government Must Keep Running Deficits. Forever.

    Imagine an economy that consists of two households, one firm, one bank, and one government. The government issues $50 to each household (maybe they do some work for it), crediting their bank accounts and running a $100 deficit. Voila! There’s money! Now one household works for the firm, creating $50 in value, goods. The firm…

  • Matthew Yglesias: Do Low Taxes Cause Inflation?

    It’s nice to see Matthew Yglesias embracing Modern Monetary Theory, but I wonder if he totally gets it: The point of collecting taxes isn’t that the government needs money (it can print money) it’s that if the quantity of taxes is too low relative to the stock of money, then the money loses its value and…

  • Length of Unemployment is Worst Since World War II

    Middle Class Political Economist: Basics: Length of Unemployment is Worst Since World War II.. (HT Brad DeLong.) The key graph: Assuming the economy is “trying” to reach equilibrium, this suggests that it “wants” less workers. If that is a secular trend, as suggested by the steadily lengthening jobless recessions since the 80s, …we’re faced with…

  • Another Comprehensive Approach: The Fair Share Tax Reform Proposal

    I just came across a fellow internet econocrank’s tax proposal, and find it quite interesting — especially its proposed progressive tax on net worth, which echoes the flat tax on financial assets that I’ve bruited. It also reflects many of the notions I suggested I’d implement if I was the Dictator of America. The basic…

  • Innovation and Market Constraints: The Case for Artificial Selection

    Bruce Wilder had an excellent comment recently in the Crooked Timber thread on markets, economic rents, and the constraints on economic actors, excerpted by Dan here, and more with comments by Jazzbumpah here. (If you like the thinking there, run don’t walk to read this windyanabasis post and comments.) The emphasis on constraints prompts me…

  • GDP and American (Non-)Exceptionalism: Again Some More

    Any knowledgeable economist will tell you that GDP (or GDP/capita) is a profoundly imperfect and non-inclusive measure of national well-being. In particular, GDP doesn’t count any work isn’t paid for with money — painting your mom’s house, volunteering for the Rotary Club or your church (David Brooks, are you listening?), caring for your kids and…

  • No: Saving Does Not Increase the Supply of Loanable Funds

    Or: It’s The Velocity, Stupid. I got quite a bit of blowback on my recent post suggesting that economists don’t understand accounting. In response I give you Exhibit A: the almost-ubiquitous notion that more saving increases the supply of “loanable funds” — hence that more saving causes or at least allows more investment. (The absolute classic…

  • David Frum Savages Charles Murray — And Rightly So

    David Frum was excommunicated from the Righties Club a few years back because he insisted on occasionally saying sane and accurate things. He continues that aberrational behavior today in his review of AEI uber-zealot Charles Murray’s new book, Coming Apart: The State of White America, 1960-2010 (which I will not link to here — no Google love from…

  • David Beckworth Scott Sumner talks very good sense sometimes

    Don’t tell me that the Dems favor fiscal stimulus because they like big government. The payroll tax cut will make it a bit more difficult to expand the size of government in future years.  (As Clinton found in 1993, when he was told the “bond markets” (i.e. the Reagan tax cuts) wouldn’t allow him to enact…