What would be the right counterfactual for the economy, in the absence of this policy? (David Beckworth)
http://macromarketmusings.blogspot.com/2014/03/the-presidents-economic-report-and.html
When 2% becomes an effective ceiling instead of a target range:
http://macromarketmusings.blogspot.com/2014/03/what-is-feds-real-inflation-target.html
"In real terms the Dow went nowhere in 68 years" (for example) - Scott Sumner
100 years of excess returns: No, they are not (statistically) significant
Lack of a clear target rule is getting in the way of coherent discussions:
It's the policy regime that needs fixing
A recent BOE monetary policy report is fine - so long as one likes the interest rate approach:
Banking theory disguised as monetary theory?
Scott discusses how his view of macro has been shaped by Lucas and Fama
Some Econlog posts from Scott:
http://econlog.econlib.org/archives/2014/03/did_the_rate_in.html
http://econlog.econlib.org/archives/2014/03/the_legacy_of_m.html
Nick Rowe has lots of fun with the BOE's (above mentioned) "lovely clear article"
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/one-general-theory-of-money-creation-to-rule-them-all.html
"The supply of money determines the quantity demanded, and not vice versa"
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/the-sense-in-which-the-stock-of-money-is-supply-determined.html
Lars Christensen responds to Sumner's policy regime post:
http://marketmonetarist.com/2014/03/15/revisiting-the-discretionary-decision-to-introduce-rules/
Russia will likely go into recession:
http://marketmonetarist.com/2014/03/19/putins-hopes-for-monetary-miracles/
Running out of ideas? Inflation adds drama (in charts) - Marcus Nunes
http://thefaintofheart.wordpress.com/2014/03/12/fed-chairmen-as-scriptwriters/
Supply siders have more excuses than solutions (Benjamin Cole)
http://thefaintofheart.wordpress.com/2014/03/13/is-inflation-dead-for-good-is-jimmy-hoffa/
Nominal stability is a Fed provision - not a government provision (Marcus)
http://thefaintofheart.wordpress.com/2014/03/14/the-impact-of-government-spending-was-not-small-it-was-nil/
Still close to trend: http://thefaintofheart.wordpress.com/2014/03/14/lessons-from-australia/
Monetary policy settings are not loose. Rather, rudderless: http://thefaintofheart.wordpress.com/2014/03/14/possible-yes/
How might monetary policy affect labor across borders? http://thefaintofheart.wordpress.com/2014/03/16/matching-shapes/
"Keynes argued himself into a corner, and in his review of the General Theory, Hawtrey caught him there and pummeled him" (David Glasner): http://uneasymoney.com/2014/03/13/hawtrey-v-keynes-on-the-general-theory-and-the-rate-of-interest/
Kevin Erdmann provides a review:
http://idiosyncraticwhisk.blogspot.com/2014/03/the-fed-in-2008.html
What does "Everybody Know" about the global and financial markets? (Ravi Varghese)
http://insecurityanalyst.blogspot.com/2014/03/everybody-knows-that.html
Also of interest::
Jonathan Finegold offers a helpful summary of Paul Krugman's trade theory in this post:
http://www.economicthought.net/blog/?p=5473
Growing concerns as to copper as a signal of deflation:
http://www.capitalspectator.com/does-coppers-slide-signal-a-new-phase-of-deflation-risk/
If anyone missed these, Arnold Kling highlights some noteworthy labor market posts for contrast:
http://www.arnoldkling.com/blog/the-labor-market-three-takes/
Now here's an idea that would make Main Street USA a lot more lively:
Unit 3 Micro: Pop Up Shops on the Underground
Wednesday, March 19, 2014
Sunday, March 16, 2014
How Did The Fed Get Its Reputation?
...That is, the one of reliability and leadership "worthiness" in a larger sense. While there is of course the more frequently told version of profligacy and irresponsibility, that's not the one I wish to (overly) emphasize in this post! Much about the Fed's influence is still taken for granted, which allows the U.S. to hold an important position for monetary matters in general. Granted, this position could readily shift elsewhere in the years ahead. But where and how that might happen is still far from obvious, by any means. Much of recent economic structure around the world still reflects what worked best in the 20th century. In other words, production wealth continues to be viewed in traditional terms, even as it begins to dramatically change in both orientation and focus.
As a result, no one really knows which sea to set sail in - hence inflation targeting is like drifting with the tide. Being the biggest vessel afloat only gets one so far. It's not hard to compare today's central bank operations, to the operations of physicians who will tell you without hesitation, "we're just practicing". Apparently that is what central banks have spent a lot of time doing as well: practicing this and that technique, tinkering with one approach and another to see what happens. "What works" of course remains in the eye of the beholder. Even so, reputations can be much easier to uphold, when the "patient" is quite healthy indeed.
All of this takes place in economic environments containing plenty of elements (circuses?) to distract one's attention. Oftentimes, central bankers were able to bumble along fairly well, until the Great Recession. After all, "piddler" and "pro" alike tend to perform reasonably when there's no emergency. But more recently, the fallout has been substantial - hence a need for more relevant expertise has grown. Except even the idea of relevant is up for grabs, unfortunately. In too many instances, those who have been charged with a heavy responsibility, have simply not been up to the task.
The ongoing fallout from recession is deceiving, in that it signifies changes in economic growth which few wish to closely examine. Important as the task is, it can be disheartening at times because of what is implied. There's no way of getting around the fact that more needs to be done, than significant numbers are ready to take on. Even though the Fed could adopt a nominal target rule which would greatly simplify its own efforts, the potential efficacy of a rule has yet to be seriously considered. In the U.S. at least, other aspects of the economy have been insisted upon as equally or more important, by those in a position to act.
