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Finance, coronavirus, the economy, etc (Read 44592 times)

petejh

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Currently reading through a blog called the The Money Enigma. Interesting to read his theories. Bit above my head! But would be interested in others' views of his theories on price determination, value of fiat money, and market valuation being a function of 2 sets of of supply/demand. His theory on fiat money's value: ''fiat money only has value (is an asset to its holder) because it is a liability of society. More specifically, fiat money is a long-duration, special-form equity instrument issued by society and represents a proportional claim on the future output of society.

http://www.themoneyenigma.com/
« Last Edit: June 20, 2020, 10:56:07 am by petejh »

seankenny

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Initial thoughts:

It's not very formal.

His attempts at rewriting basic micro theory to fit his macro theory are bollocks.

Isn't he basically just a monetarist?


petejh

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Well it is a blog, not a paper. I did find the grammatical error in the first sentence on the home page off-putting though!

Not particularity interested in which economic ideology he is or isn't (although from my limited understanding it looks like he thinks differently from Monetary theory on inflation, but being an econ punter I could well be wrong).

I'm more interested in his theory of the value of money, and fiat money. In the 'Theory of Money' section the author gives the clearest explanation I've read of how the value of paper money (or any money) is derived - well, up to halfway through his explanation of 'proportional claim of future output', then he lost me so I need to go back. It raises various questions in my mind, around time, growth, and future output. And understanding the value (or potential lack of value) of money has perhaps never been more important than currently, as JB alludes to.
« Last Edit: June 20, 2020, 11:32:02 pm by petejh »

seankenny

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It is a blog and not a paper, but if you're going to proclaim you've come up with a new theory of macroeconomics I'd expect to see something that looks like macro theory! At least, say, some kind of graph showing how various variables interact under his theory, and then maybe the actual data showing that relationship to see if there's some kind of similarity. This is the kind of basic thing you see in an undergrad econ textbook... Does this theory make some predictions that we can test?

The "universal theory of price determination" is no such thing. It's just two supply and demand graphs drawn next to each other. He writes things like "There is almost universal agreement in economics that the price of a good is determined by supply and demand for that good." I mean, the guy has a degree in economics so why he is peddling you this rubbish when he knows perfectly well about monopolistic markets, informational asymmetry, etc, I don't know.

You may declare loftily that you are not interested in "economic ideology" but are getting excited about a "new" thing that seems to have some similarities with something that was invented some time ago... let me thrill you with news of a crag in Derbyshire that is FOUR MILES long! You must go sometime.

This whole business about money being "a proportional claim on the future output of society" strikes me as silly. If the government announced today it was banning five pound notes, then no one would be able to exchange their notes for anything, so you'd have no claim on any output. There was a mention (can't find the exact wording) of something that looked almost exactly like seignorage, ie using inflation as a tax to fund government expenditure, but this forms a very small part of developed economies' taxation (maybe a couple of percent, going by memory).

The whole point of money is that it denominates prices for labour, capital, consumption goods, etc, so we can easily work out how much of one thing we want to exchange for another. Macro monetary models should connect nominal changes, ie inflation, with those real quantities, to show how the decisions of economic agents facing those situations, with views about what is going to happen in the near future, feedback into the the wider economy. Those models produce equations which look nothing like his, in fact he says his just look like an asset-pricing model so I'm guessing he's levered something he knows about to do the work in an area he's much less solid on. This may strike you as unneccesarily technical, but if you're going to present a new version on an academic discipline maybe either use the usual tools or invent some new ones.

I'm sorry to piss on your bonfire, and of course your time is yours to waste as you see fit, but there's literally tons of great stuff out there that is way more worthwhile. Loads of good economists write blogs that are worth reading. I thought this was cool, six seminal econ papers:
https://www.economist.com/sites/default/files/econbriefs.pdf

Or how about Core Economics, which is basically an intro textbook that's really easy to read and has lots of real world applications:
https://www.core-econ.org/


petejh

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Quote
You may declare loftily..
No, Iím really not declaring anything loftily?

Quote
but you get excited about..
..err... no Iím really not!?

Tell you what, you could have said what you said without coming across as an obnoxious cunt.

I was interested in otherís opinions on something I make no claim to:
a) know very much about.
or
b) be making any claims or points about.

but your shitty tone makes me totally uninterested.

Edit: typos
« Last Edit: June 21, 2020, 08:46:25 pm by petejh »

seankenny

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 Me: This theory is quite like another theory...

You: Not particularity interested in which economic ideology he is or isn't

For someone who claims not to know anything, thatís quite a sweeping judgement. If you know your guy is a bit of a monetarist it gives you a handle on where he sits on issues, maybe where he differs, whatís new, etc. Youíve got a way of putting it in some kind of context.

Or maybe not.

