Could Theoretical Economics Benefit Political Dialogue?

Perhaps a good theoretical discussion is needed: One which takes a closer look, at how today's service sector dominance affects macroeconomic outcomes. After all, the last significant theoretical debates, took place while tradable sector activity was still dominant, and much has changed since then.

For decades, theoretical economics has taken a back seat to empirical economics. While this is understandable in many respects, empirical work lacks the broader framing which could help citizens rediscover a common ground for the challenges of the 21st century. Small wonder that citizens are losing trust in their governmental institutions, as policy makers and others have too much incentive to further polarize their constituents, instead.

Even though economics as a discipline was severely questioned during the Great Recession, little was changed, and no real broader understandings were reached. But if corporate entities and economic thought in general are doing "just fine", why, then, is politics the world over in such turmoil? Why such a dramatic disconnect between political and corporate realities?

In a recent Bloomberg post, Tyler Cowen questioned why so many political problems exist, given the fact corporate America is quite healthy. He reasons that even though politics is weird, the fact that business firms are functioning normally, means there should be little cause for concern. Oddly, his post made me think of numerous posts from Noah Smith, who insists that theoretical economics is no longer important. Nevertheless, monetary policy is one of our best indicators that something is wrong, as central bankers move ever closer to a deflationary era. Without current takes on theoretical thought, we scarcely have means to describe what we are witnessing.

Meanwhile, much of the national discussion is too disjointed, to deal effectively with rapidly changing equilibrium conditions. What's more, the economic dialogue which is more theoretical than empirical, is largely focused on the nature of equilibrium expectations before they became dominated by service sector activity.

To be sure, a similar set of outdated expectations is true of Keynesian thought. Only consider how fiscal stimulus was once more effective, before non tradable sector dominance meant diminishing returns for this approach. When Keynesian thought gained prominence in the twentieth century, tradable sector activity was still dominant, which meant government redistribution had a much greater likelihood of contributing - albeit indirectly - to increased marketplace output. Before non tradabable sector requirements became so extensive, basic living costs left more discretionary income for all income levels.

Hence those 20th century multiplier effects once contributed to thriving Main Streets, even in small towns. Whether or not Baby Boomers "spent too much" in those earlier times - as some now believe - isn't quite the issue. A "good time out" could be had by frugal shoppers, as well. Indeed, most shopping was a minimal expense, compared with the non tradable sector requirements of the present. Little about the "marketplace" of the latter could be considered fun, right now.

How to think about these changes, which have unfortunately meant diminishing returns for fiscal stimulus? Again, consider how distribution patterns for tradable sector product, contrast with those of non tradable sector product. Non only is non tradable sector activity (still) dependent on the direct wealth formation of tradable sector activity, it has limited incentive for marketplace expansion, since its producers and consumers are both time and place dependent. In other words: unlike tradable sector product which is produced and consumed with little regard to time and place restraints, marketplace expansion for non tradable sector product, can mean diluted profits.

Given this instance, higher costs are sometimes understandable. The problem is that when fiscal policy addresses high costs through subsidies for non tradable sector activity, the natural limits of time and place only encourage costs to continue in the same direction. Whereas 20th century government fiscal policies once contributed to tradable sector markets which could ready expand without losses in profits. Consequently, cutting costs was not illogical for tradable sector self preservation.

Wait: If tradable sector activity is being crowded by non tradable sector dominance, why does business activity appears as though normal and flourishing? Tradable sector activity is thriving because of global production and consumption. These firms remain successful in spite of a limited marketplace "at home" in advanced economies, because of growing levels of discretionary income in developing economies, even as discretionary income is still being lost at home.

And even though it is understood that government subsidies can make tradable sectors lose their competitive edge in a global environment, non tradable sectors - with their local customers who may have few other choices - again, don't have the same incentive for innovation. Consequently, low productivity can be seen as both a cause (non tradable sectors), and a result, when tradable sectors are compelled to reduce production at home, due to the income crowding of non tradable sectors.