Aggregate spending capacity is a stronger point of reliance than some realize. Its use signals that a nation has evolved to a point where it can depend on far more than natural resource capacity or assets, in order to achieve and define prosperity. Aggregate spending capacity indicates that citizens are considered to be a vital and integrated part of a nation's wealth.
This is why I am saddened, when central banks are reluctant in the present to adopt a nominal targeting rule. To step back from nominal targeting, is to step back from progress. To focus solely on hard assets or other preexisting capital is a static version of wealth. Not only does such focus have little room for vision on the part of populations. It also means that people are ready to start worrying about dividing up what they already have - instead of living to create anew. That is the danger any nation faces, when it loses faith in it's own aggregate spending capacity. And it is clear to all, that the Fed gained its strong reputation in the world, when the U.S. made human capital a central component of what wealth might become.
While central banks may drift further from any willingness to consider nominal target rules, most developed nations would do so at further risk of losing monetary stability. There is nothing about inflation targeting that serves the purpose of monetary activity either in the short or long run. To be sure, there are numerous factors which influence economic stability, which are outside the purview of central banks. But if no one else is willing to coordinate and tend to vital structural factors, central banks could pay the price just the same.
In short, the Fed gained a strong reputation - to a large degree - because of the ascendance of human potential in the U.S. To be sure, natural resources played a role, but it was the initiative and drive of capitalism in a twentieth century U.S. which gave the Fed a natural advantage for its larger role. There has to remain a central place for human capacity in economic systems, if faith in aggregate spending capacity is to be restored. Even though monetary stability could be maintained with only a small portion of the public actively engaged in economic terms, that is simply not a way forward which inspires confidence on anyone's part.
As a result, no one really knows which sea to set sail in - hence inflation targeting is like drifting with the tide. Being the biggest vessel afloat only gets one so far. It's not hard to compare today's central bank operations, to the operations of physicians who will tell you without hesitation, "we're just practicing". Apparently that is what central banks have spent a lot of time doing as well: practicing this and that technique, tinkering with one approach and another to see what happens. "What works" of course remains in the eye of the beholder. Even so, reputations can be much easier to uphold, when the "patient" is quite healthy indeed.
All of this takes place in economic environments containing plenty of elements (circuses?) to distract one's attention. Oftentimes, central bankers were able to bumble along fairly well, until the Great Recession. After all, "piddler" and "pro" alike tend to perform reasonably when there's no emergency. But more recently, the fallout has been substantial - hence a need for more relevant expertise has grown. Except even the idea of relevant is up for grabs, unfortunately. In too many instances, those who have been charged with a heavy responsibility, have simply not been up to the task.
The ongoing fallout from recession is deceiving, in that it signifies changes in economic growth which few wish to closely examine. Important as the task is, it can be disheartening at times because of what is implied. There's no way of getting around the fact that more needs to be done, than significant numbers are ready to take on. Even though the Fed could adopt a nominal target rule which would greatly simplify its own efforts, the potential efficacy of a rule has yet to be seriously considered. In the U.S. at least, other aspects of the economy have been insisted upon as equally or more important, by those in a position to act.
Aggregate spending capacity is a stronger point of reliance than some realize. Its use signals that a nation has evolved to a point where it can depend on far more than natural resource capacity or assets, in order to achieve and define prosperity. Aggregate spending capacity indicates that citizens are considered to be a vital and integrated part of a nation's wealth.
This is why I am saddened, when central banks are reluctant in the present to adopt a nominal targeting rule. To step back from nominal targeting, is to step back from progress. To focus solely on hard assets or other preexisting capital is a static version of wealth. Not only does such focus have little room for vision on the part of populations. It also means that people are ready to start worrying about dividing up what they already have - instead of living to create anew. That is the danger any nation faces, when it loses faith in it's own aggregate spending capacity. And it is clear to all, that the Fed gained its strong reputation in the world, when the U.S. made human capital a central component of what wealth might become.
While central banks may drift further from any willingness to consider nominal target rules, most developed nations would do so at further risk of losing monetary stability. There is nothing about inflation targeting that serves the purpose of monetary activity either in the short or long run. To be sure, there are numerous factors which influence economic stability, which are outside the purview of central banks. But if no one else is willing to coordinate and tend to vital structural factors, central banks could pay the price just the same.
In short, the Fed gained a strong reputation - to a large degree - because of the ascendance of human potential in the U.S. To be sure, natural resources played a role, but it was the initiative and drive of capitalism in a twentieth century U.S. which gave the Fed a natural advantage for its larger role. There has to remain a central place for human capacity in economic systems, if faith in aggregate spending capacity is to be restored. Even though monetary stability could be maintained with only a small portion of the public actively engaged in economic terms, that is simply not a way forward which inspires confidence on anyone's part.
Saturday, March 15, 2014
Back To The Future - Piketty Versus the Mystery Of Capital
How might we think of recent inequalities in developed nations, when a rising tide has not lifted all boats? For one thing, agreed upon frameworks for growth which could increase aggregate wealth, are all but missing in action. Limitations in knowledge use settings mostly serve to make further redistribution efforts ineffectual. Plus, what appears as inequality is oftentimes pooling of resources around existing access points for skills use - something no amount of money really addresses. Over time, those access points have become too limited in scope, hence no longer provide the usefulness they were once capable of.
