Keynesian Economics

[mame]

no you misunderstand. Of course he said it was too small, I'm not making that argument. I'm saying he said the best thing about it was that it was to be implemented at the state level after it was passed. Some point last year he said what was wrong with the stimulus was that it was done at the state level. He took a little bit of shit over this but not much, people are used to him doing this, remember he's the guy after the tech bubble crashed that said we needed to create a housing bubble. Paul Krugman has predicted 11 of the last 5 recessions, he's amazing.

I'm not even aware of the circumstance you're trying to bring up, and you haven't posted any sources or quotes so I have no idea if I should even believe you. And even if krugman may have flipped on the idea of state vs federal organizing for the stimulus (again, I have no clue if that's even true) that does not somehow disprove keynesianism anyway, so I feel like you have no point here.

 

[cannabineer]

If the inflation numbers are wrong, than real GDP and real wages MUST have been plummeting in recent years... Can you produce evidence of either? If not, than the inflation numbers are entirely correct (hint: real GDP and wages have not been falling). Also, the independent billion price project produces almost exactly the same number as the official CPI. The numbers aren't cooked. There is no conspiracy to hide inflation.

Real GDP and real wages are once again contracting. cn

 

[mame]

So in the span of 09-present you see an increase and an almost equal decrease in real wages as a negative trend? Looks to me like real wages are about right where they started in 09 and you've got it In rate of change anyway. I dont see a significant negative trend.

Fred, real compensation per hour: http://research.stlouisfed.org/fred2/graph/?id=COMPRNFB

Its flat since 09, not declining.

 

[cannabineer]

Do you have real compensation data not corrected "per hour"? Imo total real compensation is a product of wages per hour and total hours worked or logged. Afaik the number of hours worked has not recovered ... but i lack good reliable data. of course, with economists providing the data, it's all angels on pinheads imo. cn

 

[ginwilly]

I'm not even aware of the circumstance you're trying to bring up, and you haven't posted any sources or quotes so I have no idea if I should even believe you. And even if krugman may have flipped on the idea of state vs federal organizing for the stimulus (again, I have no clue if that's even true) that does not somehow disprove keynesianism anyway, so I feel like you have no point here.

I could have a link war with you if that's what you really want but isn't this more of a philosophical discussion wouldn't you say? We can't prove Keynesians wrong because their answer is always "more" would have worked. When we point out historical examples of the failures of past policies you guys say it was because we didn't do enough. You will claim the new deal saved us from the depression by using data cherry picked to support the claims. Hayek fans can make the opposite argument and neither can be proven wrong because we can't possibly operate in separate realities to test our "facts". All we can do is point to historical periods, the methods used, and the results. Ever heard of the great depression of '21? wonder why? This is the last example of Laissaz-faire solution a government had to an economic problem. We can learn from this or we can continue saying the reason our keynesian policies aren't working is because it's not enough. My guess is the central planner says we are not doing enough instead of too much.

I give Krugman shit because he's a dishonest egomaniacal attention whore, not because he's a Keynes fan. I'm sure if you've read a few of his books or his NYT blog you have probably become numb to it by now.

 

[NoDrama]

I'm not sure looking at the money supply does any good. For example, there has been a TRIPLING of the monetary base since 2008 and inflation has remained low, as predicted by IS-LM. It's not just the core and CPI that show this, the billion price project confirms those numbers as well. Also, if inflation was higher than reported, Real GDP and wages must have been falling the last few years...and they have not. The inflation numbers are not a lie.

well of course you can't just LOOK at a big supply of money and assume that there is high inflation. Velocity of money certainly has something to do with this also. Banks have tons of money to play with, nearly limitless options due to a .25% interest rate. You don't think they are taking that money and paying off debt or giving customers loans do you? NOOOO, what the banks do with all this extra cash is speculate on the markets, the more free cash from the fed the more they buy. Equities and commodities go hand in hand with the free cash, noticed the market is near record highs again? Yet volume is at some of the lowest levels ever? And new records are being broken by the number of people fleeing the markets and jumping into near worthless bonds? That is where this inflation is currently going, equities and commodities. Bernanke even admitted as much.

Lets also not forget that markets can be irrational longer than you can be solvent.

 

[mame]

The depression of 21 wasn't a liquidity trap; Different conditions call for different prescriptions. In the liquidity trap, adequate fiscal expansion can restore full employment. "adequate" is determined by finding the size of the output gap and filling it. Pretty simple stuff. If this were not a liquidity trap, the federal reserve would have already restored full employment, but instead monetary expansion is traction less in terms of restoring full employment - as predicted by the model IS-LM. Only about 1/3rd of the aggregate demand lost since 08 has been restored... So, we can ether wait a half dozen more years for that demand to return to the economy (sacrificing potential output and leaving workers unemployed for no good reason) or we can embark on another round of fiscal expansion in a time of record low interest rates and crumbling infrastructure. Which makes more sense?

