Economics stuff from facebook feed
Re: Economics stuff from facebook feed
http://www.forbes.com/sites/stevekeen/2 ... effed44edc
The American ex-banker turned philanthropist and debt reformer Richard Vague, in his excellent empirical study of crises over the last 150 years, concluded that crises occur when (a) private debt exceeds 1.5 times GDP and (b) the level grows by about 20% (say from 140% to 160%) over a 5 year period.
The American ex-banker turned philanthropist and debt reformer Richard Vague, in his excellent empirical study of crises over the last 150 years, concluded that crises occur when (a) private debt exceeds 1.5 times GDP and (b) the level grows by about 20% (say from 140% to 160%) over a 5 year period.
Re: Economics stuff from facebook feed
http://debt-economics.org/review-data.php
Excellent resource with a number of links to excel spreadsheets containing a simple and neat debt data compilation for various countries
Excellent resource with a number of links to excel spreadsheets containing a simple and neat debt data compilation for various countries
Re: Economics stuff from facebook feed
http://www.forbes.com/sites/stevekeen/2 ... 691690333f
An explanation of why neoliberal economists ignorance of banks as being of macro-economic significance is absurd. (2 page article)
An explanation of why neoliberal economists ignorance of banks as being of macro-economic significance is absurd. (2 page article)
Re: Economics stuff from facebook feed
http://www.forbes.com/sites/stevekeen/2 ... 66376456a3
This gave Graziani three basic conditions that had to be met for something to be called “money”:
a) money has to be a token currency (otherwise it would give rise to barter and not to monetary exchanges);
b) money has to be accepted as a means of final settlement of the transaction (otherwise it would be credit and not money);
c) money must not grant privileges of seignorage to any agent making a payment.
Graziani saw only one way to satisfy those three conditions:
The only way to satisfy those three conditions is to have payments made by means of promises of a third agent, the typical third agent being nowadays a bank.
Only one person ever really ever did (work out what money is)—and no, it wasn’t Ayn Rand. It was Augusto Graziani, an Italian Professor of Economics, who died early last year. He understood what money is because he posed and correctly answered a simple question: how does a monetary economy differ from one in which trade occurs by barter?
This ruled out gold being money, since gold is a commodity that anyone can produce for themselves with a bit of mining (and a lot of luck). So even though gold is really special and incredibly rare, it is in the end, a commodity: an economy using gold for trade is really a barter economy, not a monetary one. As Graziani put it:
a true monetary economy is inconsistent with the presence of a commodity money. A commodity money is by definition a kind of money that any producer can produce for himself. But an economy using as money a commodity coming out of a regular process of production, cannot be distinguished from a barter economy. A true monetary economy must therefore be using a token money, which is nowadays a paper currency. [He wrote this in 1989, before our modern electronic money system had developed]
That doesn’t rule out a world in which gold is used as the basis for commerce of course: it just says that that’s not a monetary economy. Those who say we’d be better off “going back to gold” are really saying that they don’t like a monetary economy, and reckon we would be better off in a barter economy instead.
banks must be part of your economic analysis—leaving them out is leaving out the main (but not the only) way money is created in our modern economy—and you can’t just lump them with other firms:
Firms are present in the market as sellers or buyers of commodities and make recourse to banks in order to perform their payments; banks on the other hand produce means of payment, and act as clearing houses among firms. In any model of a monetary economy, banks and firms cannot be aggregated into one single sector.
Unfortunately, that is precisely what mainstream economists do. As Krugman put it recently:
in some sense money is a really weird thing, which can look to individuals like a real asset—cold, hard, cash—but is ultimately, as Paul Samuelson put it, a “social contrivance”; whose value is more or less conjured out of thin air. Mainstream macroeconomics acknowledges the weirdness—in particular, makes heavy reliance on the ability of central banks to create more fiat money at will—but otherwise treats money a lot like ordinary goods. But that intellectual strategy doesn’t come naturally to many people, so there’s always a constituency for monetary cranks.
