Venue: Seattle Town Hall
Date: May 23rd
Time: 6PM

If you’d like to attend, click on this link.

I’ll also be speaking with Gerard Fitzpatrick (Russell Investments strategic bond fund manager) on “Money, Monetary Policy and Financial Repression” at a daytime event (11:30 – 1:30) at the Town Hall.

This is the start of what can only be described as a truly ridiculous speaking and seminar tour (if I had any control over the sequence, it would be entirely different):

• May 22-25
  • Seattle  Economics Council ”The Great Financial Crisis and the Great Recession: How we got here and the way out“
• May 30th-June 1
  • University of Pula (Croatia) “Economic in Crisis – The Crisis of Economics“
• June 5-7
  • Harvard University Law School Institute for Global Law and Policy (Boston) Pro-seminar on “Re-Theorizing Liquidity” (an invitation-only event to scholars in the field of monetary macroeconomics)
• June 10-11
  • Central Bank of Malaysia (Kuala Lumpur) Conference on “Monetary Policy in the New Normal“
• June 20-21
  • A tentative proposal for talks in Frankfurt
• June 25-26
  • KEDGE Business School, Bordeaux France “Rethinking Financial and Economic Models for a Post-Crisis Era“
• July 1-2
  • Newcastle University (NSW Australia) ATEC 2013: “The future of Economics Education in Australasia: Challenges and Opportunities“

I’d be pleased to see Debtwatch readers at the above events. Of course, while doing all that travelling, I will be less able to respond to emails (and tweets) than usual.

I’d like to post a figure here, but as usual there are hassles with the ISP! Check on Twitter for the graphic.

Figure 1: Before the release of ABS data on May 7 2013

And I have proof! After all, we have 40 years of data showing the ratio of the budget deficit (and sometimes surplus) to GDP. Let’s see how the current deficit compares to other years since 1975. And look, it’s one of the worst ever!

Figure 1: Budget position as percent of GDP since 1975

Read more: http://www.businessspectator.com.au/article/2013/5/6/federal-budget/deficit-debate-thats-all-out-whack#ixzz2STx3kt4g

“The Marxian view is that capitalistic economies are inherently unstable and that excessive accumulation of capital will lead to increasingly severe economic crises,” Prescott said. “Growth theory, which has proved to be empirically successful, says this is not true. The capitalistic economy is stable, and absent some change in technology or the rules of the economic game, the economy converges to a constant growth path with the standard of living doubling every 40 years.“

About 15 years later, after the dot.com bubble and burst, the subprime bubble and burst, the apparently never-ending ‘Great Recession’ in the US and Europe’s second Great Depression, the alternative argument that capitalism is indeed inherently unstable is looking somewhat better than Prescott’s Panglossian vision.

Read more: http://www.businessspectator.com.au/article/2013/4/29/economy/when-stability-goes-belly#ixzz2RoXKKqiW

A defining feature of mainstream economic modelling is the belief that the economy is stable: given any disturbance, it will ultimately return to a state of tranquil growth. Mainstreamers argue over how fast this will happen: Chicago/Freshwater /New Classicals argue it adjusts instantly, while Saltwalter/New Keynesians say it will take time because of ‘frictions’ in the economy’s adjustment processes. But they both take the innate stability of the economy for granted, and this belief is hard-coded into their mathematical models
Read more: http://www.businessspectator.com.au/article/2013/4/23/economy/instability-may-not-be-optional#ixzz2RFy8NpNX

Or maybe not. Certainly house prices have risen — and contrary to popular opinion, I expected price rises this year, since mortgage debt has been accelerating since the beginning of 2012 (see Figure 1). One of my many economic heresies is the argument that asset prices are driven by rising debt. Rising asset prices — in this case, houses — require accelerating debt (in this case, mortgage debt), and that’s indeed what we’ve had since the beginning of 2012.

Read more: http://www.businessspectator.com.au/article/2013/4/15/property/house-prices-shoot-towards-ceiling#ixzz2QUFV7fFv

Eric Aarons, now 94 years old, has been a significant figure in left and progressive politics for over sixty years.

For the last forty years he has also been a successful sculptor in wood, marble, granite, concrete, steel and other materials. Most of Eric’s more than 200 sculptures reflect his commitments to social justice and human rights, within and between nations and peoples, and to the importance of emotions and values in human life.

Over the last 20 years he has written several books and many articles reflecting on his life and experiences in politics, and the need for new thinking for the left. Central to this new thinking is our common need to preserve the environment, alongside shaping a just society which values and respects all people.

Born just after World War I, Eric’s life was shaped by the aftermath of the slaughter of that Great War and the Great Depression of his early teens. He joined the Communist Party while studying science at university, and later worked for it in many capacities, including as a national secretary in the late 1970s.