Protectionism begins at home, and it is the protectionism of non tradable sector activity, which could ultimately affect tradable sector activity across the globe. Hopefully, citizens will gain a better understanding of what is at stake, before the effects of a tight money and protectionist environment, spread too far. Let's take a closer look at economic issues in a broader light.

Public or Private: Who Can Make the First Step?

How to respond, to recent assertions that monetarism is dead? Granted, monetarism as a discipline is changing. Where it was once approached from a somewhat quantitative stance, this viewpoint has shifted towards a supply and demand approach in terms of aggregate spending capacity. Both economic time and resource capacity are represented by money, and their relation to one another is constantly changing. Indeed, market monetarism opens up additional ways of conceptualizing money in terms of economic freedom, which have yet to be explored.

For purposes of this post, imagine the output of aggregate supply as a "race for growth potential" between public and private interests. How to think about these efforts, in real economy terms? Many assume that government is now capable of growth capacity to a greater extent than private interests. While this is viewpoint is understandable, given government involvement across the economy - alongside a growing private sector reticence - few realize what's at stake for growth and economic stability. This issue is all the more confusing for the public, when discussions between opposing economists mostly involve technical complexities or political oversimplification.

Much of it really boils down to this. In a temporarily stalled economic environment, which "side" is best equipped to address a lack of economic dynamism: fiscal policy or monetary policy, and why? That is, who is prepared to make the first meaningful step forward? After the Great Depression in the twentieth century, some government "first steps" for renewed growth had measurable impact, even though monetary assistance was quite uneven. What had become new infrastructure patterns in those decades, also meant a broader economic framework in several respects. Even the expansion of square footage for housing played a role, in that it provided "storage" for the additional supply side capacity of mass manufacture.

However in the present, it is no longer possible for government funded infrastructure - or related strategies - to have the same dramatic effect. Neither Washington - or Main Street for that matter - had sufficient response to the fact the 21st century would not/could not be a redo of the 20th. Today, the digital realm means far less physical space is needed for living and working, even though non tradable sectors have yet to adjust. And while millions of individuals desire to produce and partake of experiential product, again, organizational patterns still need to take this important shift into account.

Today, fiscal revenue for physical infrastructure - while it is needed for maintenance - is a vastly different component, than the multiplier effect of infrastructure which previously contributed to supply side dynamics across the spectrum. And while new forms of infrastructure are needed to generate more closely spaced living/working patterns, national infrastructure dialogue is mostly that of increased competition with already existing infrastructure patterns of general equilibrium - many of which are far from being fully utilized to begin with.

So called government multipliers lose their effectiveness, as government debt comes to include more economic roles that include high levels of ongoing obligation. Today, government debt includes continuous budget responsibilities which make it all but impossible, for policy makers to respond to changing economic circumstance. Again, think about the "race for growth" in which governments have to take two half steps (debt funded activity) to account for each single monetary step on the part of private industry. Until the Great Recession, government was able to access sufficient revenue that it could take enough half steps to stay ahead in the race, if need be.

Private industry has long since lost confidence in government, as capable of providing meaningful assistance for economic prosperity. But by the same token, private interests are also not inclined to make the first move, or - if they are - remain blocked by other players. Just the same, it's Main Street's turn to make the first step in a race towards stronger growth. Even though some will insist they can't, or possibly even insist it's not their responsibility to do so.

In an important sense, the Great Recession was a "contained" depression - a fact which underlies the paradox of those "return to normal" scenarios the Fed continues to speak of, only years later. Perhaps "normalization" reflected the fact that government was no longer well positioned to contribute to a broader growth pattern. There was just one problem. Too many private interests had become content with a protected and limited marketplace which left too little room for economic access.

