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Jim Rootham
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Well, there is the general principle that things that cannot continue forever, don't. I would expect the things that stop the economy from galloping madly off in any given direction would be outside the model.
My understanding of the general run of European history would suggest that economies are inherently unstable. That world was run in favour of people with money, so deflation was considered good. But the pressures of deflation on people without money eventually triggered either a revolution or a war (usually war). That triggered inflation. Until the war was over and the people with money reinstituted deflation. You might want to check with some historians about the accuracy and details of this view.
Pre- Darwinian Macroeconomics
There are signs of economic recovery. Suppose a year from now it is clear that the economy has indeed recovered. What caused it? Was it: monetary policy; fiscal policy; or did the economy recover by itself? I don't know the answer to that question; nor does anyone else. If you have one world rec...
First, you seem to be conflating publicly supplied goods with subsidized goods. Not necessarily the same. Also, there are a number of ways to supply goods. Co-ops and non profits as well as government services and private enterprise.
Frankly, sometimes a healthy dose of paternalism is a good thing. There are some pretty clear cases of that in the co-op that I am living in.
Not all the low hanging fruit has been picked by any means. We know there are things better delivered outside the profit driven market, electrical power, hospitals, and child care to name three.
But yes, a Guaranteed Annual Income would be a good thing.
Question, what is the chance of getting it in a FPTP system with a functioning centrist party?
Economic policy advice for the NDP, Part V: Give money to low-income households
Here is what I would like some staffer to ask next time NDP strategists are kicking around ideas for goods to subsidise or services that governments to provide at a discount in order to advance their agenda of reducing poverty and inequality: "Why don't we just give low-income households money a...
There is another problem with this advice. We live under a first past the post Westminster democracy. the examples cited are proportional representation systems. Some of the return to capital goes into TV stations, radio stations, newspapers, think tanks, and (as an afterthought) political parties. This moves about 10% of the population who would benefit by redistribution into supporting parties that oppose redistribution. These people will combine with the 30% of the people who don't benefit from redistribution into the 40% required to get a majority government. Voila, no redistribution.
If the NDP advanced the idea to drop income tax rates so that the GST could be raised to support redistribution the likely outcome would be a reduction in income taxes and a concommitent reduction in redistribution (see the result of the report on Ontario hospitals that said improvements in efficiency would permit hospital closings).
The Scandinavian countries were once known for exceedingly high income tax rates designed to support redistribution (either via money or services). The transformation into VAT was a politically required historical arc.
Economic policy advice for the NDP, Part III: The GST
The NDP has never been a fan of the GST, and persuading Canadian progressives of its merits is a never-ending variation on the theme of "but these go to eleven:" Progressive Person: How do we raise the tax revenues we need for the social programs we want to implement without tanking the economy?...
The converse of the idee fixe that I was referring to is not that investment is bad, but that the idea of choosing investments solely by their profitability will lead to socially optimal outcomes.
Economic policy advice for the NDP, Part III: The GST
The NDP has never been a fan of the GST, and persuading Canadian progressives of its merits is a never-ending variation on the theme of "but these go to eleven:" Progressive Person: How do we raise the tax revenues we need for the social programs we want to implement without tanking the economy?...
The basic idea comes down to the role of taxes in determining the rate of return on investment. If an economy has a large number of high-return investment projects, then it will have higher levels of investment and - as investment accumulates - higher levels of productive capacity. That increased capacity in turn generates higher output, employment and wages. These are assumed to be Good Things in what follows.
I don't believe you managed to type that with a straight face. Have you not noticed what that particular idee fixe just lead to?
Economic policy advice for the NDP, Part III: The GST
The NDP has never been a fan of the GST, and persuading Canadian progressives of its merits is a never-ending variation on the theme of "but these go to eleven:" Progressive Person: How do we raise the tax revenues we need for the social programs we want to implement without tanking the economy?...
You missed a story. Don't economists read Galbraith? He spotted the mechanism that drives this in the fifties (which is when, if you look at individual rather than family incomes this distortion started).
Corporate senior management has captured a lot of the profits of corporations. So it is rising profits (effectively) but the owners aren't getting them.
I'm sure the increased scaling effects of entertainment is a factor as well. It would be good to have real numbers on all of this.
