Re: One Step At a Time - Saab General Bulletin Board - Saabnet.com
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Re: One Step At a Time
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Posted by James [Email] (more from James) on Tue, 10 May 2011 12:50:37 Share Post by Email
In Reply to: One Step At a Time, Reality, Tue, 10 May 2011 05:58:19
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I'll try to be brief. Not easy!

1. Completely agree. But, remember all of this is feedback loops. One can decide to maintain low inflation by moderating policy (most modern economists support a small positive level of inflation vs deflation). This avoids the "wheelbarrows of cash" problem (by limiting spending). Expansionary fiscal policy leads to economic growth which shifts the demand for money, and so an increase in money supply is needed to meet the demand of economic expansion. But expansion of the money supply can be achieved in different ways, and various methods are more effective than others (depending on elasticity of the curves + I suppose also stickiness of various quantities).

2. Absolutely, minting is different.

3. Expansionary fiscal policy means increases in government spending or decreases in taxation. Either of which require borrowing, or at least I like to think of it as borrowing (even if against an existing surplus), to pay for it. In reality it's a combination of factors (including printing money) as nothing occurs in isolation, but in a cyclical arrangement, the printing + unprinting of money should have no net positive printing of money... the money supply should only grow in tandem with the long term economic growth.

4. Canada ran budget surpluses over much of the last decade or so. Those surpluses were applied to the debt (which was a result of many structural deficits of the past - passed on to my generation!). So it can be done. Many might look at our social programs and think we're going broke for them, but it's really a matter of defining a bundle of services + structuring a balanced budget to pay for them (which may be impossible or unduly taxing if the bundle is too large). The cyclic fluctuation I would advocate is on top of that, never affecting the structural balance.

Where governments get into trouble is when they change the basket of services and inappropriately address the associated structural change required to the budget. That is different to me than Keynesian cycles, but that is why I said Keynes vs Keynes.

5. That the US hasn't chosen to do it right yet does not mean it will not. Of course I am against pegging the currency as it significantly limits policy.

6. Interesting you mention Volcker. Do you not find his recent efforts to increase banking regulations contrary to your free market views?

7. I'm not really sure where you are going with this one... food is just one part of the economy... but, no, I don't think the government should be it's mopolistic provider ;-)...

8. I look at Keynesianism as "what are the good things we can use from it" not taking it all literally. imho, the aggregation is merely a simplification for conceptual reasons (consider a spherical cow?) and that the same principles can be applied more carefully in a more complex way.

Like other past topics, I wish we could discuss this offline, as I'm certain everyone else lost interest 20 pages ago + it's deviating from the objectives of the bb... do you have a junk email address you could use if you wish to maintain your privacy/anonymity?

James...

posted by 69.63.50...

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