Fortunately, there are still ways to move forward which do not require the "half step" matched revenue of fiscal policy. Matched time value can renew non tradable sector activity, through coordinated settings which combine public/private efforts into a single monetary framework. Matched time value would represent wealth which requires no debt, public or private. With enough "whole" steps, output would finally return to a level capable of accommodating all who wish to take part.

Demand Also Depends on Resource and Time Constructs

Even though money represents the resource capacity of all exchange, economies are also affected by the terms in which production and consumption are defined. How much of any given population is able to fully participate in these settings? Those participation levels matter, for the degree of services and asset formation that is possible.

These issues affect the inaccuracies of demand and supply, as framed in Keynesian terms. However, supply side interests - particularly those representative of non tradable sectors - continue to stand in the way of conditions for optimal demand. The fact that entrenched interests also limit marketplace potential, makes it too easy for the Keynesian model to maintain its intellectual prominence. Demand and supply factors are still engaged in a process of undermining one another, in spite of present attempts to keep economies out of recession.

Hence my initial response to a recent post from Roger Farmer (entitled "Demand creates its own supply"), was "Oh my". I will try to wrap my head around his explanations and also take note when he provides further explanations regarding supply in an upcoming post. But in the meantime I at least need to respond to this:

The Keynesian theory of aggregate supply asserts that firms will increase or decrease the number of workers they employ in order to produce as many goods as are demanded. The French economist John Baptiste Say, famously asserted that supply creates its own demand. Keynes turned the proposition on its head. Demand creates its own supply.  

Keynes argued that the economy is typically producing at less than full employment. And as long as there is any voluntary unemployment everything that is demanded will be supplied.

For one, there is a lack of recognition that different dynamics exist for greater supply in tradable goods, than for non tradable goods whenever the (basic) product in question is time based, such as healthcare. In the present, it has become possible to generate more product (i.e. supply and demand) in tradable goods without increasing employment in these areas. Whereas more demand for time based services should mean more employment, but because of redistribution issues and limitations in knowledge use, this does not necessarily occur.

When non tradable product is time based, knowledge based services production faces several limitations for the fulfillment of supply and demand, which run counter to the production capacity of tradable goods. Product which includes time based application of knowledge sets, tends to only be available in certain time frames. Therefore only a percentage of any given population has the potential to be consumers of time based services at any given moment. This constraint is also affected by the limited quantity of service providers in certain knowledge sets which are actually sought by populations as a whole.

Further, the fact that knowledge based services still rely on asymmetric compensation from other wealth, means demand for services production will remain artificially constrained so long as services are not generated through direct, symmetrical means. Consider how these limits in employment aggregates affect asset formation, for instance. In part because of limits in knowledge based services production, nations are now experiencing limits in traditional production as well.

Much about our quantitative realities, depends on how resources are allowed to be utilized in environments as a whole. This particularly matters, given the fact that investment is not just about money, but about priorities for time value. No amount of money or investment will increase the availability of services providers who have derived marketplace value by virtue of their own relative scarcity. Too much monetarily backed investment also ends up chasing too little time backed investment, in part because of the lack of a marketplace for time.

The fact that the Keynesian model does not take money into consideration, is enough of a head scratcher as it is. A lack of consideration for the dynamics of time based product, only makes it more difficult to derive practical value from this model - either for purposes of monetary policy or for circumstance in the real economy.

Market Monetarists and the Great Divide

In a recent post, Scott Sumner reflects on the market monetarist effort to make headway in public dialogue, after Noah Smith highlights a "powerful" Neo-Fisherian argument, so to speak.

Unfortunately, market monetarism is still a fringe movement, even less popular than other heterodox theories like ABCT.

Neo-Fisherian thought provides a too convenient rationale, that "normalization" can occur by means of the interest rate peg. Steve Williamson and John Cochrane in particular, have found an audience that is willing to see whether economic logic can be turned inside out. Scott Sumner was clearly frustrated in the above linked post. How could an economist from the University of Chicago, so easily dismiss the veracity of QE at the zero bound?