This post picks up from the last one, where I considered elements of the first chapter in "Capital" by Thomas Piketty. I can't help but contrast a book about capital just published, with "The Mystery of Capital" by Hernando de Soto. Perhaps de Soto's book was inspiring - in part - because it was written at the turn of the century, prior to the Great Recession. At that time, few nations questioned the ongoing potential of economic growth. That level of optimism spilled from Wall Street to Main Street, and it could still be found even in the rural backwaters of the U.S.
It wasn't so long ago that inequality was not uppermost in people's minds in the U.S. After all, until recently, a reasonable amount of economic access still existed for lower incomes. Granted, such access was not as significant as previous decades, but at the turn of the century one could still easily take on an affordable fifteen year mortgage for some properties - for instance - even with a near minimum wage income.
What concerns me most about discussions of inequality, is that they are not really intended to address these kinds of changed realities. Most individuals need to own something that they can manage themselves, even if it is not structurally permanent in the sense of traditional housing. Often, rental properties are not good housing otions for lower income levels and they generate additional security concerns as well. Incentives are skewed for low income landlords in terms of maintenance, and housing provisions on the part of government are even worse.
This is why I advocate flexible housing components for lower income levels which can be purchased and sold individually, and adjusted as needed whenever circumstances change. Rent should be that of property, which contains sturdy forms for flexible housing components to exist on. That way each "property" can be maintained when no renter is using a specific form. Local recycling can create new components through 3D printing, as old ones deteriorate.
There is nothing inherently wrong with the idea of greater equality, especially equality of opportunity. The problem now is that the context for discussion is somewhat misleading, in that it is taking place in an environment of diminished economic possibilities. Few agree, as to the kinds of economic activities which could replace recent patterns of consumption led growth. Indeed, there have been no real discussions for local visions including the public (in the U.S.), as far as I know. Unfortunately, those who are convinced that little further growth is possible, still want to continue the old growth patterns which have proven so unwieldy - albeit in a diminished capacity.
Perhaps a lack of agreement as to future growth potential, is partly responsible for the heavy focus on inflation targeting by central banks. After all, inflation targeting is an indiscriminate cap which does little more than stop economic activity in its tracks. That could have had some bearing on Bernanke's reaction in 2008, when he severely shorted nominal spending for just a brief moment in time, in response to rising oil prices. But that brief moment was enough to trigger more widespread wealth loss and social instability, than ever should have happened. Indeed, the fact that it did happen, created a downward shift in the growth trajectory which only has a recent counterpart in the Great Depression.
For instance, look closely at a graph in an earlier post from Marcus Nunes, which shows the nominal growth trajectory for 1870 forward. Consider that even though the recent drop and loss of nominal output was not as significant as the Great Depression, a continued faith in spending capacity nonetheless created a strong rise in the growth trajectory shortly after the Depression began. That rise didn't happen this time in the U.S., and it remains to be seen whether lost output will be regained. Whereas after the Great Depression, growth finally returned to trend after a decade. What happened to faith in economic growth? Why have governments not convened their citizens to address this together?
That earlier faith in economic capacity was on full display, when Hernando de Soto published "The Mystery of Capital". His was the hope and certainty that the 20th century had offered, in terms of progress. Of course one might reasonably ask, "Didn't you disparage houses just a little, in your last post, as wealth? After all, a big part of de Soto's work was about bringing people's homes into the formal economy". Yes, and context is everything here, because of what these informal economy homes represented, as opposed to the homes which Piketty counts as real capital now.
Just as de Soto made clear, aggregate growth is not possible, if people are not willing to acknowledge the efforts to thrive, which the downtrodden actively make on their own behalf. Such initiative holds just as true for broader knowledge use and simpler home construction models in the developed world, as it does for the recognition of informal home building efforts in the developing world.
In the present, knowledge use needs the same role that de Soto assigned to housing, in terms of allowing a significant portion of the population to engage in economic activity at more formal levels. Only consider the difference in housing capital in the construct which Piketty highlights. He argues for further redistribution from a portion of fixed capital which derives not so much from production potential, as it does pre existing consumption. Such redistribution also lowers growth potential in the aggregate.
Whereas, de Soto advocated for what would in effect also create a higher growth plateau than had previously existed. Newly recognized housing created not additional economic elements of growth, but more concentrated areas of economic activity as a result. Just as newly recognized housing wealth led to stronger growth trajectories, recognition of informal and in Piketty's description "non tradable human capital", could instead create new, tradable human capital. Doing so could go a long way to restore the growth trajectory which was lost in the Great Recession.
The human drive to succeed was inherent in the mystery, which de Soto sought to capture. More than anything, he wanted human motivation to count for economic purpose in concrete ways. Those homes were a representation of the quest of those outside the formal economy to make their lives count. In the same way those owner built homes become a part of developing nation wealth, today's developed nations could extend a helping hand to all who wish to use the materials they have invested in - their educations and skills sets. Who wants to get back to the future?
This post picks up from the last one, where I considered elements of the first chapter in "Capital" by Thomas Piketty. I can't help but contrast a book about capital just published, with "The Mystery of Capital" by Hernando de Soto. Perhaps de Soto's book was inspiring - in part - because it was written at the turn of the century, prior to the Great Recession. At that time, few nations questioned the ongoing potential of economic growth. That level of optimism spilled from Wall Street to Main Street, and it could still be found even in the rural backwaters of the U.S.
