Multi-sectoral production–one for Geeks

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Paul Krug­man some­times intro­duces his more com­pli­cated posts on his blog as being “wonk­ish”. This post is wonk­ish in spades–though in the linked papers rather than the con­tent here.

I’ve just fin­ished the first rea­son­able descrip­tion of my multi-sectoral mon­e­tary model of pro­duc­tion, which I’ll be pre­sent­ing at the Paul Wool­ley Cen­tre for Cap­i­tal Mar­ket Dys­func­tion­al­ity con­fer­ence later this month.

There’s lots more to add before the model is com­plete, but this is a work­ing first draft. Later addi­tions will include a ten­dency to equalise profit rates across sec­tors and fixed cap­i­tal, as well as fiat money cre­ation in addi­tion to pure credit money as in this model.

The Economy, How Bad Is It?

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The Econ­omy, How Bad Is It?
The econ­omy is so bad:
That I got a pre-declined credit card in the mail.
I ordered a burger at McDon­alds and the kid behind the counter asked, “Can you afford fries with that?”
That CEO’s are now play­ing minia­ture golf.
If the bank returns your check marked “Insuf­fi­cient Funds,” you call them and ask if they meant you or them.
Hot Wheels and Match­box stocks are trad­ing higher than GM.
McDon­alds is sell­ing the 1/4 ouncer.
Par­ents in Bev­erly Hills have fired their nan­nies and learnt their children’s names.
T truck­load of Amer­i­cans was caught sneak­ing into Mexico.
Dick Cheney took his stock­bro­ker hunting.
The Mafia is lay­ing off judges.
Exxon-Mobil laid off 25 Congressmen.
And finally
Con­gress says they are look­ing into this Bernard Mad­off scandal.
Oh, great!!  The guy who made $50 Bil­lion dis­ap­pear is being inves­ti­gated by the peo­ple who made $1.5 Tril­lion disappear!

In the spirit of “we all need a laugh”, this list of jokes is doing the rounds in the USA:

RBA gets it wrong again

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The RBA has put rates up now on the belief that the finan­cial cri­sis is behind us, and it has to return to its estab­lished role of con­trol­ling inflation.

That this deci­sion was likely was flagged by the speech by Anthony Richards last week, which implied that the RBA, hav­ing ignored the house price bub­ble cre­ated by pri­vate credit growth in the pre­ced­ing two decades, was wor­ried about the renewal of the bub­ble ini­ti­ated by the Government’s First Home Ven­dors Boost (I refuse to call it by its offi­cial name, since the money clearly went to the ven­dors, while the buy­ers copped only higher prices).

Debtwatch No. 39 October 2009: In the Dark on Cause and Effect

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One of the keynote speak­ers at the 38th Aus­tralian Con­fer­ence of Econ­o­mists in Ade­laide last week was Edward Lazear, who was Chair­man of the US President’s Coun­cil of Eco­nomic Advis­ers from 2006-09.

In other words, he was in one of the world’s eco­nomic hot­seats right when the “Great Mod­er­a­tion” (see also Ger­ard Baker’s UK Times arti­cle in early 2007) gave way to the Global Finan­cial Crisis.

When Herds Collide on the Yellow Brick Road

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2010 is shap­ing up as the year that the bulls and bears of the world’s last unpopped asset mar­ket bubble—Australia’s prop­erty market—will col­lide head on. The gap between those pre­dict­ing yet another bub­ble, and those pre­dict­ing its ulti­mate demise, has closed.

The bulls as always, empha­sise the “fundamentals”—population-fuelled demand out­strip­ping lag­gardly supply—and that “Aus­tralia is different”.

The bears, as always, empha­sise lever­age— that the true fun­da­men­tal behind asset prices is people’s will­ing­ness to go into debt to buy them, in the belief that they can flog them for a lever­aged profit to the next Greater Fool. And on the “We’re dif­fer­ent because we have kan­ga­roos” the­ory, the bears con­tend that Aussies are just as sus­cep­ti­ble to a well dis­guised Ponzi Scheme as any­body else on the planet.

It’s Hard Being a Bear (Part Six)?Good Alternative Theory?

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If the econ­omy does in fact recover from the Global Finan­cial Cri­sis—with­out pri­vate debt lev­els once again ris­ing rel­a­tive to GDP—then my approach to eco­nom­ics will be proven wrong.

But this won’t prove con­ven­tional neo­clas­si­cal eco­nomic the­ory right, because, for very dif­fer­ent rea­sons to those that I put for­ward, mod­ern neo­clas­si­cal eco­nom­ics argues that the gov­ern­ment pol­icy to improve the econ­omy is inef­fec­tive. The suc­cess of a gov­ern­ment res­cue would thus con­tra­dict neo­clas­si­cal eco­nom­ics just as much—or maybe even more—than it would con­tra­dict my analysis.

Why I use Mathcad

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A new blog mem­ber asked “Why do you use Math­cad?” in response to my most recent post about using some of the funds donated by vis­i­tors to the blog to help fund my research.

It’s a very good tech­ni­cal ques­tion, and one that deserves more than just a reply to the com­ment. So I’ll try to explain why here.

I build dynamic mod­els of the econ­omy using sys­tems of ordi­nary dif­fer­en­tial equa­tions. There are many pro­grams that sup­port this these days, from pub­lic domain pro­grams like Scilab to com­mer­cial giants like Math­e­mat­ica and Math­cad. I’ve tried most of them, and I’ve stuck with Math­cad for two reasons:

Thanks to donors

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Thank you to the roughly 170 indi­vid­u­als who have made dona­tions to date via the “Donate” wid­get on the right hand side of the blog.

Dona­tions have totalled A$7,730, of which about $800 has been for Michael Hudson’s talk in Syd­ney (on Fri­day Octo­ber 23rd at Cus­toms House, Syd­ney at 6pm).

I have just made the first pur­chase using those funds, of a Dell Stu­dio 17 inch lap­top that I will use while research­ing with my sys­tems engi­neer­ing col­league Trond Andresen in Europe later this year.

Dinner with Michael Hudson?

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There will be a din­ner with Michael Hud­son and his wife after the talk at Cus­toms House on Fri­day Octo­ber 23rd at a restau­rant called Young Alfred, which is also in Cus­toms House. The din­ner will start at 8pm.

If you’d like to be part of the book­ing, please let me know via an email to me at debunk­ing (at) gmail dot com (spelt out this way to min­imise the addi­tion to the already ridicu­lous amount of spam I receive!).