Economic policy advice for the NDP, Part I: Inequality
One of the themes being played up in the NDP's convention is its attempt to 're-brand' (up to, but not quite, including dropping the 'New' from its name), and part of this is apparently an attempt to develop a credible economic platform. The NDP has historically been pretty consistent in its ref...
Casanova, there is a big hole in the "Sell the Banks" comparison of US to Canada.
Because of a different income distribution and health care costs the median Canadian is better off than the median American. Also 35 year amortizations move a lot of money over time into lenders pockets, but they don't have carrying cost explosions like ARM mortgages do. It's individually annoying for someone to own a house that is worth less than the mortgage, but as long as they can carry it it's not a systemic problem.
The key question is how many people who recently bought houses are losing their jobs. If that is a problem you would expect to see a spike in mortgage defaults. It's not visible now.
As long as we keep the right wingers trying to bring back 1933 at bay we should be OK.
How far out of line is the Canadian exchange rate?
No one knows. There is approximately an infinity of exchange rate models out there, and according to the one(s) used at the Bank of Canada, the CAD is over-valued. I don't think anyone will strenuously object to the notion that the CAD is in some sense too high - that is, higher than what most m...
From mh
The number of lenders do not equal the number of borrowers, because in a fractional reserve system, the banks create money. They will lend out as much as they feel like.....
The CDIC (FDIC in the US) insures savings so savers don't mind receiving a low interest rate, and more importantly they don't care how the banks use their capital. The banks of course make piles of money by lending out these funds many times over at higher rates.
You can't leave out institutions and expect to get reality.
The apples analogy fails because apple types are not fungible. I cannot create apple type a by selling apple type b. I can create loan type a by selling loan instrument b, especially if I'm a bank.
In a reasonably functioning economy, consumer credit supply (for credit worthy customers) appears infinite. Given the relatively high interest rates and the relatively low default rates (note: no limited liability, bankruptcy is painful) the limit to consumer credit is how much consumers are willing to take on. Consumers not under severe stress will limit their borrowing to what they can support or less. Explanation 4 is pointed in that direction.
If consumer credit supply starts to be less than consumer credit demand it's probably a clue that the economy is screwed in some way, at a guess, a way station on the road to hyper inflation.
Why did debt increase?
Updated below. I have heard the argument so many times: "Low interest rates caused people to want to borrow and spend, and that's what caused debt to increase". It's such a simple and obvious explanation; only someone with a PhD in economics could fail to understand it. Unfortunately it's also a...
That model is way too simple minded.
There is not one interest rate, there are a plethora of them, depending on the instrument of debt in question. In particular, for lenders into the consumer debt market, the interest rate is exceedingly sensitive to the credit worthiness of customers, which is why loan sharkers can compete.
Consumer credit is thus limited by the demand of credit worthy consumers, who are finite. Consumer rates are always(?) higher than rates on instruments like T-Bills. So banks and others will always lend to the limit to credit worthy customers. If they have more money than that (or probably more accurately, the amount of money they have greater than that) will flow into T-Bills and similar instruments. Call that reserve debt. So, when interest rates fall, the credit worthy demand more, and money flows out of reserve debt into consumer debt.
This looks an awful lot like the simple minded explanation you complained about.
The total amount borrowed and lent is an accounting identity but the amount that is in each market segment is not.
Why did debt increase?
Updated below. I have heard the argument so many times: "Low interest rates caused people to want to borrow and spend, and that's what caused debt to increase". It's such a simple and obvious explanation; only someone with a PhD in economics could fail to understand it. Unfortunately it's also a...
The NBA shut down fighting after Kermit Washington almost killed Rudy Tomjanovich. The international game has not gone through that experience.
Of roster moves and the coming schedule
Hey, everyone have a good weekend? Finally got some good weather for a holiday, which was entirely unusual but quite welcome around these parts at least. Still painfully slow around the Raptors but there are some things to think about. Like … - Okay, in the last couple of days I’ve heard or been ...
On the Jamario numbers:
a) It's a bit more than twice the minimum.
b) Last year the Raptors had a better record with Moon on the floor than they did with Parker.
c) Economic times are a lot tougher for a lot of people than they are for NBA teams.