Like many, Cochrane is focused on an increasingly limited equilibrium which is credit driven, instead of the broader equilibrium which markets seek to maintain. In recent decades, some have become convinced that monetary policy is just another name for credit policy. Apparently, central bankers at the Fed feel the same way - given the fact one hardly finds mentions of monetary factors in FOMC minutes. Instead, there are constant mentions of the interest rate.

Indeed the idea of credit as primary for wealth origination is important for Austrians in terms of private industry, just as Keynesians consider credit integral for government's role in the economy. Further, the average citizen is exposed on a regular basis to watered down versions of these opposing poles of economic thought. Since central bankers have proven to be more concerned about credit circumstance than monetary circumstance, Neo-Fisherism appears as though a "useful" concept whose time has come.

There has been insufficient time for market monetarism to influence public opinion to any real extent, at least in the U.S. Some years earlier, it didn't appear that a broader public understanding would be necessary. But who could have known, the degree to which public opinion would also contribute to an ongoing path of monetary tightening? With a little luck, market monetarism could influence monetary policy in the next presidential election. But in this one, as Bonnie Carr recently noted, only Marco Rubio has a market monetarist adviser on his team.

Market monetarist thought has yet to benefit, from the kinds of personal associations that populations hold in regard to Keynesian and Austrian thought - even if those associations are a crude reflection of the theoretical realities. For instance it is far too easy to align internet Austrians with anti-government rhetoric, much as crude versions of Keynesian thought are associated with government interests - especially those of major cities and U.S. coastal areas. Neither of these represents a cohesive interpretation, for the vast panorama that is today's economic activity.

Perhaps market monetarism needs an identification with something tangible, i.e. a concrete image or symbol in the public's mind. At the very least, balance could play a role. Thus far, without some degree of public support and understanding regarding monetary policy, it is not clear that central bankers will be willing to act in the public's best interests, any time soon.

Even though I believe market monetarism could help bridge the divide between pro and anti government factions, plenty of obstacles remain in the way. How to find identity in the middle of opposing forces, which seek to gain strength through opposition and divisiveness? Everyone needs to take part in healing the rift between pro and anti government forces. Perhaps the next political election will have more market monetarist representation, than the coming election holds thus far.

Is It Really a Good Idea to Ridicule Faith?

Apparently, some have become convinced that "faith" is now a derogatory expression, capable of undermining the integrity of basic economic precepts and perhaps even some market monetarists along the way...

For the most part, I try not to blog too much about the divide between Keynesians and market monetarists, which often appears wider than it actually is. Still, it's fair to assign partial blame on this divide, for the remaining output gap. Why have Keynesians used so much energy to deride what could have been effective monetary policy to prevent the worst of the great Great Recession? And why should it be so controversial for market monetarists to suggest that further studies of fiscal austerity could be helpful? Regular readers know how I feel about the fact that vital fiscal activities need not be lost. Some of the growth which fiscal policy initiated, needs to be transformed into more direct, viable and understandable settings.

Until fiscal and monetary issues are better resolved, long term growth potential remains in the lurch. We're "all in this together", right? Hmm. Last week, I looked at the bright side and was glad for the support that Simon Wren Lewis appeared to offer to market monetarists in an earlier post. However, in "Faith based macroeconomics" he made me quite angry, so I said:

It is wrong to deride the fact that people need faith to move an economy forward, because government also relies on faith that the money will be in its coffers to do the job it wants to do. Also, when you use the word faith as a slap at anyone, you may as well accept the fact that you have already moved beyond simple statistics and numbers.

