Tuesday, 5 August 2014

Index to Economy Posts

Annotated Index to Blog Postings


[21]  Monetarism 2— Keynesianism probably does cause Stagflation; but its purpose is to stabilize the labour market, not to stabilize the currency 
[20]  Monetarism 1— I read with sympathy the efforts of the Austrian/Chicago school of economics to preserve the inexorable logic and simplicity of their discipline, and to defend its relevance. But I cannot help them.
[19]  Keynes2 — With delight I spot the problem of having rich people living amongst us, or one extra problem; they sequester too much of the global money so that is does not circulate properly.
[18] Keynes1 — Keynes's 'General Theory' is an exciting but frustrating read. This seems generally conceded. I focus on the concept of the 'involuntarily unemployed'.
[17] Interest Rates — trying to follow Gerardo Coco on the Cobden Centre website. Is the essence of his point that no one interest rate will meet all the needs of this 'indicator'. Which is (presumably) why there are lots of interest rates.
[16] How bad is debt? — Bad for some, good for others. Do we therefore monitor or regulate?
[15] Payday Loans — Here I revive an old idea; that high rates of interest may be justified to cover risk, but once the principal is paid, the risk vanishes, and the entire period of the debt reverts to minimal rate of interest. Usury. Shylock. Contracts made under duress.
[14] The Big Six Power Companies — Power companies make a lot of money. On the continent they pay big dividends, in the UK tiny dividends, but they grow!
[13] Winter Fuel Payments — voluntary taxes are a bad idea. Anyway, the better-off do pay for their own fuel and for that of the less well off as well. Silly!
[12] Alcohol Duty and Minimum Price — Our government seem to have bodged that issue (reccommended by experts). Tax rates are a tangle. Seems to me the Scandinavians have the edge on us (again).
[11] The Money Masters & Positive Money — The "Money Masters" is a polemic against bankers. 'Positive Money' is a pressure group against bankers.
[10] Positive Money 2 — 'Positive Money' advocates a real Ring fence; but their suggestions seem to me to be unrealistic. Danish banks score better than ours in regard to clarity; and Danish pensions yield 50% more per 1£ invested. Connection?
[9] Interest and Usuary — First statement of my modification of the way interest is calculated. Is it essentially "Islamic Banking"?
[8] Centrica's Profit — The shareholders seem to think their dividends will go up with a rise in the cost of feedstock. That is funny! Are customers being taken for a ride?
[7] Pre-distribution — This sees 'worker participation' or 'Mitbestimmung' as in Germany and Sweden as the way to reconcile capital and labour.
[6] CPI or RPI — There are two 'cost of living' indices. Why do they differ, and which is better?    
[5] Deficit Spending 2  — I try to decide whether we should clamour for more government spending to tackle the recession. Not convinced at this stage (mid 2012).
[4] Taxation of the Wealthy  — What exactly is bad (for the country) about having wealthy people, and why must they be heavily taxed? 

Monetarism 2

Monetarism 2: Keynesianism and Stagflation

John Butler's recent post on the Cobden Centre website [1]  cogently argues that "Stagflation is, always and everywhere, a Keynesian phenomenon", but to some extent his piece follows in the vein of Punch and Judy argy-bargy between Keynesians and Monetarists that has yanked the truth back and forth across the stage these last 4 or more decades. 
Of course politicians were happy to blame OPEC for the fourfold rise in the dollar price of oil in 1973 following the OPEC oil-embargo. John Butler calls this a "blatant reversal of cause and effect" because in the same year the USA abandoned the Bretton Woods/Smithsonian price of gold at 38$ per ounce and let the dollar float down by a factor of 2 (albeit to float down further by the end of the decade). In my view there were two causes of the oil-price rise in 1973: OPEC power and dollar weakness. One is no more "blatant" than the other.
It seems to me that John Butler is largely right that "Stagflation is, always and everywhere, a Keynesian phenomenon", but this misses the point somewhat. Keynesianism is not a method for stabilizing the value of the currency; it is a method of stabilizing the labour market. Of course the injection of money into the system will devalue the currency (unless it is subsequently withdrawn). And of course soaring unemployment of 10, 20 or 50% will bring down labour costs (unless there is a foolproof benefit system).
It all depends on what sort of country you want to live in.