The CPA condemned the 1968 Soviet invasion of Czechoslovakia, which ended the Prague Spring and “socialism with a human face”, and the failures of the repressive Soviet system as a whole. Eric began a long process of rethinking his earlier commitments to orthodox Marxism and the Soviet model of socialism. In the 1990s and 2000s he published five books, including a detailed consideration of the philosophies of Friedrich Hayek and Karl Marx, the two thinkers who most influenced the politics and history of the 20^th Century.

The Casula Powerhouse Art Centre is hosting an event to honour Eric’s wide-ranging contributions to art, politics and political philosophy.

MC and Introduction:

Kon Gouriotis, Director, Australian Centre of Photography and former Director of Casula Powerhouse Art Centre

Speakers:

• Meredith Burgmann – ALP and progressive left activist, and former President of the NSW Legislative Council
• Professor Steve Keen – author of Debunking Economics
• Drew Hutton – President of the “Lock the Gate Alliance” fighting irresponsible mining, longtime environmental campaigner, and a co-founder of the Australian Greens
• Margaret West – artist, poet and essayist

Join us – and Eric – for an afternoon of discussion and celebration.

Refreshments provided.

My logical argument was the latter. In my monetary approach to macroeconomics, aggregate demand is income (effectively gross domestic product) plus the change in debt, and this money is expended on both goods and services (also effectively GDP) plus net asset sales. Net asset sales in turn reflect the price level of assets, the quantity in existence, and the fraction of that stock that is sold over a year.

Read more: http://www.businessspectator.com.au/article/2013/4/9/australian-news/stock-secrets-hidden-margin-debt#ixzz2Q6gRtqAW

Alan Greenspan observed last month that this augured well for the economy, since

“the stock market is the really key player in the game of economic growth… The data shows that stock prices are not only a leading indicator of economic activity, they are a major cause of it. The statistics indicate that 6 percent of the change in GDP results from changes in market value of stocks and homes.”

This is the so-called “wealth effect”: an empirical relationship between change in the value of assets and the level of consumer spending which implies that an increase in wealth will cause an increase in consumption.

Greenspan’s sage status is somewhat tarnished post-2007, so I don’t think anyone should be surprised that his definitive statement involves something of a sleight of mouth. The “6 cents extra spending for every dollar increase in wealth” found in the research he alluded to was for the relationship between changes in the value of housing wealth and consumption, not stocks. In fact the authors, Christopher Carroll and Xia Zhou, argued that the wealth effect from stocks was “statistically insignificant and economically small”:

Read more: http://www.businessspectator.com.au/article/2013/4/1/markets/greenspans-bullish-time-sell#ixzz2PGi2ExQ5

What is the
World Economics Association?

The World Economics Association (WEA) was launched in May 2011. The WEA seeks to increase the relevance, breadth and depth of economic thought. Its key qualities are worldwide membership and governance, and inclusiveness with respect to: (a) the variety of theoretical perspectives; (b) the range of human activities and issues which fall within the broad domain of economics; and (c) the study of the world’s diverse economies.

 Already over 11,000 economists and related scholars have joined, including some of today’s most respected thinkers. (See page 3 for a geographical list of the WEA’s founding members.) The geographical distribution of the WEA’s membership is approximately as follows: Africa 9%, Asia 18%, Europe 33%, Latin American and the Caribbean 12%, Oceania 8%, and US and Canada 20%.

This phenomenal success has come about because the WEA fills a huge gap in the international community of economists — the absence of a professional organization which is both broadly international and pluralist.

Contact: supportWEA@worldeconomicsassociation.org

What does the WEA do already?

http://www.worldeconomicsassociation.org/

The WEA facilitates the development of economic thinking and debate through:

• 3 on-line journals (high download rates of papers):
  
  • World Economics Review (with open on-line peer review)
    
  • Economic Thought (with open on-line peer review)
    
  • Real-World Economics Review (See page 4 for the contents page of current issue.)
    
• Online Conferences
  
  • Recently held:
    
    • Economics in Society: The Ethical Dimension
      
    • Sustainability – Missing points in the development dialogue
      
    • Rethinking financial markets
      
    • The political economy of economic metrics
      
  • Forthcoming:
    
    • The economics curriculum: towards a radical reformation (spring)
      
    • Inequalities in Asia (Spring)
      
    • Neo-liberalism in Turkey (Autumn)
      
• Bi-monthly 12-page newsletter: 8 issues have already been published

All of the above are freely available to audiences across the globe: academics, students, lay people, and those in government and business.

What new things does the WEA plan to introduce this year?

• Its website is in the process of being completely redesigned and upgraded.

• A Network of 50+ National Chapters
  Our prototype national network is Amnesty International’s. One or more people will be recruited to start up a national chapter and manage its website. The idea is for them to promote WEA network groups for scholars and students in the individual countries, and for their websites to display results of their activities in terms of memoranda, conferences, special sessions therein, reports, and discussions of both publications and their national economic situation. The IT system for the network is already in place, and the organizing campaign will be launched in May. We expect this grassroots network to lead to a large increase in WEA membership, enough to make the WEA the world’s largest professional association for economists.
• Blog and Notice Boards
  The WEA Pedagogy Blog will soon be operational, managed by an American, a Pakistani and a Brazilian. A set of seven regional WEB blog-type notice boards for jobs and events are planned, including one for the world as a whole, with the Latin American one (in Spanish and Portuguese) to lead off.
• WEA Press
  Plans are underway for establishing a WEA Press to publish e- and paperback books, initially of best papers from WEA conferences, later probably more wide ranging.
  

