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  • It Was Never About Oil  [View article]
    "As for public money, banks would not be able to create ex-nihlo. Private banks today create more money than the FED. Under a public reserve system banks would have to borrow from the people and could not create money ex-nihlo."

    Being public or private has nothing to do with creating money ex-nihilo. Your argument makes absolutely no sense. Besides, the ability to create money ex-nihlo via fractional reserve banking very useful. Since the Renaissance it has made modern economies possible. It gives economies the ability to create money rapidly when there is demand and destroy it when demand slackens, which is something that a purely metal-backed currency cannot do. It must however be well constrained, as debt can be a dangerous thing.

    "That argument is a non-sequiter today because the Brits debased the Continental script by counterfeiting it, which today is not practical."

    Really? Nation states have done more to debase their own currencies than all the world's counterfeiters have ever dreamed of. I'm not a fan of the Fed, but am I supposed to trust the Federal government with keeping the money supply stable? The same Federal government that can't balance a budget and has run up over $19 trillion in debt? Look, it's about separation and dispersion of power, and putting the power to spend money AND create money in one place is just too dangerous.
    Feb 13, 2016. 01:12 AM | Likes Like |Link to Comment
  • The Great Economic Task Ahead  [View article]
    Did I say that the sales and inventory reports were wrong? No. I am saying that we have created more capacity than SUSTAINABLE demand can absorb. Loaning people more money to create demand is not sustainable. Creating make work jobs in the economy will not create sustainable demand. There is only one thing that increases sustainable demand: More output per person, i.e., higher productivity. A better education system would help. Removing CO2 from the atmosphere would not - that's a luxury or an unavoidable overhead cost depending on your opinion. Get your head out of failed and outdated mid-twentieth century thinking.
    Feb 13, 2016. 12:58 AM | Likes Like |Link to Comment
  • It Was Never About Oil  [View article]
    "Relying upon a metal to set your currency is foolhardy and only facilitates booms and busts because it is based upon only one metal. It is as if you would put all of your eggs in one basket."

    That has not been the case for a long time. First, FDR did not end the gold standard. He changed from gold-as-money to gold-backed money. That way he could change the price of gold from $20/ounce to $35/ounce and instantly increase the money supply. We also didn't have all our eggs in one basket. We had money backed by gold and simultaneously we had money backed by credit created through fractional reserve banking. It is TODAY that we have all of our eggs in one basket, as all of our money is backed by credit. Also, if fractional reserve banking was publicly held, most money would be created by banks to satisfy political requirements, not economic ones. Governments that can print their own money, like Argentina and Venezuela usually end up with runaway inflation.
    Feb 11, 2016. 07:10 PM | Likes Like |Link to Comment
  • The Great Economic Task Ahead  [View article]
    "So how do we create more demand?"

    Wrong question. We have already created more demand than our economy can sustain by using enormous an amount of debt. Your question is tantamount to asking "How can we keep the party going?"
    Feb 11, 2016. 12:43 PM | Likes Like |Link to Comment
  • The Walking Dead: Something Is Rotten In The Banking System  [View article]
    Thank you, but it's not Mr. ketch. Jut plain ketch.
    Feb 10, 2016. 03:49 PM | Likes Like |Link to Comment
  • The Walking Dead: Something Is Rotten In The Banking System  [View article]
    If there is one thing that describes 21st century banking and investing it is: "People in general always underestimate the interconnectedness of the financial world".
    Feb 9, 2016. 12:35 PM | 3 Likes Like |Link to Comment
  • Why Japan Went NIRP: No More Doubts About QQE  [View article]
    Right, because that solution has worked so well everywhere it's been tried.
    Feb 9, 2016. 12:01 PM | 1 Like Like |Link to Comment
  • Fix The Error  [View article]
    David,
    You are not thinking it though. Macroeconomic productivity is more involved than microeconomic productivity. In micro the we are talking about open systems, but in macro the system is closed, or approximates a closed system. Thus:

    If your hunter-gatherers are producing more widgets, where is the extra productivity going to come from to buy them? To sell more widgets you must have demand. If productivity is fixed, then your customers must give up buying gadgets, or some other product or service, to buy the widgets. The production of gadget goes down by the same mount as the increase in the production of widgets. The only way to sell both gadgets and additional widgets into the closed system is if productivity increases. In macroeconomic systems, production and productivity are NOT independent variables, but are in reality closely tied.
    Feb 7, 2016. 04:47 PM | Likes Like |Link to Comment
  • Fix The Error  [View article]
    NN,
    "No economy will grow with low or even zero productivity; it's plain common sense."

    Absolutely correct. See my answer below about the connection of productivity to production. In an attempt to make economics simple and linear (which it is not) economists have presented total production and total productivity as independent variables, while in reality they are highly dependent.
    Feb 7, 2016. 03:51 PM | Likes Like |Link to Comment
  • Fix The Error  [View article]
    David,
    That is obviously microeconomics. In macroeconomics the question would be: "What were those new 100 employees doing before you hired them?".