It wasn't so long ago that inequality was not uppermost in people's minds in the U.S. After all, until recently, a reasonable amount of economic access still existed for lower incomes. Granted, such access was not as significant as previous decades, but at the turn of the century one could still easily take on an affordable fifteen year mortgage for some properties - for instance - even with a near minimum wage income.
What concerns me most about discussions of inequality, is that they are not really intended to address these kinds of changed realities. Most individuals need to own something that they can manage themselves, even if it is not structurally permanent in the sense of traditional housing. Often, rental properties are not good housing otions for lower income levels and they generate additional security concerns as well. Incentives are skewed for low income landlords in terms of maintenance, and housing provisions on the part of government are even worse.
This is why I advocate flexible housing components for lower income levels which can be purchased and sold individually, and adjusted as needed whenever circumstances change. Rent should be that of property, which contains sturdy forms for flexible housing components to exist on. That way each "property" can be maintained when no renter is using a specific form. Local recycling can create new components through 3D printing, as old ones deteriorate.
There is nothing inherently wrong with the idea of greater equality, especially equality of opportunity. The problem now is that the context for discussion is somewhat misleading, in that it is taking place in an environment of diminished economic possibilities. Few agree, as to the kinds of economic activities which could replace recent patterns of consumption led growth. Indeed, there have been no real discussions for local visions including the public (in the U.S.), as far as I know. Unfortunately, those who are convinced that little further growth is possible, still want to continue the old growth patterns which have proven so unwieldy - albeit in a diminished capacity.
Perhaps a lack of agreement as to future growth potential, is partly responsible for the heavy focus on inflation targeting by central banks. After all, inflation targeting is an indiscriminate cap which does little more than stop economic activity in its tracks. That could have had some bearing on Bernanke's reaction in 2008, when he severely shorted nominal spending for just a brief moment in time, in response to rising oil prices. But that brief moment was enough to trigger more widespread wealth loss and social instability, than ever should have happened. Indeed, the fact that it did happen, created a downward shift in the growth trajectory which only has a recent counterpart in the Great Depression.
For instance, look closely at a graph in an earlier post from Marcus Nunes, which shows the nominal growth trajectory for 1870 forward. Consider that even though the recent drop and loss of nominal output was not as significant as the Great Depression, a continued faith in spending capacity nonetheless created a strong rise in the growth trajectory shortly after the Depression began. That rise didn't happen this time in the U.S., and it remains to be seen whether lost output will be regained. Whereas after the Great Depression, growth finally returned to trend after a decade. What happened to faith in economic growth? Why have governments not convened their citizens to address this together?
That earlier faith in economic capacity was on full display, when Hernando de Soto published "The Mystery of Capital". His was the hope and certainty that the 20th century had offered, in terms of progress. Of course one might reasonably ask, "Didn't you disparage houses just a little, in your last post, as wealth? After all, a big part of de Soto's work was about bringing people's homes into the formal economy". Yes, and context is everything here, because of what these informal economy homes represented, as opposed to the homes which Piketty counts as real capital now.
Just as de Soto made clear, aggregate growth is not possible, if people are not willing to acknowledge the efforts to thrive, which the downtrodden actively make on their own behalf. Such initiative holds just as true for broader knowledge use and simpler home construction models in the developed world, as it does for the recognition of informal home building efforts in the developing world.
In the present, knowledge use needs the same role that de Soto assigned to housing, in terms of allowing a significant portion of the population to engage in economic activity at more formal levels. Only consider the difference in housing capital in the construct which Piketty highlights. He argues for further redistribution from a portion of fixed capital which derives not so much from production potential, as it does pre existing consumption. Such redistribution also lowers growth potential in the aggregate.
Whereas, de Soto advocated for what would in effect also create a higher growth plateau than had previously existed. Newly recognized housing created not additional economic elements of growth, but more concentrated areas of economic activity as a result. Just as newly recognized housing wealth led to stronger growth trajectories, recognition of informal and in Piketty's description "non tradable human capital", could instead create new, tradable human capital. Doing so could go a long way to restore the growth trajectory which was lost in the Great Recession.
The human drive to succeed was inherent in the mystery, which de Soto sought to capture. More than anything, he wanted human motivation to count for economic purpose in concrete ways. Those homes were a representation of the quest of those outside the formal economy to make their lives count. In the same way those owner built homes become a part of developing nation wealth, today's developed nations could extend a helping hand to all who wish to use the materials they have invested in - their educations and skills sets. Who wants to get back to the future?
Problems With Piketty
Even as his latest book has just been published in the U.S. (March 10th), I already have problems with Piketty's portrayal of human capital as not truly representative of wealth - something which is probably no surprise to my readers. The paradox is all the greater, in that he emphasizes the spread of knowledge as being more important than free trade, for the evolution of populations. Why would someone who believes the spread of knowledge is more important than free trade, insist just the same that it is only the assets and product producing capacities of free trade that represent capital? Hmmm, more homes and factories, please - I suppose. Why even bother with GDP measures if they don't really count?
At a time when dialogue is needed to move forward the ideas of what wealth represents, I'm not convinced this book is going to provide the kind of discussion that can take nations into more positive directions. The only reason that knowledge use time increments cannot be counted as capital in the present, is that people are not free to use them at such, in the multiple economic contexts where they are sorely needed at all levels. How could nations with low amounts of savings for investment overcome the problems of extractive governments or firms, otherwise?