Fiscal programs are important. But to defend them so indiscriminately that one is willing to derail the monetary base they rely on, makes little sense at all. When does fiscal policy accomplish needed ends, and when does it mostly line the pockets of special interests? At the onset of the Great Recession, a tremendous amount of fiscal stimulus was unleashed to assist the banks, but no further monetary support for spending on the part of the public was ever provided. Two suggestions for Keynesians: look closer to determine whether fiscal policy is fully capable of supporting the monetary framework at stake in an economy. If not, allow monetary policy to take care of and represent a public's needs, once governments and special interests take care of their own desires.

Some who never had their jobs dislodged by the Great Recession, don't really know what a foxhole feels like - let alone the faith one needs to overcome the dangers involved. The prosperity of any nation relies on the countless risks individuals have to take for their own survival - risks which do not always pay off. And once anyone has experienced a recessionary foxhole firsthand, the "dirt" never really goes away completely. The "dirt" stays with a person and affects - to some degree - the decisions he or she makes from that day forward.

No one can afford to forget that governments also rely on the faith which generates prosperity for their citizens. Faith is what those confidence surveys are all about, for instance. If only fiscal activity were in the starter or alpha position, and monetary activity in a beta position, these struggles would be quite unnecessary. But consider what has happened to U.S. government spending in recent years. Keynesians need to take a closer look at the behemoth they support and consider what might be done. What has been lost? Some of those losses need to be recreated on terms that are within reach of the average citizen, instead of the special interests whose default positions have eaten away at earlier fiscal gains.

Everyone's jobs would be easier if fiscal concerns were capable of trumping monetary concerns. But it doesn't work this way, which is why some of the most important aspects of fiscal activity in the present need to be preserved and redefined on monetary terms. Growth potential needs to be placed squarely into the public's hands, particularly if they are expected to have anything left over for government in the years ahead. Some services involve costs which eviscerate low income potential, hence need to take place on new terms. So do concepts of housing and infrastructure.

Perhaps I could say that by treating fiscal roles as one indecipherable entity, Keynesians are "flying blind". But why belabor the point? If they too occasionally need to rely on faith, fine. Confidence is good. But stop to consider...how far have the riptides already carried this fragile vessel out to sea? Sometimes, everyone needs to row hard for the shore - once again - when it becomes necessary to do so.

Macroeconomics is Real

Does this seemingly obvious element of life even need to be asserted? Apparently it does, because even as nations everywhere grapple with budgets and monetary concerns, there are those who insist that macroeconomics as a discipline is not real. Somewhat misguided in the present? Of course. Something to be done away with? Certainly not. As long as there are nations, and nations are in fact a part of the budget coordination and consideration of any group of people,  there are going to be economic issues which fall under the rubric of macroeconomics.

How could it possibly be any other way? And yet, people - quite often serious scholars who really should know better - try to insist that macroeconomics is not real. What's more, macroeconomics is monetary, as Marcus Nunes pointed out in this post as a reply to Robert Higgs. Monetarism matters now more than ever, because it continues to utilize a dynamic concept of economic thought which allows a focus on future potential.

Whereas older forms of monetarism often focused on the gold standard and other aspects of resource use which readily aligned with the standard, Market Monetarists now focus on aggregate spending as measured by the time elements of individual participants. This active conception of economic activity is presently missing from both Keynesian and Austrian thought, which both assign a greater role to credit allocation in the marketplace.

Sometimes we hear that nations are losing their "importance", a sentiment illustrated in discussion of growing state and local importance in economic affairs. However there are some serious concerns with that perspective, in that both state and local economies closely reflect the same valuations and definitions of resource use which nations have previously defined. That, in turn, continues to make local and state economies quite dependent on the national redistribution that such definitions all but made mandatory, even as states express unwillingness to go along with national programs as they are now evolving.

Protection of special interests - which make so much redistribution necessary to begin with - remains just as strong at local and state levels as it is at national levels. Keynesianism in turn is closely connected to those same redistribution patterns. Even as many on the hard right seek to deny the redistribution they rely on, they still offer practically no reflection as to what might take their place. The more that states attempt to deny federal aid because of the impositions it creates, the more class polarization they will experience from their own limitations to choice.

