stip wrote:I need to give a talk about the shutdown, the debt ceiling, the tea party, and basically an overview of why everything is so fucked in two weeks. If you were in the audience what would you want to hear explained/discussed.
I would want an explanation of how the budgeting process works and how it ties into the debt limit. How previously approved entitlements affect both the budget and subsequently the debt ceiling. I would want you to stick to facts and not opinions and/or competing economic theories.stip wrote:I need to give a talk about the shutdown, the debt ceiling, the tea party, and basically an overview of why everything is so fucked in two weeks. If you were in the audience what would you want to hear explained/discussed.
Dev wrote:you're delusional. you are a sad sad person. fuck off. you're mentally ill beyond repair. i don't need your shit. dissapear.
I probably won't be writing up my remarks for another few days (and post debt ceiling deadline) but I'll post them here.
Different funding is so criminal.Fuck You Jobu wrote:Unlike prison workers, federal inmates still getting paid during government shutdown
http://news.yahoo.com/unlike-prison-wor ... 59095.html
About 100 prison workers at South Dakota’s federal prison camp in Yankton are still showing up to work during the government shutdown, even though their pay is being denied. But in a "Say, what?!" outrage, the inmates they are supervising are still being compensated for the jobs they do onsite.
"There's a different funding for them," American Federation of Government Employees Local 4040 Union President Michele Kunkel told a local CBS affiliate.
Roger Simon wrote: Question: If Ted Cruz and John Boehner were both on a sinking ship, who would be saved?
Answer: America.
Uh, link please.stip wrote: since one of my economics colleagues (the one who wrote the rebuttal to thodoks et all)
I know why your Austrian/libertarian friends are so keen on that equation. It's called the "equation of exchange." As an identity, the equation is a truism, for it logically follows from the definition of the velocity of money (V). The velocity of money equals nominal GDP divided by the money supply (M). You can think of the velocity of money as how many times a unit of money is used to buy goods and services over the course of one year. That's essentially what you are looking at if you consider the economy's current annual output of goods and services valued at current year's prices, divided by the money supply. Now, nominal GDP equals the overall price level, labeled P, times real GDP, labeled in this context as Q. (Real GDP is the current year's output of goods and services valued in the prices of an arbitrarily chosen base year, which are constant.) Therefore, by definition, V=PQ/M. Just multiply both sides by M, an you MV=PQ. Nobody can argue against the logic and assumptions so far. All this follows from the definition of the velocity of money.
Now, here are two assumptions that your Austrian friends are making: (1) For institutional reasons, V is fairly stable over time. (2) The level of real GDP is completely determined by: the resources available for producing goods and services; the size of the labor force; people's preferences with regard to leisure and consumption (which impacts their willingness to work); and the set of technologies available for transforming resources and labor into final products and services. (As you can see, the Austrians have much in common with the supply side crew.) Notice that, based on the equation of exchange and assumptions 1 and 2, Q is determined independently of the money supply M. Now, if V and Q are not influenced by M, then if the central bank increases the money supply, then the only outcome will be an increase in P, i.e. loose monetary policy does nothing but ruin the currency. Remember that, MV=PQ, so if the left hand side increases as a result of an expansionary monetary policy, the only way the right hand side can adjust to maintain the equality is through an increase in P.
The Austrian crew are close cousins of the mainstream neoclassical crew. The neoclassicals provide and argument supporting assumption #2 above. Keynes devastated the neoclassicals on this way back in 1936, but it seems everyone has forgotten this, and we're paying for it now.
I don't agree with the Austrians, but I have a great deal more respect for them than I do the neoclassicals. The Austrians are actually quite erudite and are familiar with the philosophy of science and intellectual history, including the history of economic thought. The neoclassicals, virtually without exception, are Philistines with Ph.D.'s, which is certainly sad testimony to the state of higher education these days.
One counterargument I would make to the Austrian/neoclassical position on this issue is that the central bank of a country does not directly control the money supply (cash circulating outside the banking system plus checking account balances) in the first place. Instead, the central bank controls the amount of currency in existence and commercial banks' deposits at the central bank. One of the main avenues through which an expansionary monetary policy is instigated is the central bank's boosting the amount of currency in existence and/or commercial banks' deposits at the central bank. E.g. an expansionary monetary policy may come in the form of the central bank purchasing government bonds from commercial banks, with the central bank printing currency and giving it to the commercial banks or just raising their account balances at the central bank in exchange for the bonds. E.g. if the Fed bought a $1000 government bond from Citibank, the Fed would credit Citibank's account at the Fed for $1000; this is what Citibank would get in exchange for the bond it sold to the Fed. (Alternatively, the Fed could, in principle, print out ten $100 bills and send them in an armored car over to Citibank, but the electronic crediting of Citibank's account there entails a far lower transactions cost.) So, when the central bank embarks on an expansionary monetary policy, it boosts what's known as the "monetary base," or currency in existence plus commercial banks' deposits at the central bank. (By the way, I'm ignoring another avenue for embarking on an expansionary monetary policy, which is lowering the required reserve ratio, but I don't want to go into that much detail, and it makes no difference to the argument I'm making.) The central bank does not raise the money supply, i.e., cash circulating within the non-bank public plus the sum total of checking account balances in the economy. In order for an expansionary monetary policy to lead to an expansion of the money supply, commercial banks must lend out the newly created monetary base. This decision is up to the commercial banks, not the central bank. Since there's no necessary reason why the newly created monetary base has to be converted into a boost in the money supply, the central bank does not actually control the money supply. If you get a chance, you might want to Google "chart of monetary base", "chart of M1 money supply," etc. to see that while the monetary base more than doubled during the financial crisis, the money supply rose by a much smaller percentage. Better yet, Google a chart of the monetary base since 1997, then Google a chart of the inflation rate since 1997, and you'll see that the Fed's doubling of the monetary base had no impact on inflation, contrary to what the Austrians and neoclassicals say. Ron Paul's been howling for decades about how the Fed's expansionary monetary policies were going to bring us to a Weimar Republic-style hyperinflation, and he keeps getting proved wrong.
My position is that the central bank, through monetary policy, can have an effect on real GDP. Consider, for example, how the severe recession of 1979-80 was engineered by Paul Volker. However, fiscal policy has an even stronger impact on GDP because it operates much more directly. Your Austrian friends would argue, by contrast that an expansion (contraction) of the government sector would only take away resources from (free-up resources for) the private, productive sector, having no impact on GDP in the short-term.
stip wrote:They did win something. The sequester cuts are, for now, the new normal. Although that would have happened with or without the shutdown. But it happened with a whisper, rather than a bang,
stip wrote:They did win something. The sequester cuts are, for now, the new normal. Although that would have happened with or without the shutdown. But it happened with a whisper, rather than a bang,
Green Habit wrote:I agree with stip. See you in this thread in January!
dimejinky99 wrote: Hang on I check on my Grindr