Clearly I'm going to have to purchase his book and read the whole thing, before I really know how to respond to his portrayal of wealth capacities at length. But respond I will, and to no small degree. Thankfully I was able to get the Economist link this time, in which Ryan Avent provides descriptions of the first chapter of Thomas Piketty's "Capital in the Twenty-First Century".
It is vitally important to get past dialogue which - if given the chance - is going to get bogged down in needless bickering over inequalities. So long as knowledge use is treated as a hidden form of wealth that can be appropriated such as minerals or valuable destinations, we're going to be stuck with the worst inequality of all. That is, a static pie of wealth that everyone continues to fight over, instead of the knowledge of the 20th century which everyone had fully expected to grow and flourish in the 21st. I will continue to look at a number of aspects regarding this problem in following posts.
At a time when dialogue is needed to move forward the ideas of what wealth represents, I'm not convinced this book is going to provide the kind of discussion that can take nations into more positive directions. The only reason that knowledge use time increments cannot be counted as capital in the present, is that people are not free to use them at such, in the multiple economic contexts where they are sorely needed at all levels. How could nations with low amounts of savings for investment overcome the problems of extractive governments or firms, otherwise?
Clearly I'm going to have to purchase his book and read the whole thing, before I really know how to respond to his portrayal of wealth capacities at length. But respond I will, and to no small degree. Thankfully I was able to get the Economist link this time, in which Ryan Avent provides descriptions of the first chapter of Thomas Piketty's "Capital in the Twenty-First Century".
It is vitally important to get past dialogue which - if given the chance - is going to get bogged down in needless bickering over inequalities. So long as knowledge use is treated as a hidden form of wealth that can be appropriated such as minerals or valuable destinations, we're going to be stuck with the worst inequality of all. That is, a static pie of wealth that everyone continues to fight over, instead of the knowledge of the 20th century which everyone had fully expected to grow and flourish in the 21st. I will continue to look at a number of aspects regarding this problem in following posts.
Thursday, March 13, 2014
What Purpose Knowledge Use?
...That is, in contrast to the act of acquiring knowledge. Knowledge matters most, when it exists as recognizable means to multiple ends, both experiential and practical. However, those are the environments that people need to consciously create for one another when they do not exist. This is sort of a back to basics post for me. Thinking about resets (yesterday's post) made me a bit weary, but I'll get over it! So, I'll use this space as an opportunity of sorts to reintroduce myself.
Some readers may be curious: why all the focus on knowledge use, anyway? What's the big deal with that? Especially from someone who did not finish their college degree, and never had the time earlier on to fully apply the logic of knowledge in their work...I know, it shows. Sorry. Some of the dots I "connect" as a consequence are nothing short of unusual, to others. I've spent far too much time over the years, answering my own sets of questions and musings.
Knowledge of all kinds can be most helpful in one's life. Just the same, without the ability to contrast, compare and utilize knowledge with others; knowledge gain can sometimes turn into a consumption activity of limited benefit. When no means exists for knowledge share and exchange - economic or otherwise - it's easy to lose perspective as to one's intellectual identity. No matter how many books one reads, or classes one takes: if the topic is not being actively discussed in one's environment, individual logic (knowledge applicability) as to what one attempts to learn, still exists as though an unused muscle.
After all - if little about what we study is relevant at home, among friends and acquaintances, or in the workplace; what we learn may not have a chance to matter beyond our own energy and commitment. We think of this as a problem mostly in relatively undeveloped countries, but it still poses a problem in numerous areas of developed countries as well. Only consider the simplest example of taking a class in a foreign language, which turns out to be a book, tests and lectures. Without discussion in the language itself, not much may be recalled afterward, beyond certain words and easy to remember phrases.
Much reading on my part was of a solitary nature, in that there wasn't always the chance to discuss those books with others. Of course, like some avid readers, I can find the pace of lectures somewhat slow in comparison to reading speed. And yet I tend to be slower than normal in discussion, for it takes extra time to craft a thoughtful response. That also slows me down in internet discussions. Still, I've enjoyed keeping up with commentary in recent years, because economics blogs with added dialogue can be like books come to life. Some classes over the years didn't even provide that experiential element. The input of multiple perspectives at the same time can make a difference, thus it's something that any digital education of the future needs to consider.
Knowledge use in action, frequently requires more logic - hence concentration - than reading a book. In recent years I've learned to think of logic as a muscle that everyone needs to be able to use. How could life be otherwise? And yet too much of the workplace sorted itself as though some individuals would not need to think at all, to get through life. Hopefully that can change. At the very least, logic can still be developed even as one gets older and gains a chance to put it to use. In a sense, active knowledge use is like an Olympic sport. For the real competition involves overcoming one's own limited perspectives, in the company of others.
Some readers may be curious: why all the focus on knowledge use, anyway? What's the big deal with that? Especially from someone who did not finish their college degree, and never had the time earlier on to fully apply the logic of knowledge in their work...I know, it shows. Sorry. Some of the dots I "connect" as a consequence are nothing short of unusual, to others. I've spent far too much time over the years, answering my own sets of questions and musings.
Knowledge of all kinds can be most helpful in one's life. Just the same, without the ability to contrast, compare and utilize knowledge with others; knowledge gain can sometimes turn into a consumption activity of limited benefit. When no means exists for knowledge share and exchange - economic or otherwise - it's easy to lose perspective as to one's intellectual identity. No matter how many books one reads, or classes one takes: if the topic is not being actively discussed in one's environment, individual logic (knowledge applicability) as to what one attempts to learn, still exists as though an unused muscle.
