tag:blogger.com,1999:blog-6245381193993153721.post8635986955955781835..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Academic Agent on “Six Key Lessons from Classical Economics”: A CritiqueLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-6245381193993153721.post-51668460360050555542018-03-09T10:20:13.341-08:002018-03-09T10:20:13.341-08:00@LachMinsky
The stock of hard (base) money in the...@LachMinsky<br /><br />The stock of hard (base) money in the banks is fixed. It cannot be expanded unless the central bank decides to increase it. But yes, banks may multiply this stock of money. For instance with a 10% reserve requirement and 1 million base money in the banks they can produce up to 10 million (monetary multiplication). But this is the limit. They cannot produce more since they are limited by the banking laws. Even if this minimum reserve requirement did not exist they would still need to keep some money to cover the normal withdrawals (let us say 1 %). So, even in this limiting case they can create 100 million maximum. But as you see they cannot create more. They still have a limit. Unless the central bank increases their reserves banks will expand the monetary supply up to 100 million and stop (forever!). That is why the supply of money determines how much money can be lent (i.e. supply creates demand). It is an inescapable physical law. Youliy Ninovhttps://voluntaristicsociety.liberty.me/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-49046502505041412072018-03-08T18:50:11.922-08:002018-03-08T18:50:11.922-08:00Your argument takes the stock of money as a pre-ex...Your argument takes the stock of money as a pre-existing, finite amount to which debtors are trying to get access. That is incorrect. Banks operate off of double-entry bookkeeping; that is the basic practice that underpins all of finance. The essence of double-entry bookkeeping is that a new loan creates new deposits. Loans are not taken out of a pre-existing stock at all--that stock is created by promises by debtors to take on new loans. The promise to take on a loan is what allows new interest-bearing debt to be created.<br /><br />This is also what dictates interest rates. When reliable debtors are scarce, the banks will demand more interest on the money they lend out--a reflection of a diminished supply of people willing to take on loans. When reliable debtors are numerous, the price of debt declines as banks compete for an expanding supply of customers.<br /><br />The notion that banks contain a fixed supply of money which dictates financial conditions to debtors is completely at odds with the most basic practices of accounting upon which finance and banking operates.LachMinskyhttps://www.blogger.com/profile/16329474355097347528noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-1773544944364735962018-03-06T10:29:08.513-08:002018-03-06T10:29:08.513-08:00@germi lad
Of course willingness depends on many ...@germi lad<br /><br />Of course willingness depends on many things. For instance on the amount of interest you have to pay. As I said before if one has to pay back a loan with 50% interest one would think twice before taking it. When banks see a growing demand for their financial products they raise prices (interest). And when they have lent out most of the money that they have they raise the interest even higher.<br /><br />In short: people cannot get more money than there is in the banks. It does not matter how much they crave money when the money itself is limited.Youliy Ninovhttps://voluntaristicsociety.liberty.me/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-19739386682879342982018-03-06T01:54:28.466-08:002018-03-06T01:54:28.466-08:00The willingness to take such a credit would also d...The willingness to take such a credit would also depend on expectations regarding future prices, wages and profits would it not ?<br />With a very high inflation you might crave for such a credit provided you need them to fuel your company, pay wages and produce goods you intend to sell at higher and higher prices.<br />(And to prevent the objection that inflation itself stems from too affluent money etc. it might very well be a political response to a reprartition conflict between capital and organised labor. At least it is one explanation of inflation during the 70')<br />GLhttps://www.blogger.com/profile/04372485857847843352noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-23540919182009675182018-03-05T04:12:01.828-08:002018-03-05T04:12:01.828-08:00Hi LK !
Excellent post, rich and clear cut !