What are the WEA’s long term ambitions?

• To create a global grassroots movement in the economics profession that will realize the WEA’s aims of pluralism, global inclusiveness and real-world relevance.

• To make its website a primary focus point for the economics profession worldwide.
  
• To establish more journals using the strategic combination of digital technology and the membership email list.
  
• To make the WEA the discipline’s primary professional reference point, rather than the American Economic Association.
  
• To create digital platforms for the global based professional discussion of economics and economic issues.
  

What is the WEA’s legal status?

 World Economics Association is registered under United Kingdom law as a non-profit Community Interest Company. Company number: 07507045. Address: 12 Maurice Road, St. Andrews, Bristol BS6 5BZ, UK. Email: info@worldeconomicsassociation.org. It has a board of directors and is a company limited by guarantee.

 What is the WEA’s financial situation?

 The WEA is now at a point of transition from “start-up”, based entirely on volunteers, to a more established and permanent organization, still volunteer based, but with a need for self-sustaining financing to support our web and publications infrastructure.

 So far the WEA has been financed entirely by small donations ($50 is about average) from its members. In total about $45,000 has been raised this way. Our main costs are the employment of staff for editing, formatting and IT work and the purchase of IT software. Assuming that the management of the WEA operations continues to be available on a voluntary basis, then a total budget of $200,000 for the next 2 years would secure WEA’s development and future.

For this we require substantial donations.

 We invite anyone who sympathizes with the WEA’s manifesto, agrees with WEA’s goals and appreciates its potential to contact us, either to volunteer or to donate: supportWEA@worldeconomicsassociation.org

 7 key WEA members are participants in the INET Hong Kong Conference.

• Sheila Dow – co-editor of Economic Thought
  
• Jean-Pierre Dupuy – founding member
  
• Edward Fullbrook – Executive Director (edward.fullbrook@btinternet.com)
  
• Norbert Häring – Director
  
• Steve Keen – member of Executive Committee
  
• Richard Koo – member of Executive Committee
  
• André Orlean – founding member
  

WEA Executive Committee Members

• Juan Carlos Moreno Brid, Mexico, UN Economic Com. for Latin America and the Caribbean
  
• C. P. Chandrasekhar, India, Jawaharlal Nehru University
  
• Ping Chen, China, Peking University and Fudan University
  
• Edward Fullbrook, UK, University of the West of England
  
• James K. Galbraith, USA, University of Texas at Austin
  
• Grazia Ietto-Gillies, Italy / UK, London South Bank University
  
• Steve Keen, Australia, University of Western Sydney
  
• Richard C. Koo, Japan, Nomura Research Institute
  
• Tony Lawson, UK, Cambridge University
  
• Peter Radford, USA, Radford Free Press
  
• Dani Rodrik, USA, Harvard University

Founding members of the World Economic Association

 Initiators

Edward Fullbrook

Peter Radford
Norbert Häring
Grazia Ietto Gillies
Vicki Harris
Valerie Radford

Launch Committee

Dean Baker

Ha-Joon Chang
Herman E. Daly
Heiner Flassbeck
Edward Fullbrook
James Galbraith
Jayati Ghosh
Grazia Ietto Gillies
Norbert Häring
Steve Keen
Richard C. Koo
Tony Lawson
Frédéric Lordon
Juan Carlos Moreno-Brid
Peter Radford
Erik S Reinert
Irene van Staveren
Robert Wade

sanity, humanity and science                      probably the world’s most read economics journal

real-world
economics
review

– Subscribers: 22,149 Subscribe here
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ISSN 1755-9472

– A journal of the World Economics Association (WEA) 11,201 members, join here

– Sister open access journals: Economic Thought and World Economic Review

     – back issues at www.paecon.net
recent issues: 62
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Issue no. 63, 25 March 2013

In this issue:

The veil of deception over money                                 2
Norbert Häring

Ultra easy monetary policy and the law of unintended consequences              19

William White

Civilizing capitalism                                         57

Erik Reinert

Looking at the right metrics in the right way – Two kinds of models                  73

Merijn Knibbe

Crisis and methodology: Some heterodox misunderstandings                 98

Egmont Kakarot-Handtke

Inapplicable operations on ordinal, cardinal, and expected utility                118

Jonathan Barzilai

Reduced work hours as a means of slowing climate change                     124

David Rosnick

Electronic money and Modern Monetary Theory                        135

Trond Andresen

Productivity, unemployment and the Rule of Eight                        142

Alan Taylor Harvey

What I would like economic majors to know                            147

David Hemenway

Past contributors, submissions and etc.                                155

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