After all - if little about what we study is relevant at home, among friends and acquaintances, or in the workplace; what we learn may not have a chance to matter beyond our own energy and commitment. We think of this as a problem mostly in relatively undeveloped countries, but it still poses a problem in numerous areas of developed countries as well. Only consider the simplest example of taking a class in a foreign language, which turns out to be a book, tests and lectures. Without discussion in the language itself, not much may be recalled afterward, beyond certain words and easy to remember phrases.
Much reading on my part was of a solitary nature, in that there wasn't always the chance to discuss those books with others. Of course, like some avid readers, I can find the pace of lectures somewhat slow in comparison to reading speed. And yet I tend to be slower than normal in discussion, for it takes extra time to craft a thoughtful response. That also slows me down in internet discussions. Still, I've enjoyed keeping up with commentary in recent years, because economics blogs with added dialogue can be like books come to life. Some classes over the years didn't even provide that experiential element. The input of multiple perspectives at the same time can make a difference, thus it's something that any digital education of the future needs to consider.
Knowledge use in action, frequently requires more logic - hence concentration - than reading a book. In recent years I've learned to think of logic as a muscle that everyone needs to be able to use. How could life be otherwise? And yet too much of the workplace sorted itself as though some individuals would not need to think at all, to get through life. Hopefully that can change. At the very least, logic can still be developed even as one gets older and gains a chance to put it to use. In a sense, active knowledge use is like an Olympic sport. For the real competition involves overcoming one's own limited perspectives, in the company of others.
Wednesday, March 12, 2014
"Dream On"
...and some dreams can seem a bit "glamorous" for a while, at least until they're not, yet again. A word of caution for any unprepared readers: this is a rather "detached" and tongue in cheek post.
There's been a subtle shift of late, which took me a while to put into perspective. It almost feels like a reset, where one senses some factions remaining in place or moving ahead, while other factions revert back to the starting gate. Hopefully the latest round of "beginners" have still got plenty of energy for the race. Aahhh, now I know what it is...that's the sound of recently deflated unemployment concepts getting swept under the rug. It must not take long, historically, for such concepts to lose their practicality. What is it with the idea that everyone needs to be economically engaged, anyway? Or that it matters one way or the other whether statistics get it right, or don't?
What was all that hoopla about unemployment? Especially given the fact that even the president hardly noticed. After all, the real drivers now are to enact policies that increase unemployment, and many people are in full agreement about them. Prisons have always got room for a couple more unemployed, I suppose. And that's good money for certain Republican investments...Or just allow the Democrats to claim the unemployed as "victims" of the system - what harm is there in that, minimum wage hikes or no?
And yet it seemed as though something significant might result from economic access concepts, hence lots of dialogue and lively imagination ensued in recent years. All were reminded how vital the concept of unemployment "really is" as a base for economic thought, for instance. And politicians could be quick to take up the "cause", if it might sell their actually important messages. A few are still picking up broken bits of unemployment concepts and examining them, to see if any remaining political benefit is left. But the shine is already off the recent "belle of the ball", plastic surgery or no. Now, the hour is well past midnight (recovery), unemployment has mostly gone back wherever it came from, and the main dialogue fest is over.
For a while, unemployment concepts became the recipients of substantial "makeovers". Once picked up and dusted off, they "cleaned up" quite nicely and caught quite a bit of attention. One might occasionally find them being wined and dined in some of the highest places and the "right spots". Indeed, economic access concepts in general received a significant breath of life, or "wind under their wings" if you will, so long as people agreed that substantial output gaps remained. Therefore, quite an audience congregated, to see what might come out of the shake up. Was a real economic housecleaning in order? Inquiring minds wanted to know, and the ensuing get togethers had far more than the "usual suspects" in attendance.
Of course all the extra energy gradually gave way, like a slow tire leak. At least the moral equivalents provided some leverage for other goals. Supposedly, we are long past the point when it should be necessary to feign outrage, or express real outrage for that matter, as to the suffering which created the initial drivers of emotion. Or, this is the point in time when we're all moving on, if we know "what's good" for us. And yet a few onlookers had naively expected that somebody, somewhere, somehow, would actually do something. Were they disappointed when nothing really changed, and normal life routines finally intervened?
The lead up, the social engagement, the attentive focus of a larger percentage of the population: all seemingly the elements that would mean a new level of focused efforts after the storm passed. But the waters returned to calm, and it didn't happen. Just as Keynes worried about economic storms finally "blowing over" and - sure enough - no one really being the better for it. Nothing changed this time either, and one can almost feel the sigh of relief from numerous VIPs, that it didn't. Why did anyone bother with unemployment concepts in the first place? Better just to have left them in the gutter.
"Dream on, dream until your dream come true."
Clarification is in order, as to the intent of this post. It wasn't written from a place of "hot anger", and neither was Bonnie Carr's recent reaction which she explains in a related post. Rather, I'm experiencing some consternation that a lot of time which should have led to productive action, fizzled out unexpectedly. At least, unexpectedly to me. Some cynics would say, "what did you expect?"
At the very least, I would have expected concerted efforts with the larger ramifications of unemployment, to continue. Because the reset seems to imply a cancellation of carefully thought through arguments as to what might be done in years ahead. Who is really up for another restart? After all it's just "grunt work" left now, right? Even as macroeconomists are washing their hands of the matter, microeconomists should be ready to accept the passed torch...oh wait, what microeconomist should have to sacrifice a far more lucrative career for that?? Is this going to be like the last time when everyone tired so much of the the mundane and boring matter of economic access, that a U.S president ended up imposing a New Deal? Let's hope not.