Fore! (What did you expect? All hoops?)
I tell ya, if they ever had rain delays in basketball, I’d be a stark, raving lunatic. (Not that I’m not now, according to a few of you). For real, 7 1-2 hours without a ball being struck; at the course at 9 a.m.; off the course about 9 p.m. and they still don’t have the first freaking round f...
Welcome back, even if your name is not Kotter.
I assume the offer to Jamario is better than an unguaranteed minimum. That's good, I like him. Of the 4 wings Toronto had at the beginning of the year they had the best record with him on the floor. He seemed to wind up as a bit of a scapegoat, as if the minimum wage player on the team was most critical to their downfall from the year before.
He has an unusual combination of strengths and weaknesses. Biggest alley-oop target in the league. Can't dribble in NBA traffic. Pushed his open 3 percent to about 40%. Will go for every pump fake going, but you have to pump fake or he will swallow up your shot (much better than knocking it into the 6th row). Seriously squeezes the passing lanes.
I assume he plays backup minutes, maybe even more that Anthony. I think the way to exploit him is to have him spend every possession fighting to get to 2 feet from the rim without the ball and having whoever has the ball immediately jack up a jump shot aimed at his head whenever he gets there. Close enough to the hoop to get a goaltending call if the defense goes up, I figure he has about an 80% chance of getting it down if he gets that position. If he tries 30 or 40 times a game and succeeds 3 or 4 he will make the Cleveland second unit dangerous. Also, if he is fighting like that his man will not be available at all for double teams.
And you thought I'd forgotten about you
Miss me? STEVE RUSSELL/TORONTO STAR Georgia Tech teammates come together again in Toronto. Thought so. Well, being refreshed after a week of deck washing and weed pulling, ball games and barbecue hosting, looks like there’ll be some basketball work in the next little while. Which is good fo...
Air Miles are actually a consumer tracking exercise. Using your Air Miles (or any other similar card) produces a spending database so you can be an advertising target.
I suppose the banks would jump into currency if it was easy. The presence of the law puts a quick spike into them trying it.
The State(s) Theory of Money: California and Canadian Tire
I learn via Mark Thoma that there is a distinct chance that California will allow taxes to be paid in the new scrip it issued when it ran out of funds. I have no idea whether this will happen, or whether the Federal government will stop it. Let me just assume that it does happen, and that the Fe...
Hmm, perhaps the key issue on the Currency Act issue is whether the currency circulates throughout Canada.
I tempted to think that this is a law originally put in place to stop private banks from issuing notes when the government got into the game. The banks don't want to do this any more but the law hangs around.
The State(s) Theory of Money: California and Canadian Tire
I learn via Mark Thoma that there is a distinct chance that California will allow taxes to be paid in the new scrip it issued when it ran out of funds. I have no idea whether this will happen, or whether the Federal government will stop it. Let me just assume that it does happen, and that the Fe...
Doug, can you smack your editors upside the head and get them to put the under 19 stories in the basketball section?
The calm before the storm? We can only hope so
How quiet was yesterday? Eerily quiet. No calls returned, e-mails went unanswered, everyone seemed to go underground. History would suggest that something’s close to getting done and sources simply didn’t have time, or the inclination, to talk to us. It happens, unfortunately. But not without so...
Hey Doug, watch the snarking about Track and Field. My niece (Michele Krech) is competing in the Heptathlon at that meet.
Alex Radojevic and Oliver Miller and a summer of work
No news of note yesterday, that’s for sure; and I don’t imagine there’ll be much today. The braintrust gathered, the braintrust talked and braintrust continues to hammer out different scenarios. It was that way yesterday, it’ll be that way today and I imagine it’ll be that way tomorrow and Th...
Because when things start going bad in places with historically better employment prospects a lot of people get whacked badly. It may smack of closing the barn after the departure of the horse to do it now, but an actual rather than a theoretical crisis does tend to concentrate the mind.
The May LFS survey: Ontari-ari-ario is not a place to grow
The May LFS release pretty much cancels out the (surprising) growth in employment we saw in April. Here is the latest in my series of graphs comparing the current recession with previous experiences: It's way too early to break out the party hats, but we can perhaps set aside direct compariso...
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