I h...Hi LK !<br /><br />Excellent post, rich and clear cut !<br /><br />I had a question about investment and (un-)employment and Shackle / Keynes' view of it :<br />they seem to explain involuntary employment in an essentially psychological way (losing one's nerve). Other authors like Kalecki (and more recently Streeck) argue that investement is also a political matter and to some extent a weapon. Refusal to invest is a kind of capital's strike.GLhttps://www.blogger.com/profile/04372485857847843352noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-48310828295165267252018-03-04T14:08:51.598-08:002018-03-04T14:08:51.598-08:00Lord Keynes, is it possible to refute the modern t...Lord Keynes, is it possible to refute the modern theory of comparative advantage that was formulated in terms of opportunity costs? That's the version I was taught at university. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-36885770918345131802018-03-04T13:17:18.219-08:002018-03-04T13:17:18.219-08:00LK,
You seem to support the opinion that the deman...LK,<br />You seem to support the opinion that the demand for money in our contemporary system creates supply and not the other way around.<br />What I would like to ask you if you would be willing to take a credit with 50% interest? I am asking because it is the interest that determines if people would like to apply for a credit or not. But the interest depends on the amount of money available in the banks. When banks have much money they lower the interest rates, when not they raise them. So, it is again up to the amount of money in the bank that determines how much credit is created. In other words: The supply of money creates demand (i.e. Say's law), not the other way around (as you claim).<br /><br />As a side note: You seem to take the contemporary monetary system as given (i.e. an axiom) and start from there. Austrians do not. But when and if you manage to drop some of your core assumptions you may be able to see the situation from a different perspective.Youliy Ninovhttps://voluntaristicsociety.liberty.me/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-30027742256358599672018-03-04T05:21:13.107-08:002018-03-04T05:21:13.107-08:00As a marxist i do find your stuff very intresting ...As a marxist i do find your stuff very intresting and i think we need your perspective very intresting, do Youtuve PLZAnonymoushttps://www.blogger.com/profile/16247697039350663992noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-80674852208051541502018-03-03T22:13:32.999-08:002018-03-03T22:13:32.999-08:00"By practising free trade a nation could expe..."By practising free trade a nation could experience capital flight and severe de-industrialisation"<br /><br />That can't happen in a free-floating currency area. <br /><br />If a production facility moves then wherever the production facility ends up has to take either your new output, or your money in return for the new increase in imports to you. And the currency moves accordingly.<br /><br />If they don't take your stuff or your money, then you won't get the exports and some new firm can produce the element locally instead. <br /><br />So if Nissan move from the UK to the EU they have to export Nissans they sell here to us and the EU overall has to take our output or our money (which is free to produce). The workers won't move though, so the UK could just hand them over to Mr Dyson with a very cheap working capital loan to start producing a competitor. <br /><br />Comparative advantage assumes that you can transform a wine press into a spinning jenny within a nation, when in fact they are more likely to flow between nations these days.<br /><br />The Capital of a nation is the skills of the people within it. They tend to stay home, because most people like to live in an area rather than wander the globe looking for their next gig. <br /><br />The Specialisation theories of trade still think we operate with interchangeable labour units. It's straight out of the 1930s. NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-82316944564510972082018-03-02T22:20:26.932-08:002018-03-02T22:20:26.932-08:00Regarding Ricardo and comparative advantage, what ...Regarding Ricardo and comparative advantage, what about the modern formulation based on opportunity cost rather than the labor theory of value?<br /><br />https://en.wikipedia.org/wiki/Comparative_advantage<br /><br />"In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade.[3] One does not compare the monetary costs of production or even the resource costs (labor needed per unit of output) of production. Instead, one must compare the opportunity costs of producing goods across countries."<br /><br />"In 1930 Gottfried Haberler detached the doctrine of comparative advantage from Ricardo’s labor theory of value and provided a modern opportunity-cost formulation. Haberler’s reformulation of comparative advantage revolutionized the theory of international trade and laid the conceptual groundwork of modern trade theories.<br /><br />Haberler’s innovation was to reformulate the theory of comparative advantage such that the value of good X is measured in terms of the forgone units of production of good Y rather than the labor units necessary to produce good X, as in the Ricardian formulation. Haberler implemented this opportunity-cost formulation of comparative advantage by introducing the concept of a production possibility curve into international trade theory.[15]"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-88051704945621429082018-03-02T13:06:08.108-08:002018-03-02T13:06:08.108-08:00You know, I think it would be more beneficial if y...You know, I think it would be more beneficial if you created a YouTube channel and made videos on this subject. There aren't enough "Realist Leftists" on YouTube.Anonymoushttps://www.blogger.com/profile/15159439150464089686noreply@blogger.com