There's been a subtle shift of late, which took me a while to put into perspective. It almost feels like a reset, where one senses some factions remaining in place or moving ahead, while other factions revert back to the starting gate. Hopefully the latest round of "beginners" have still got plenty of energy for the race. Aahhh, now I know what it is...that's the sound of recently deflated unemployment concepts getting swept under the rug. It must not take long, historically, for such concepts to lose their practicality. What is it with the idea that everyone needs to be economically engaged, anyway? Or that it matters one way or the other whether statistics get it right, or don't?
What was all that hoopla about unemployment? Especially given the fact that even the president hardly noticed. After all, the real drivers now are to enact policies that increase unemployment, and many people are in full agreement about them. Prisons have always got room for a couple more unemployed, I suppose. And that's good money for certain Republican investments...Or just allow the Democrats to claim the unemployed as "victims" of the system - what harm is there in that, minimum wage hikes or no?
And yet it seemed as though something significant might result from economic access concepts, hence lots of dialogue and lively imagination ensued in recent years. All were reminded how vital the concept of unemployment "really is" as a base for economic thought, for instance. And politicians could be quick to take up the "cause", if it might sell their actually important messages. A few are still picking up broken bits of unemployment concepts and examining them, to see if any remaining political benefit is left. But the shine is already off the recent "belle of the ball", plastic surgery or no. Now, the hour is well past midnight (recovery), unemployment has mostly gone back wherever it came from, and the main dialogue fest is over.
For a while, unemployment concepts became the recipients of substantial "makeovers". Once picked up and dusted off, they "cleaned up" quite nicely and caught quite a bit of attention. One might occasionally find them being wined and dined in some of the highest places and the "right spots". Indeed, economic access concepts in general received a significant breath of life, or "wind under their wings" if you will, so long as people agreed that substantial output gaps remained. Therefore, quite an audience congregated, to see what might come out of the shake up. Was a real economic housecleaning in order? Inquiring minds wanted to know, and the ensuing get togethers had far more than the "usual suspects" in attendance.
Of course all the extra energy gradually gave way, like a slow tire leak. At least the moral equivalents provided some leverage for other goals. Supposedly, we are long past the point when it should be necessary to feign outrage, or express real outrage for that matter, as to the suffering which created the initial drivers of emotion. Or, this is the point in time when we're all moving on, if we know "what's good" for us. And yet a few onlookers had naively expected that somebody, somewhere, somehow, would actually do something. Were they disappointed when nothing really changed, and normal life routines finally intervened?
The lead up, the social engagement, the attentive focus of a larger percentage of the population: all seemingly the elements that would mean a new level of focused efforts after the storm passed. But the waters returned to calm, and it didn't happen. Just as Keynes worried about economic storms finally "blowing over" and - sure enough - no one really being the better for it. Nothing changed this time either, and one can almost feel the sigh of relief from numerous VIPs, that it didn't. Why did anyone bother with unemployment concepts in the first place? Better just to have left them in the gutter.
"Dream on, dream until your dream come true."
Clarification is in order, as to the intent of this post. It wasn't written from a place of "hot anger", and neither was Bonnie Carr's recent reaction which she explains in a related post. Rather, I'm experiencing some consternation that a lot of time which should have led to productive action, fizzled out unexpectedly. At least, unexpectedly to me. Some cynics would say, "what did you expect?"
At the very least, I would have expected concerted efforts with the larger ramifications of unemployment, to continue. Because the reset seems to imply a cancellation of carefully thought through arguments as to what might be done in years ahead. Who is really up for another restart? After all it's just "grunt work" left now, right? Even as macroeconomists are washing their hands of the matter, microeconomists should be ready to accept the passed torch...oh wait, what microeconomist should have to sacrifice a far more lucrative career for that?? Is this going to be like the last time when everyone tired so much of the the mundane and boring matter of economic access, that a U.S president ended up imposing a New Deal? Let's hope not.
Midweek Market Monetarist Links and Summaries - 3/12/14
Has Jeffrey Frankels lost faith in a nominal target? (Marcus Nunes)
http://thefaintofheart.wordpress.com/2014/03/05/academics-are-funny-they-do-turnarounds-all-the-time/
How to "correct course" with inflation as a guide?
http://thefaintofheart.wordpress.com/2014/03/06/its-really-a-sing-dance-among-fomc-members/
Too many missed connections: http://thefaintofheart.wordpress.com/2014/03/08/macroeconomic-theory-is-not-the-best-analytical-framework-for-making-monetary-policy-decisions/
A useful thought experiment on Nick Rowe's part:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/coordination-and-the-demand-for-money.html
"Investment in machinery is a hybrid between storing wheat and buying land" http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/macro-savings-vehicles.html
Post title is an apt description of "too useless a task" (Scott Sumner)
When the storm is long past, the five year-five year forward TIPS spread will show 2% inflation
The Fed and monetary offset...do they or don't they?
Watch what they predict, not what they say
What accounts for the "Texas miracle"?
No Texas oil multiplier (dedicated to Adam Gurri and Noah Smith)
Was the 5048 closing in March 2000 "utterly insane"?