 

[NoDrama]

The depression of 21 wasn't a liquidity trap; Different conditions call for different prescriptions. In the liquidity trap, adequate fiscal expansion can restore full employment. "adequate" is determined by finding the size of the output gap and filling it. Pretty simple stuff. If this were not a liquidity trap, the federal reserve would have already restored full employment, but instead monetary expansion is traction less in terms of restoring full employment - as predicted by the model IS-LM. Only about 1/3rd of the aggregate demand lost since 08 has been restored... So, we can ether wait a half dozen more years for that demand to return to the economy (sacrificing potential output and leaving workers unemployed for no good reason) or we can embark on another round of fiscal expansion in a time of record low interest rates and crumbling infrastructure. Which makes more sense?

The Fed cannot make people feel good and start spending again, they can only set the system up to accept such people. No government agency or private corporation has any control over your feelings, they leave that to the MSM.

 

[ginwilly]

So, we can ether wait a half dozen more years for that demand to return to the economy (sacrificing potential output and leaving workers unemployed for no good reason) or we can embark on another round of fiscal expansion in a time of record low interest rates and crumbling infrastructure. Which makes more sense?

don't you wish you guys would have done this when you had the political capital? We could have spent 1/2T on infrastructure paying off the trade unions or we could spend 1/2T on teacher unions. We picked the wrong sector to help the economy, damn politicians.

Now you guys have to look at the Americans with a straight face and tell us that if we let you try it again THIS time you'll do what you said you would do LAST time.

Our roads and bridges need work. Would have been great if that money were spent for this purpose.

So for Keynesian policies to work the politician implementing these policies need to pick the right ones, just spending money has proven to be the wrong answer. Also, people must behave in a consistent predictable manner, good luck with that. Even if I agreed with this theory I would hopefully have the sense to know our present leadership are not the people to carry this out.

 

[RoninAmok]

We can't prove Keynesians wrong because their answer is always "more" would have worked. When we point out historical examples of the failures of past policies you guys say it was because we didn't do enough. You will claim the new deal saved us from the depression by using data cherry picked to support the claims. Hayek fans can make the opposite argument and neither can be proven wrong because we can't possibly operate in separate realities to test our "facts". All we can do is point to historical periods, the methods used, and the results. Ever heard of the great depression of '21? wonder why? This is the last example of Laissaz-faire solution a government had to an economic problem. We can learn from this or we can continue saying the reason our keynesian policies aren't working is because it's not enough. My guess is the central planner says we are not doing enough instead of too much.

I give Krugman shit because he's a dishonest egomaniacal attention whore, not because he's a Keynes fan. I'm sure if you've read a few of his books or his NYT blog you have probably become numb to it by now.

THIS^^^^^^ gets right to the point. Perhaps now we can get to the manipulation and abuse of the system that resulted in the greatest transfer of wealth in modern history?

 

[RoninAmok]

Our roads and bridges need work. Would have been great if that money were spent for this purpose.

*******So for Keynesian policies to work the politician implementing these policies need to pick the right ones********, just spending money has proven to be the wrong answer. Also, people must behave in a consistent predictable manner, good luck with that. Even if I agreed with this theory I would hopefully have the sense to know our present leadership are not the people to carry this out.

Thus opening the door for corruption when the politicians in place are bought and paid for. They'll always serve the interest of those who pay them.

 

[OGEvilgenius]

when calculating inflation necessities like energy and food are for some reason not included, wonder why that is?
what costs are increasing at the highest rates?

inflation is like unemployment numbers, we can make them look like anything we want. It's hard to see gold double in price but say nah, the dollar is STRONG!!

What's included in the CPI changes all the time. It's an obviously manipulated number.

Food prices continue to skyrocket.

 

[OGEvilgenius]

And btw ginwilly, youre putting words in krugmans mouth. He said from the very beginning that the stimulus was too small.

http://krugman.blogs.nytimes.com/2011/08/22/early-stimulus-worries/

Krugman also said that a housing stimulus was the best way to recover from the dot com recession. Good idea there Paul. He's a guy who won a Nobel prize for his work in international trade theory, not in overall macro economics where he has been very consistently wrong about very many things going back until he started making his thoughts public. He acts like he knows it all. A very dangerous mind set.

 

[OGEvilgenius]

Of course, but golds recent rise in price is NOT inflation driven, because inflation has only been 2-3% in recent years and golds rise has been much more. The huge increase in the price of gold the last few years is explained by negative real interest rates.

This is an absurd statement on many levels.