That “intellectual strategy” is actually a mistake, which is why mainstream economists miss the importance of banks in creating money. It isn’t just the Federal Reserve that can create money—as many people that Krugman labels monetary cranks believe—nor can the Federal Reserve control bank lending, as mainstream economists like Krugman believe.
This gave Graziani three basic conditions that had to be met for something to be called “money”:
a) money has to be a token currency (otherwise it would give rise to barter and not to monetary exchanges);
b) money has to be accepted as a means of final settlement of the transaction (otherwise it would be credit and not money);
c) money must not grant privileges of seignorage to any agent making a payment.
Graziani saw only one way to satisfy those three conditions:
The only way to satisfy those three conditions is to have payments made by means of promises of a third agent, the typical third agent being nowadays a bank.
Only one person ever really ever did (work out what money is)—and no, it wasn’t Ayn Rand. It was Augusto Graziani, an Italian Professor of Economics, who died early last year. He understood what money is because he posed and correctly answered a simple question: how does a monetary economy differ from one in which trade occurs by barter?
This ruled out gold being money, since gold is a commodity that anyone can produce for themselves with a bit of mining (and a lot of luck). So even though gold is really special and incredibly rare, it is in the end, a commodity: an economy using gold for trade is really a barter economy, not a monetary one. As Graziani put it:
a true monetary economy is inconsistent with the presence of a commodity money. A commodity money is by definition a kind of money that any producer can produce for himself. But an economy using as money a commodity coming out of a regular process of production, cannot be distinguished from a barter economy. A true monetary economy must therefore be using a token money, which is nowadays a paper currency. [He wrote this in 1989, before our modern electronic money system had developed]
That doesn’t rule out a world in which gold is used as the basis for commerce of course: it just says that that’s not a monetary economy. Those who say we’d be better off “going back to gold” are really saying that they don’t like a monetary economy, and reckon we would be better off in a barter economy instead.
banks must be part of your economic analysis—leaving them out is leaving out the main (but not the only) way money is created in our modern economy—and you can’t just lump them with other firms:
Firms are present in the market as sellers or buyers of commodities and make recourse to banks in order to perform their payments; banks on the other hand produce means of payment, and act as clearing houses among firms. In any model of a monetary economy, banks and firms cannot be aggregated into one single sector.
Unfortunately, that is precisely what mainstream economists do. As Krugman put it recently:
in some sense money is a really weird thing, which can look to individuals like a real asset—cold, hard, cash—but is ultimately, as Paul Samuelson put it, a “social contrivance”; whose value is more or less conjured out of thin air. Mainstream macroeconomics acknowledges the weirdness—in particular, makes heavy reliance on the ability of central banks to create more fiat money at will—but otherwise treats money a lot like ordinary goods. But that intellectual strategy doesn’t come naturally to many people, so there’s always a constituency for monetary cranks.
That “intellectual strategy” is actually a mistake, which is why mainstream economists miss the importance of banks in creating money. It isn’t just the Federal Reserve that can create money—as many people that Krugman labels monetary cranks believe—nor can the Federal Reserve control bank lending, as mainstream economists like Krugman believe.
Re: Economics stuff from facebook feed
http://www.forbes.com/sites/stevekeen/2 ... 5643152000
A good simple article on the world according to the managers of reserve banks. I like the 2,3,4,5 explanation at the start.
A good simple article on the world according to the managers of reserve banks. I like the 2,3,4,5 explanation at the start.
Re: Economics stuff from facebook feed
http://www.forbes.com/sites/stevekeen/2 ... 7014ff8db7
A preview of the future, taking the case of japan that got to a massive debt burden in 1995 and then mapping japan's future since then on top of the advanced economies that now have a massive debt burden akin to old japan and then looking at what the future might look like.
A preview of the future, taking the case of japan that got to a massive debt burden in 1995 and then mapping japan's future since then on top of the advanced economies that now have a massive debt burden akin to old japan and then looking at what the future might look like.