The point is not to negate national identity because it appears helplessly misguided, even if it presently does. Rather, the point is to find new avenues of economic intersection between local and national concerns which make sense.  Knowledge use and services need to be thought of in local terms of wealth creation, while scarce resources need to be able to utilize national coordination strategies, without the excess destruction of free markets which has been going on for so long.

How might local to national avenues of economic activity be reconstructed so that they actually work with one another, instead of fighting with and taking advantage of one another?  National and ongoing conversations in this regard are rapidly becoming necessary, and summits to make this possible really need to happen before the U.S. becomes more divided than ever. Too many people in the U.S. are invested in spreading blame, lies and even historical distortions now - activities which have to be turned around and soon, if in fact they are not going to escalate further.

What's more, macroeconomic realities need to reflect the rationale for realignment, rather than continuing to detract from the potential of realignment. If people are willing to utilize knowledge in more direct ways and establish understandable frameworks for doing so, governments can work with their own citizens to help them become more self sufficient. It would be far preferable to include such coordination strategies into monetary representation than to simply assign a bare minimum of money to people "at the bottom" who supposedly have no rational place in society. The longer government assumes it can take care of citizens when special interests are completely in the way, the more citizens become endangered as to the services they actually need.

Sticky Markets and the "First Mover" Problem

Aahhh, complexity is a many splendored thing, especially when it involves sticky wages which do not readily change just because people say they should! It's tempting to look at wages as the obvious place of correction whenever unemployment rises and economic conditions go south, but then whose wages exactly are we talking about: mine, yours, or that guy over there by the window? And how do we suppose would be the best way to bring that about? Hey, you "go first" (knock down those wages) and someone else will surely go next...well, perhaps not so much. Looks like we could be seeking equilibrium for a long time, especially as this issue has been (once again) moved to the back burner with the better employment numbers of late. Plus, what may appear as a success story in this regard often turns out to be "shared" jobs which are now part time.

As mentioned in my last post, monetary policy has done a reasonably good job of addressing short term and cyclical problems. Over time, at least in the U.S., government is likely to continue decreasing overall its contribution to services as entitlements become more substantial, in the midst of continuing unemployment which has now become more structural than cyclical. While macroeconomic thought readily distinguishes between structural and cyclical issues, it nonetheless is better equipped to address the cyclical aspects. Consequently, structural unemployment realities tend to get "smoothed out" over time without any clear strategies. War is a lousy "strategy" that too often gets utilized as a result. When people ask, "Why do we tolerate war?" they really ought to be asking, "Why do we insist on looking the other way, when people don't have economic access?" Unfortunately, we still have the mid to long term scenario where money does not yet address many of the services which people will increasingly take upon themselves in the meantime.

One of the primary goals of this blog is to return monetary relevance, or equivalence, to many ongoing responsibilities which people know to be important, but don't yet know how to address in realistic terms. We just don't have good ways yet to address this important issue, in the present. Consequently a nation may decide to print money to encourage domestic spending when global cross border capital flows do slow down (60 percent from their 2008 peak) and yet it seems no one really has a clue what to do with that money at local levels, which isn't already being done.  Even though recent globalization flows have reversed, nations fail to see recent printing as efforts for the local stimulation that leaders are actually trying to provide, and no one is in charge who can realistically tend to such structural efforts in any organized way, even though structural issues are now clearly the problem.

First mover problems clearly show that such internal coordination will be  necessary for efforts at local levels to work, or local economies will only continue to drive potential workers away, instead of finding ways to create further wealth with what has now become excess markets of human skill. And yet, any institution that would reduce wages would find themselves in a first mover disadvantage, which is but one reason why this problem is so hard to address head on. Plus, reducing wages is simply another way of reconfiguring the pie instead of actually making the pie itself larger. There are many people with skills more than adequate for jobs who don't get hired in the first place, and were wages to decrease to reflect the actual existing pool, there would scarcely be enough left for one's financial responsibilities. That is also one of the problems with the idea of skills auctioning, which is why it not only would need subsidized backing by government in order to be realistic, but is really a back door retreat to subsidized welfare which doesn't address the issue of actual economic integration, in the first place.

