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This article is utterly nonsensical (claiming the money supply is essentially unrelated to inflation) but the specifics of their argument say a lot about the fi

by anm89 7y ago

This article is utterly nonsensical (claiming the money supply is essentially unrelated to inflation) but the specifics of their argument say a lot about the field and why things I think are about to get worse. Their argument goes A) current economic regimes are built on shifting sand and border on useless for predicting macro crises (this is true more or less) B) there are other schools of thought out there which are sometimes more predictive than the main stream C) therefore get rid of economics D) and replace it with a different version of economics, specifically one which agress with my politics. The problem is that they are right, mainstream economics is junk, and so it becomes really hard to discredit other wacky ideas like mmt, or endless unmoderated fiscal stimulus because hey, couldn't be much worse than our system which seems to blow up and screw everyone over.

nlfwhulsdhouv 7y ago
> D) and replace it with a different version of economics, specifically one which agrees with my politics. All of macroeconomics is really just politics though, so if you believe a particular political conception is more useful or valuable, of course you want economics to follow. It's a shame the author didn't cite more, but it also doesn't mean they're wrong. The current set of economists are evolved Reagan-era republicans, which is certainly political, and one particular politic at that.
- AnimalMuppet 7y ago
  Well... it's true that macroeconomics is always influenced by politics. It's not true, though, that "all of macroeconomics is really just politics". There's a bit more to macroeconomics than just "here's my politics, therefore here's my economics".
- widowlark 7y ago
  >All of macroeconomics is really just politics This is not really true, there's a science to it as well, but its not always well employed
apendleton 7y ago
> claiming the money supply is essentially unrelated to inflation I don't think this is the actual claim. The key quote is this (emphasis mine): > Doubling the amount of gold in a country will have no effect on the price of cheese if you give all the gold to rich people and they just bury it in their yards, or use it to make gold-plated submarines It's not that they're unrelated, it's that increasing the monetary supply is a necessary but not sufficient criterion for inflation to occur. I don't think the author would likely deny that printing boatloads of money resulted in inflation in Zimbabwe or Venezuela, just that if you increase the monetary supply specifically by giving it to rich people who hoard and it never gets spent on consumer goods, it won't affect the price of consumer goods. That's not how it went down in Venezuela, but is (the author asserts) what kept QE from working.
- chillacy 7y ago
  In the common model for inflation MV=PQ that would match with low V, or "velocity of money"
- jfengel 7y ago
  I don't think the author would likely deny that printing boatloads of money resulted in inflation in Zimbabwe or Venezuela They might, actually, since the relationship between cause and effect isn't as simple as that. In both cases, the economy collapsed, causing massive inflation from the supply shock. The governments turned that into hyper-inflation by responding with printing money, but that was effect rather than cause. Even if they hadn't devalued their currency that way, they would still have been in a crisis. The hyperinflation added an accounting crisis on top of that, but that's more about numbers than about the real problems. It's frequently presented as if the monetary policy were the cause of the crisis and they should just stop doing that, but it's simply not true. What they needed was to fix their specific national disasters -- destroying the farming infrastructure in Zimbabwe's case (after centuries of colonialism putting all of the farmland in the hands of an entrenched elite and race-based oppression of everybody else), and the collapse of the oil economy in Venezuela's (as well as mismanagement of their oil wealth leading up to it).
- BenoitEssiambre 7y ago

by anm89 7y ago

nlfwhulsdhouv 7y ago

> D) and replace it with a different version of economics, specifically one which agrees with my politics. All of macroeconomics is really just politics though, so if you believe a particular political conception is more useful or valuable, of course you want economics to follow. It's a shame the author didn't cite more, but it also doesn't mean they're wrong. The current set of economists are evolved Reagan-era republicans, which is certainly political, and one particular politic at that.

AnimalMuppet 7y ago
Well... it's true that macroeconomics is always influenced by politics. It's not true, though, that "all of macroeconomics is really just politics". There's a bit more to macroeconomics than just "here's my politics, therefore here's my economics".
widowlark 7y ago
>All of macroeconomics is really just politics This is not really true, there's a science to it as well, but its not always well employed

apendleton 7y ago

> claiming the money supply is essentially unrelated to inflation I don't think this is the actual claim. The key quote is this (emphasis mine): > Doubling the amount of gold in a country will have no effect on the price of cheese if you give all the gold to rich people and they just bury it in their yards, or use it to make gold-plated submarines It's not that they're unrelated, it's that increasing the monetary supply is a necessary but not sufficient criterion for inflation to occur. I don't think the author would likely deny that printing boatloads of money resulted in inflation in Zimbabwe or Venezuela, just that if you increase the monetary supply specifically by giving it to rich people who hoard and it never gets spent on consumer goods, it won't affect the price of consumer goods. That's not how it went down in Venezuela, but is (the author asserts) what kept QE from working.

chillacy 7y ago
In the common model for inflation MV=PQ that would match with low V, or "velocity of money"
jfengel 7y ago
I don't think the author would likely deny that printing boatloads of money resulted in inflation in Zimbabwe or Venezuela They might, actually, since the relationship between cause and effect isn't as simple as that. In both cases, the economy collapsed, causing massive inflation from the supply shock. The governments turned that into hyper-inflation by responding with printing money, but that was effect rather than cause. Even if they hadn't devalued their currency that way, they would still have been in a crisis. The hyperinflation added an accounting crisis on top of that, but that's more about numbers than about the real problems. It's frequently presented as if the monetary policy were the cause of the crisis and they should just stop doing that, but it's simply not true. What they needed was to fix their specific national disasters -- destroying the farming infrastructure in Zimbabwe's case (after centuries of colonialism putting all of the farmland in the hands of an entrenched elite and race-based oppression of everybody else), and the collapse of the oil economy in Venezuela's (as well as mismanagement of their oil wealth leading up to it).
BenoitEssiambre 7y ago