    If you hired them away from a competitor producing widgets, overall production and productivity would be the same. If they were formerly unemployed, then their individual productivity increased - it went from zero to 1 widget per shift. So overall production increased without productivity increasing. If you look at the entire population, then the addition of new productive workers to the population increases overall productivity. The last is also important because although a part of the population is not economically productive (children, the elderly, the disabled, the unemployed) they still consume resources.
    Feb 6, 2016. 11:55 PM | Likes Like |Link to Comment
  • Fix The Error  [View article]
    I am not conflating the two. Either one can cause economic growth, however for production to increase, someone's productivity must increase as well. Only on a microeconomic scale can production increase without a productivity increase. On a macroeconomic scale all production is consumed by someone, so for more production and consumption to take place, productivity must increase for some new consumer OR productivity must be borrowed from the future and carried forward.
    Feb 5, 2016. 07:41 PM | Likes Like |Link to Comment
  • Let's Get This Over With: Factory Orders More Toward Finality  [View article]
    Usually the Fed tightens before a recession and then loosens once the recession has become apparent. This will be the first recession where the Fed started with low interest rates and stayed with low interest rates, so it might play out differently than typical recessions do. One thing is certain, this recession will dispel a lot of myths that have been bandied about by Monetarists for decades.
    Feb 5, 2016. 12:57 PM | Likes Like |Link to Comment
  • Personal Savings Up Meaning No Energy 'Tax Cut' Reaches Consumers  [View article]
    "Why not?
    America is the richest country in the world. Probably the richest country ever. Is it you can't afford to pay a sustainable wage or choose not to."

    I just explained it in the paragraph that you quoted above. Wages are not arbitrary, just like costs and prices are not arbitrary. Why don't you walk into the nearest McDonalds and tell the manager that you are willing to work there for $30/hour and see how far you get. China and other nations are taking away our manufacturing jobs because customers would rather pay less for a product. They don't care where it's made or what the worker gets paid. That's reality. How do you think America became the richest country on earth? Not by paying higher wages to do less work. We did it through higher productivity. Either we start becoming more productive, or we will fritter away our "riches".
    Feb 5, 2016. 12:21 PM | Likes Like |Link to Comment
  • Personal Savings Up Meaning No Energy 'Tax Cut' Reaches Consumers  [View article]
    "Keynes is not Keynes anymore, it's some hybrid comic book approximation, shot full of corporate vested interest."

    Keynes was never Keynes. He's a fantasy like the socialist workers paradise that is always promised and never comes, because somehow dark powers have corrupted it.

    "Somehow, the elites (their employees, one supposes) mangled toffler's warning in future shock. They heard about the employment dislocation due to mechanization and automation,"

    We didn't lose jobs to mechanization and automation, we lost them to the billions in China and India who would do the same jobs for less. Our employment dislocation is China's post-industrial revolution, where hundreds of millions of people leave agricultural poverty to participate in the global economy.

    "but they missed the part about how the market would suffer if these individual purchasing units were left to rot in abject poverty."

    "Individual Purchasing Units", i.e., consumers do not live in abject poverty in the West. The amount of money that we redistribute through social transfer programs is larger than the economies of most third world nations.

    "They missed the part about the living wage being needed to support the overarching superstructure of elite privilege. Like the pyramid with the enlightened up on the tip with god's eye."

    Living wage? You can't pay a wage that will sustain a middle class American lifestyle, which is what you are talking about, when people in other countries will do far more work for far less money. The problem isn't not enough worker pay, the problem is not enough worker productivity. There are more IT jobs available than Americans can fill. Why? The West has fooled itself into thinking that they can now slack off and live the good life. Burger flippers will all drive new cars, and buy homes, iPhones, and big screen TV's. We traded savings and investment for consumption, self-fulfillment for education, and leisure time for hard work. We refuse to deny ourselves any pleasures, and we want it all now. Then we wail and weep and gnash our teeth when it all starts to come apart. The elites have amassed all the wealth because we willingly traded it to them for promises of security and leisure without responsibility. We willing ate the seed corn, and now we will go hungry for a while.
    Feb 3, 2016. 04:58 PM | Likes Like |Link to Comment
  • Fix The Error  [View article]
    I have said that increases in economic growth come from both increases in production and productivity. If production becomes more extensive without becoming more intensive, it must be accompanied by an equivalent increase in population if productivity is to remain constant.

    Sorry, productivity is everything. It is the source of continuous profit growth. Lower cost production without profits is an indication of a bad business model. Productivity encompasses both operating costs and fixed investment costs. You seem to be defining it as only encompassing operating costs.
    Feb 3, 2016. 02:20 PM | Likes Like |Link to Comment
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