5048.62: All judgments are provisional
Some Econlog posts from Scott Sumner:
http://econlog.econlib.org/archives/2014/03/unemployment_wa.html
http://econlog.econlib.org/archives/2014/03/krugman_slides.html
http://econlog.econlib.org/archives/2014/03/the_old_rules_s.html
http://econlog.econlib.org/archives/2014/03/economics_must.html
Unfortunately, monetary policy is only one of their worries right now (Lars Christensen)
http://marketmonetarist.com/2014/03/07/recession-time-for-russia-the-ultra-wonkish-version/
and, http://marketmonetarist.com/2014/03/10/this-is-how-worried-dr-copper-is-about-the-chinese-economy-the-one-graph-version/
Justin Irving's response to the second link: YOY inflation at or below 2% does strange things...
http://economicsophisms.com/2014/03/10/inflation-targeting-makes-the-world-malthusian/
David Beckworth suggests the gold standard was not as definitive as one might think:
http://macromarketmusings.blogspot.com/2014/03/the-gold-standard-was-accident-of.html
By no means the first time Stephen Williamson has had a different take...(David Glasner)
http://uneasymoney.com/2014/03/06/stephen-williamson-defends-the-fomc/
House prices are only a price index (Britmouse)
http://uneconomical.wordpress.com/2014/03/12/if-house-prices-are-the-key-to-full-employment/
Evan Soltas explains why NGDP is better than quantitative easing:
http://esoltas.blogspot.com/2014/03/exit-easing-enter-ngdp.html
Evan looks at some of the arguments regarding remaining unemployment:
http://esoltas.blogspot.com/2014/03/trading-in-your-feathers.html
Like Matt Waters, I have a weaker prior re possible market failures than many economists do. His first two posts, here and here.
UI may be over but there are plenty of remaining issues that can't just be swept under the rug (Bonnie Carr)
http://dajeeps.wordpress.com/2014/03/12/a-non-technical-post-about-the-north-carolina-ui-experiment/
"dry and formulaic" huh...eyow. http://blogs.wsj.com/economics/2014/03/11/bank-of-england-destroys-tapes-of-meetings-after-minutes-published/?mod=WSJBlog
Also of interest:
Great article from Tim Harford on systems tracking:
http://www.ft.com/intl/cms/s/2/5f2d1334-a4ca-11e3-9313-00144feab7de.html#axzz2vOWwOXtX
http://thefaintofheart.wordpress.com/2014/03/05/academics-are-funny-they-do-turnarounds-all-the-time/
How to "correct course" with inflation as a guide?
http://thefaintofheart.wordpress.com/2014/03/06/its-really-a-sing-dance-among-fomc-members/
Too many missed connections: http://thefaintofheart.wordpress.com/2014/03/08/macroeconomic-theory-is-not-the-best-analytical-framework-for-making-monetary-policy-decisions/
A useful thought experiment on Nick Rowe's part:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/coordination-and-the-demand-for-money.html
"Investment in machinery is a hybrid between storing wheat and buying land" http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/macro-savings-vehicles.html
Post title is an apt description of "too useless a task" (Scott Sumner)
When the storm is long past, the five year-five year forward TIPS spread will show 2% inflation
The Fed and monetary offset...do they or don't they?
Watch what they predict, not what they say
What accounts for the "Texas miracle"?
No Texas oil multiplier (dedicated to Adam Gurri and Noah Smith)
Was the 5048 closing in March 2000 "utterly insane"?
5048.62: All judgments are provisional
Some Econlog posts from Scott Sumner:
http://econlog.econlib.org/archives/2014/03/unemployment_wa.html
http://econlog.econlib.org/archives/2014/03/krugman_slides.html
http://econlog.econlib.org/archives/2014/03/the_old_rules_s.html
http://econlog.econlib.org/archives/2014/03/economics_must.html
Unfortunately, monetary policy is only one of their worries right now (Lars Christensen)
http://marketmonetarist.com/2014/03/07/recession-time-for-russia-the-ultra-wonkish-version/
and, http://marketmonetarist.com/2014/03/10/this-is-how-worried-dr-copper-is-about-the-chinese-economy-the-one-graph-version/
Justin Irving's response to the second link: YOY inflation at or below 2% does strange things...
http://economicsophisms.com/2014/03/10/inflation-targeting-makes-the-world-malthusian/
David Beckworth suggests the gold standard was not as definitive as one might think:
http://macromarketmusings.blogspot.com/2014/03/the-gold-standard-was-accident-of.html
By no means the first time Stephen Williamson has had a different take...(David Glasner)
http://uneasymoney.com/2014/03/06/stephen-williamson-defends-the-fomc/
House prices are only a price index (Britmouse)
http://uneconomical.wordpress.com/2014/03/12/if-house-prices-are-the-key-to-full-employment/
Evan Soltas explains why NGDP is better than quantitative easing:
http://esoltas.blogspot.com/2014/03/exit-easing-enter-ngdp.html
Evan looks at some of the arguments regarding remaining unemployment:
http://esoltas.blogspot.com/2014/03/trading-in-your-feathers.html
Like Matt Waters, I have a weaker prior re possible market failures than many economists do. His first two posts, here and here.
UI may be over but there are plenty of remaining issues that can't just be swept under the rug (Bonnie Carr)
http://dajeeps.wordpress.com/2014/03/12/a-non-technical-post-about-the-north-carolina-ui-experiment/
"dry and formulaic" huh...eyow. http://blogs.wsj.com/economics/2014/03/11/bank-of-england-destroys-tapes-of-meetings-after-minutes-published/?mod=WSJBlog
Also of interest:
Great article from Tim Harford on systems tracking:
http://www.ft.com/intl/cms/s/2/5f2d1334-a4ca-11e3-9313-00144feab7de.html#axzz2vOWwOXtX
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