What is tiresome is that there is, as I said, just tons of great stuff out there, for free, written by amazingly knowledgeable people. Even Wikipedia is actually pretty good. So why be attracted to the kooky blog? Itís just catnip to some guys, that ďIím gonna turn everything on itís head, answer the questions the experts canít,Ē that whole spiel. Iím afraid I find it on the same spectrum as anti-vaxxers, probably harmless but you never know, look at MMT. So that perhaps explains my tone.


Johnny Brown

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Funny this, I did think Sean your first response was a bit dismissive and was about to point how annoying it is when someone just says bullshit and that does seem to be a habit of yours tbf. But you'd already posted a very long and informative follow up post - duly wadded. But Pete seems to find offence in that anyway. Ah well, chill out people, pulling the c word is never going to advance a debate...

seankenny

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Yes perhaps I was initially a bit dismissive so maybe should have waited.

Iíve been thinking about the strength of my reaction to this sort of thing. Itís 2020, millions of Americans and British people literally do not believe coronavirus exists. We have a crisis of knowledge and understanding that is going unchecked and is hollowing out our societies. If some blogger writes ďIíve got one over the expertsĒ we simply do not have the luxury of indulging this nonsense. Spreading nonsense is just dangerous.

Clearly this is not an Andrew Wakefield situation, but you never know when crank ideas are going to catch on and what damage they could cause. And the environment of ďhereís the real truthĒ is damaging.

I have some half formed idea that it comes from a lot of menís (itís quite a guy thing, I think, tho Iím sure there are plenty of anti-vaxxers on mumsnet) need for esoteric and privileged knowledge. They should be joining some mystery cult or other, or the
Freemasons, but instead they end up believing Bill Gates wants to put a chip in their head.

danm

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Does this mean I can take my tinfoil hat off now then?

Offwidth

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Martin Lewis profile from the Guardian including his typical campaigning gusto to close the gaps in the C19 government financial support.

https://www.theguardian.com/money/2020/jun/22/martin-lewis-having-money-is-not-happiness-but-not-having-money-destroys-lives

https://www.moneysavingexpert.com/#coronavirus

Johnny Brown

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Quote
I have some half formed idea that it comes from a lot of menís (itís quite a guy thing, I think, tho Iím sure there are plenty of anti-vaxxers on mumsnet) need for esoteric and privileged knowledge.

Yeah, that's an interesting point. The number of flat-earthers I come across at work is amazing, seems particularly prevalent offshore. Which is the ironic, given the time they spend staring at the horizon.

Among 'older' (non-millenials) people, I think a big part of the problem is due to the transition from the curated, edited and accountable news feed of old compared to the free-for-all fire hose of modernity. A lot of folk seem to assume the new, like the old, can be taken at face value. There is a educational gulf to bridge there but it's also a battle against engagement, gumption and ultimately intelligence which is being exacerbated by increasing state-sponsored and social media-enabled disinformation.

But at a deeper level I wonder if it isn't being driven by the failure of the modern civilisation - and late capitalism in particular - to deliver us an attractive vision of the future. Instead we are faced with a global tragedy of the commons with those in charge seemingly unable to direct either the government, businesses or people in a more sustainable direction. And that has led a lot of people to genuinely have had enough of experts.

From my point of view - and the reason for this thread - I'm interested in what aspects of modernity are to blame for the economy's ongoing and seemingly unstoppable destruction of the environment and our future. Despite the aforementioned commons issue I'm not convinced basic human nature is to blame. I do have a strong hunch that the de-facto adoption of money as a universal value system, and the associated belief in markets, is at the heart of it.

We are all so invested in money's legitimacy that pointing out its illusory nature has become something of an revolutionary act. No surprise, then, that people are keen to theorise that it's value rests on more than imagination.

duncan

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Quote
I have some half formed idea that it comes from a lot of menís (itís quite a guy thing, I think, tho Iím sure there are plenty of anti-vaxxers on mumsnet) need for esoteric and privileged knowledge.

Yeah, that's an interesting point. The number of flat-earthers I come across at work is amazing, seems particularly prevalent offshore. Which is the ironic, given the time they spend staring at the horizon.

Among 'older' (non-millenials) people, I think a big part of the problem is due to the transition from the curated, edited and accountable news feed of old compared to the free-for-all fire hose of modernity. A lot of folk seem to assume the new, like the old, can be taken at face value. There is a educational gulf to bridge there but it's also a battle against engagement, gumption and ultimately intelligence which is being exacerbated by increasing state-sponsored and social media-enabled disinformation.


To this add:

- Alpha climber whose barking views (and attempts at creativity) are tolerated by his peers due to past ability to climb E8 / 9a / A5.
- Strong streak of the anti-establishment, as he's from the era when climbing was the sport of rebellious white men .
- Lives in relative physical isolation with a limited and uncritical social circle, compensates by spending an unhealthy amount of time in the wilder reaches of the internet.











Johnny Brown

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- Lives in relative physical isolation with a limited and uncritical social circle, compensates by spending an unhealthy amount of time in the wilder reaches of the internet.