A structural nature of economic realities is well reflected in both Austrian literature and ongoing dialogue. However, the still ongoing discussions of production, manufacturing and the efforts of privatization don't really address what people are facing in their circumstances at countless local levels, and right now that matters immensely. Therefore, in the dominant strands of both Keynesian and Austrian thought, I continue to search in vain for the missing human skill factor. Like the Austrians, Keynesian thought sometimes appears backward looking in that it too sees services primarily as both external and government driven, rather than capable of providing wealth creation in a self supporting sense. Cleary I agree with any Keynesian that services are paramount. My concern is that they take the existence of services for granted in ways that appear dangerous for the long run, especially whenever nations run into severe supply side issues, and it is all a government can do to "hold its head above water".

Austrians have much literature that is valuable concerning production processes for actual product that is separate from us and our own time factor. But where are the missing coordination and pricing mechanisms that could assist with the human skill factor so important in the present? This is what people need, to be able to utilize skills amongst one another when in fact their institutions no longer have room for them. Some in the Austrian economic community gave special consideration to Elinor Ostrom who was truly an inspiring individual. Ostrom did excellent work in her lifetime, part of which involved the study of spontaneous organization in communities for shared resources. But, again like so much of economic study, her work in these coordination mechanisms was also intended for actual physical resources which faced certain issues in traditional markets.

The only spontaneous coordination mechanism I have seen to date for skills - outside their primary uses in institutions and familial settings - is a very limited one in the form of time banks, where people are primarily trying to capture valuable skills which, alas, are already restricted in the marketplace to some extent and therefore already needed by others. In other words, the actual arbitrage potential one might expect to find in these time banks is blunted by those who primarily seek the specialized services of those who are already quite connected and busy.

All of this needs to be considered when the idea becomes, "well, if only wages weren't sticky". Are we talking about wages in the now somewhat limited world of manufacturing and production that is still at the center of so much economic dialogue? Or, are we talking about wages in services organizations, which remain set up for institutional and organizational needs, rather than actual market, individual or community needs? Small wonder no true pricing mechanism exists in so many of these organizations that actually corresponds with the realities of economic actors.

Where, then, are Market Monetarists in all of this? Hmmm, one step at a time (maybe you think it's fun to be a radical but to me it's extremely lonely and not fun at all, just, unfortunately, necessary)...I see the pioneers in this movement as looking toward the future in ways that other economists aren't quite as willing to do, and looking towards the future means moving away from the recent past of interest rate targeting which was structured for a much more product oriented and credit oriented economy than will be possible again for some time. I have tremendous hope for the Market Monetarist model because it acknowledges that in a diverse economy, real measurement begins and ends with the economic actor, which is also what skills wealth is about. 

Extensive credit use basically throws the idea of the individual (as integral to the economy) out the window. But people don't seek the same kind of product they sought even a decade ago. Today people look for product in ways that are more about people to begin with: more digital, experience oriented, knowledge and services based, and they do not have strong reasons to be tied to locations which do not promote economic opportunity. Even as I am also Market Monetarist and so promote their cause, I cannot ascribe some of my own positions in this blog to others, many of whom see Market Monetarism through a somewhat more expedient and perhaps practical framework than I do. Still, as a group, Market Monetarists are quite forward looking, especially in that they would provide a monetary rule that would also allow more productive forms of service coordination. In other words, I see Market Monetarists as being in the best position to be a first mover for positive structural change, even if the model is intended for aggregate demand. Therefore, I see Market Monetarists as capable of being first movers in ways which neither Austrians or Keynesians can adequately address, without altering their basic belief systems.