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For every act of production, there must be an equal and opposite act of consumption. Double entry accounting pretty much guarantees it. I don't see store shelve

For every act of production, there must be an equal and opposite act of consumption. Double entry accounting pretty much guarantees it. I don't see store shelves empty. I do see stores closing. I see negative effective interest rates on demand deposits and pitiful rates on CDs that are barely better than stuffing the money under a mattress. Somehow, I fail to detect a massive shift towards underproduction. This website stands as testament to the difficulty in founding or expanding a business these days. Trying to classify people into "productive" and "nonproductive" is very nearly impossible even within small groups who perform that same basic work in the same building. The thing that makes your line of reasoning nearly impossible is that the economy is nowhere near a closed system. There is a rate of money printing which makes all the gummint largesse meaningless in the larger economy, and it does so without destroying the value of the currency. As GDP growth ( remember that? Ah, the 1990s ) rises, the indebted funds decline in value relative to the rising economy. But if everybody sits on a box full of Benjamins as people do now, this doesn't happen. But people confuse low interest rates with "loose money" when it's not that at all.

logicchains 12y ago
>For every act of production, there must be an equal and opposite act of consumption. The key thing is, the production and consumption need not occur simultaneously. Say I dig up a really spiky plant. I could immediately consume it. Or, I could use it to bludgeon an ox to death that I couldn't otherwise kill. The latter use is a form of investment: the plant is turned into a tool that increases my productivity, allowing me to obtain more food (the ox) than without it. A similar decision applies in some way to everything that's produced. It can be consumed sooner, or it can be invested and consumed later, in a manner than increases overall ability to produce/consume. Take a look at http://faculty.lebow.drexel.edu/lainczc/cal38/Growth/Levine_Renelt_1992.pdf http://faculty.lebow.drexel.edu/lainczc/cal38/Growth/Levine_..., a metastudy that identifies "a positive, robust correlation between growth and the share of investment in GDP"; more investment leads to more growth. >Trying to classify people into "productive" and "nonproductive" is very nearly impossible even within small groups who perform that same basic work in the same building. By unproductive I was speaking of the stereotypical welfare-dependent individual to which the conversation I was replying to seemed to be referring. If somebody does not work or study, just sits around receiving money for doing nothing, most people would not consider that productive.
- ArkyBeagle 12y ago
  What you will find is that the lag between production and consumption works out as if it were a "constant" in the differential equations and is... dropped. In general more investment means more growth, but sometimes investment isn't the bottleneck. I don't know how much you can generalize from the economy since 2007 but is looks like monetary velocity is just plain old down. I don't believe in the stereotypical welfare bum. It does not square with what I have seen. YMMV. Tyler Cowan and others have been talking A Lot about "zero marginal product" workers. Given the length and depth of the recession, you wonder if this is the "new normal" and if it is, we'll have to adjust to it. But I am sure we had the same thoughts in '73. '81-82, '91, '01... still, each recession, some workers are permanently displaced.

logicchains 12y ago

>For every act of production, there must be an equal and opposite act of consumption. The key thing is, the production and consumption need not occur simultaneously. Say I dig up a really spiky plant. I could immediately consume it. Or, I could use it to bludgeon an ox to death that I couldn't otherwise kill. The latter use is a form of investment: the plant is turned into a tool that increases my productivity, allowing me to obtain more food (the ox) than without it. A similar decision applies in some way to everything that's produced. It can be consumed sooner, or it can be invested and consumed later, in a manner than increases overall ability to produce/consume. Take a look at http://faculty.lebow.drexel.edu/lainczc/cal38/Growth/Levine_Renelt_1992.pdf http://faculty.lebow.drexel.edu/lainczc/cal38/Growth/Levine_..., a metastudy that identifies "a positive, robust correlation between growth and the share of investment in GDP"; more investment leads to more growth. >Trying to classify people into "productive" and "nonproductive" is very nearly impossible even within small groups who perform that same basic work in the same building. By unproductive I was speaking of the stereotypical welfare-dependent individual to which the conversation I was replying to seemed to be referring. If somebody does not work or study, just sits around receiving money for doing nothing, most people would not consider that productive.

ArkyBeagle 12y ago
What you will find is that the lag between production and consumption works out as if it were a "constant" in the differential equations and is... dropped. In general more investment means more growth, but sometimes investment isn't the bottleneck. I don't know how much you can generalize from the economy since 2007 but is looks like monetary velocity is just plain old down. I don't believe in the stereotypical welfare bum. It does not square with what I have seen. YMMV. Tyler Cowan and others have been talking A Lot about "zero marginal product" workers. Given the length and depth of the recession, you wonder if this is the "new normal" and if it is, we'll have to adjust to it. But I am sure we had the same thoughts in '73. '81-82, '91, '01... still, each recession, some workers are permanently displaced.