Relative is a pivotal word here, but this is the general direction of society whether you are in your perma-culture smallholding in mid-Wales or a terrace in Meersbrook.

mrjonathanr

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I have some half formed idea that it comes from a lot of menís (itís quite a guy thing, I think, tho Iím sure there are plenty of anti-vaxxers on mumsnet) need for esoteric and privileged knowledge.

Yeah, that's an interesting point. The number of flat-earthers I come across at work is amazing, seems particularly prevalent offshore.

Do you mean that literally??

Johnny Brown

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Yes.

Johnny Brown

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To expand on that last one - there's a fairly well trodden path of conspiracies most of them follow. Once you've swallowed the story that 9.11 was an inside job, it's a short step to knowing the moon-landings were faked and thence the earth is flat. What is interesting is that it's often the more interesting, inquisitive guys rather than the mouth breathers. Their interest is piqued by the little discrepancies, but they fail to spot the giant non-sequiturs in the bigger picture. There is little point in debating with them as they are convinced you are the idiot happily chewing the blue pill while only they had the courage to swallow the red. (That stance is likewise my main beef with Andy K's output.)

duncan

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- Lives in relative physical isolation with a limited and uncritical social circle, compensates by spending an unhealthy amount of time in the wilder reaches of the internet.

Relative is a pivotal word here, but this is the general direction of society whether you are in your perma-culture smallholding in mid-Wales or a terrace in Meersbrook.

Good point. I don't know Sheffield well enough to know if there is a hint here but it reminds me of an encounter I had with a minor but persistent Peak activist, cruciverbalist, and Japanophile. He's also intelligent but with tunnel vision. In c.1980 he was selling off all his gear as he was 'giving up climbing'. I took advantage of this and collected my purchase from his flat which was painted entirely black for unspecified health benefits. He is now a strong proponent of the links between 5G and covid-19.

Johnny Brown

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 :lol: No, no hint intended there it's just the new Nether Edge.

mrjonathanr

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Yes.
:o

it's a short step to knowing the moon-landings were faked and thence the earth is flat

 A small step for a man maybe, but..

SA Chris

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Late Middle Aged delusions of grandeur maybe? A realisation that your life is not amounting to as much as you hoped, and you therefore start to look for a deeper meaning somehow, or start to think there is more to everything that there appears to be, and you are the only one (or one of the few) who knows the TRUTH.

You either start to blog about the deep value / meaning of a relatively trivial activity (often surfing, astronomy, photography, road biking or running) and mistake the minor endorphin hit for visions of enlightenment.

Oldmanmatt

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Late Middle Aged delusions of grandeur maybe? A realisation that your life is not amounting to as much as you hoped, and you therefore start to look for a deeper meaning somehow, or start to think there is more to everything that there appears to be, and you are the only one (or one of the few) who knows the TRUTH.

You either start to blog about the deep value / meaning of a relatively trivial activity (often surfing, astronomy, photography, road biking or running) and mistake the minor endorphin hit for visions of enlightenment.

Hmmm...

Yeah, I can see that.

Iím going down that route, but I feel compelled to start a new religion, rather than a blog.

What do you reckon to the worship of Extra Mature Cheddar on toast? Slightly overdone?

I feel possessed by the holy spirit, just thinking about it.

SA Chris

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That's the other one. Faced with their own mortality they find / found a religion, or get all spiritual, go vegan or start doing yoga.

Davo

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thought this was cool, six seminal econ papers:
https://www.economist.com/sites/default/files/econbriefs.pdf


Thanks for the link. Just read those and they were all really interesting

Fultonius

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But at a deeper level I wonder if it isn't being driven by the failure of the modern civilisation - and late capitalism in particular - to deliver us an attractive vision of the future. Instead we are faced with a global tragedy of the commons with those in charge seemingly unable to direct either the government, businesses or people in a more sustainable direction. And that has led a lot of people to genuinely have had enough of experts.


This ^^

And I'm not Millennial!  (not sure what I am, generation Y?) the offspring of the baby-boomer generation who have made the rules, played the rules and are still desperately trying the keep a grip of the rules.  I can't help but feel that our generation understands the fuckups that have been set in the stone of modern society, but we're too ingrained in the system, and too powerless against the structures, hierarchies and inertia of the machine to do anything about it. Oh, and we have endless instabangs and youtubes to distract us whenever we start questioning things. And we're scattergunned by the million potential truths.

Johnny Brown

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I thought this was a fascinating lecture on the way demographics have created the current generational divide.



In the context of growing conspiracies and blaming the self-serving rich etc, it's useful to see the wide-ranging effects that can be created by a very simple input variable (a large cohort - the boomers) on a complex system. Willetts is a Tory life peer, but you wouldn't know it from his analysis or conclusions, and I daresay he would have no place in today's party. Also worth watching the q & a which largely consists of him effortlessly batting aside boomers' attempts to blame the young.

 

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