CPI is a manipulated number. Real inflation is far far higher and it's evidence in soaring prices of many commodities. You can ignore this if you're crazy and always wrong about these things (ie: Krugman) or you can acknowledge it as a real problem that is only going to get worse in the future and try to find ways to address it.

 

[OGEvilgenius]

If the inflation numbers are wrong, than real GDP and real wages MUST have been plummeting in recent years... Can you produce evidence of either? If not, than the inflation numbers are entirely correct (hint: real GDP and wages have not been falling). Also, the independent billion price project produces almost exactly the same number as the official CPI. The numbers aren't cooked. There is no conspiracy to hide inflation.

The basket of goods changes all the time. This is an accepted fact. ]

The output gap can be temporarily masked by printing more money, but eventually you have to pay the piper and malinvesting money you don't have isn't ultimately healthy for any economy in the long run. The Armenian government has for years claimed to have a growing GDP, but it didn't really matter because all the numbers were cooked. The people sure know it's a lie.

 

[OGEvilgenius]

What you are saying makes no sense.


Lets say the price of meat goes up 10%.

That does not affect the GDP or the price of wages but cuts into people's disposable income.

Gas is twice as expensive as years ago, meat is 10-20% more expensive, gold is double, everything in the supermarkets is shrinking in size while remaining the same cost (they now have 20 packs of coke in some stores and I cannot even find the family size bag of ruffles chips anymore and the regular size is 4.99 at Walmart.

Everything has gone up and not by a piddly 2-3%.

If you cannot see it in your real life you are blind.

The reduction of quality in productions or quantity is another way inflation is masked, along with playing very fast and loose with definitions.

 

[mame]

This is an absurd statement on many levels.

CPI is a manipulated number. Real inflation is far far higher and it's evidence in soaring prices of many commodities. You can ignore this if you're crazy and always wrong about these things (ie: Krugman) or you can acknowledge it as a real problem that is only going to get worse in the future and try to find ways to address it.

You're wrong. Just because you keep making the same assertions (that inflation is higher than reported) doesn't make them true. You've offered zero evidence that they're cooked... Your single argument seems to be that "soaring commodities" are evidence but correlation is not causation. I can make a very good case that gas prices are driven by rising global demand and rampant speculation because of instability in the middle east - there's no need to blame monetary expansion. Corn and wheat both have real supply/demand imbalances causin price shifts, etc... There's more to it than what you seem to think there is.

Besides, the independant billion price project has produced nearly the same numbers as the official CPI.

Going further, the models and fundamentals support the argument that inflation is around 2-3% as reported. The absence of falling real GDP and real wages supports the reported numbers and low inflation - even in the face of significant monetary expansion - as predicted by IS-LM. The evidence supports the official numbers.

 

[RoninAmok]

. Corn and wheat both have real supply/demand imbalances causin price shifts, etc... There's more to it than what you seem to think there is.

.

Hold up. I'm *in* " BigAg , you're quite likely unaware of some of the stuff that goes on to create those same shifts and imbalances and take the profits created thereby. The manipulation is massive and the corporations are HUGE , and they do this at the expense of both the consumer and the small producer , the latter of whom they will absorb and then contract ,effectively turning them into sharecroppers.

These companies often own the various processing facilities too , and they;ve made a practice throughout the industries of shutting out the small acreage grower...example: certain olive processing facilities in Calif that shut out folks with less than ten sometimes less than 20 acres , along with the Sevillano and Manzanilla folks , the latter two going to the new machine picked sort of producing tree........guess who owns most of the acreage with those new trees and quarter million dollar harvesters.

Take a look at what you get for beef on the hoof as a producer , then take a look at what it costs in a supermarket. You know who is getting rich.

 

[RoninAmok]

The reduction of quality in productions or quantity is another way inflation is masked, along with playing very fast and loose with definitions.

Egggggzackly. Lies.Damned Lies.And Statistics.

 

[OGEvilgenius]

[h=2]Investopedia explains 'Basket Of Goods'[/h] When conceptualizing a basket of goods, it is best to imagine a shopping basket. The basket contains everyday products such as food, clothing, furniture and financial services. As the products in the basket increase or decrease in price, the overall value of the basket changes. The CPI compares the value of the basket each year and determines the level of inflation for that period. The contents of the basket are subject to change each year.

Need more? This isn't debatable nor would any reputable economist argue that it is debated. The basket changes all the time. And yes, you can very easily make a case it is cooked as quite frequently items that are soaring in price are removed (ie: Gas & Food which are claimed volatile but also claimed relatively inelastic, which is it? Same text books say these things despite the obvious clash in logic. These things are volatile only in the same way money is volatile.)

That was from investopedia, but you can find the information in any economics text book (about the CPI changing all the time).

It's not just commodities but also the bond market as well.

You probably make a lot of money and I'm guessing you don't do your own grocery shopping.