What’s The Economy For?

The common practice of adjusting interest rates so as to change stimulus makes no sense. The interest is also affected by the amount authorities borrows. Unfortunately there is no general agreement concerning how much government should borrow. Milton Friedman and Warren Mosler argued that governments should borrow nothing at all, though Friedman thought there is a complete case for borrowing in war-time.

I argued similarly here. An alternative solution and popular idea is that authorities should borrow to fund infrastructure. But a flaw in that idea is that the whole education budget is investment of a sort. So should all education spending be funded via borrowing than via tax rather? You will find no easy answers to that, though I argued here a few years ago that (in line with Friedman and Mosler thinking) government borrowing makes little sense.

So in the absence of any totally clear response to the question concerning how much authorities should borrow, let’s presume the optimum amount to borrow is X% of GDP. Now let’s suppose an economy requires stimulus. One way of imparting stimulus is to really have the state print money and spend it simply, and/or cut taxes.

Note that that does not alter all these X%. At least there is no obvious reason X should change due to some stimulus. Another way of imparting stimulus is to cut interest rates, and that’s done by having the central bank printing money and buy up federal government bonds. But that reduces the amount of authorities borrowing to below X%. I.e. the total amount of government borrowing is then less than its optimum or “GDP maximising” level. Provisional bottom line: stimulus should always be imparted essentially by getting the state printing money and spend it, and/or cut taxes.

What’s the economy for? That is, given a need for stimulus (i.e. assuming the economy is working at significantly less than capacity) the types of spending that require boosting based on the latter “basic purpose” idea, is home spending and open public spending. And households and the government bodies responsible for public spending can, if they see fit, spend a few of that extra money on extra interest to fund more borrowing.

• IO: Productivity, Innovation & Technology eJournal
• Claim Adjuster
• The social safety net was more powerful, and work was much more secure
• 110% — 11 a few months
• To specifically create cost savings for the future
• $300,000 building value / 27.5 = $10,909 annual allowable depreciation deduction
• Dividend recapitalizations

The results may amaze some. The main element advantage comes from managed futures and commodities even though both are riskier property as assessed by volatility. The diversification reap the benefits of alternative investments will not result from long/short equities but from the strategies that are fundamentally different. Investors should not be afraid of volatility if the there is more benefit from lower correlation.

The chapters and the material in these chapters are uneven, bordering to the somewhat disorganized often, and occasionally challenging to follow a reasonable movement in the exposition. Granted, the mathematics are there and they’re correct for the most time (some steps in chapter 12 only make sense when you switch across the notation, which may be annoying).

The section on gas marketplaces is somewhat confusing and the treating electricity markets is very unequal. The two better chapters in the second fifty percent of the reserve – on metals and essential oil – aren’t written by prof Geman. Is this a good book? Notwithstanding the nagging problems, it is a useful publication as as the audience and user identifies its restrictions long.