tag:blogger.com,1999:blog-8764541874043694159.post7453836830590611653..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: An Alternative Brexit PolemicFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger21125tag:blogger.com,1999:blog-8764541874043694159.post-12273806108368244732018-04-16T14:12:33.915+01:002018-04-16T14:12:33.915+01:00This is the error:
In "The General Theory of...This is the error:<br /><br />In "The General Theory of Employment, Interest and Money", John Maynard Keynes’ opus ", pg. 81 (New York: Harcourt, Brace and Co.), gives the impression that a commercial bank is an intermediary type of financial institution (non-bank), serving to join the saver with the borrower when he states that it is an “optical illusion” to assume that “a depositor & his bank can somehow contrive between them to perform an operation by which savings can disappear into the banking system so that they are lost to investment, or, contrariwise, that the banking system can make it possible for investment to occur, to which no savings corresponds.”<br /><br />In almost every instance in which Keynes wrote the term bank in the General Theory, it is necessary to substitute the term non-bank in order to make his statement correct, viz., the Gurley-Shaw thesis, the elimination of Reg Q ceilings, the DIDMCA of March 31st, 1980, the Garn-St. Germain Depository Institutions Act of 1982, the Financial Services Regulatory Relief Act of 2006, the Emergency Economic Stabilization Act of 2008, sec. 128. “acceleration of the effective date for payment of interest on reserves”, etc.<br /><br />The DFIs can force a contraction in the size of the non-banks, NBFIs, & create liquidity problems in the process, by outbidding the non-banks for the public’s savings. This process is called “disintermediation” (an economist’s word for going broke). The reverse of this operation cannot exist. Transferring saved TR or TD deposits through the non-banks cannot reduce the size of the payment’s system. Deposits are simply transferred from the saver to the non-bank to the borrower, etc.<br />Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-38545916537076278952018-04-16T14:01:26.115+01:002018-04-16T14:01:26.115+01:00This is one facet of BuB's mistake:
POSTED: D...This is one facet of BuB's mistake:<br /><br />POSTED: Dec 13 2007 06:55 PM |<br />The Commerce Department said retail sales in Oct 2007 increased by 1.2% over Oct 2006, & up a huge 6.3% from Nov 2006.<br />10/1/2007,,,,,,,-0.47,... -0.22 * temporary bottom<br />11/1/2007,,,,,,, 0.14,,,,,,, -0.18<br />12/1/2007,,,,,,, 0.44,,,,,,,-0.23<br />1/1/2008,,,,,,, 0.59,,,,,,, 0.06<br />2/1/2008,,,,,,, 0.45,,,,,,, 0.10<br />3/1/2008,,,,,,, 0.06,,,,,,, 0.04<br />4/1/2008,,,,,,, 0.04,,,,,,, 0.02<br />5/1/2008,,,,,,, 0.09,,,,,,, 0.04<br />6/1/2008,,,,,,, 0.20,,,,,,, 0.05<br />7/1/2008,,,,,,, 0.32,,,,,,, 0.10<br />8/1/2008,,,,,,, 0.15,,,,,,, 0.05<br />9/1/2008,,,,,,, 0.00,,,,,,, 0.13<br />10/1/2008,,,,,,, -0.20,,,,,,, 0.10 * possible recession<br />11/1/2008,,,,,,, -0.10,,,,,,, 0.00 * possible recession<br />12/1/2008,,,,,,, 0.10,,,,,,, -0.06 * possible recession<br />Trajectory as predicted.<br />Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-88401055991679755062018-04-16T14:00:21.281+01:002018-04-16T14:00:21.281+01:00The Oct. 15th dis-equilibria was so profound and u...The Oct. 15th dis-equilibria was so profound and unique that the Treasury did a joint staff study on it with the (1) U.S. Department of the Treasury, (2) Board of Governors of the Federal Reserve System, (3) Federal Reserve Bank of New York, (4) U.S. Securities and Exchange Commission, and (5) the U.S. Commodity Futures Trading Commission.<br /><br />http://bit.ly/1VKxCQw<br /><br />I also predicted this: “Diminishing market depth and a surge in volatility were both on display Oct. 15, when Treasuries experienced the biggest yield fluctuations in a quarter century in the absence of any concrete news. The swings were so unusual that officials from the New York Fed met the next day to try and figure out what actually happened”<br /><br />From: Spencer (@hotmail.com)<br />Sent: Thu 9/18/14 12:42 PM<br />To: FRBoard-publicaffairs@... (frboard-publicaffairs...<br />Dr. Yellen:<br />Rates-of-change (roc’s) in money flows (our “means-of-payment” money times its transactions rate-of-turnover) approximate roc’s in gDp (proxy for all transactions in Irving Fisher’s “equation of exchange”).<br />The roc in M*Vt (proxy for real-output), falls 8 percentage points in 2 weeks. This is set up exactly like the 5/6/2010 flash crash (which I predicted 6 months in advance and within 1 day).<br />Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-51017144234884140622018-04-16T13:58:59.807+01:002018-04-16T13:58:59.807+01:00That's how I denigrated Nassim Nicholas Taleb’...That's how I denigrated Nassim Nicholas Taleb’s “Black Swan” theory (un-foreseeable event), 6 months in advance and within one day:<br /><br />[1] To: anderson@stls.frb.org<br />Subject: As the economy will shortly change, I wanted to show this to you again – forecast:<br />Date: Wed, 24 Mar 2010 17:22:50 -0500<br />Dr. Anderson:<br />It’s my discovery. Contrary to economic theory and Nobel Laureate Milton Friedman, monetary lags are not “long & variable”. The lags for monetary flows (MVt), i.e., the proxies for (1) real-growth, and for (2) inflation indices, are historically, always, fixed in length.<br />Assuming no quick countervailing stimulus:<br />2010<br />jan….. 0.54…. 0.25 top<br />feb….. 0.50…. 0.10<br />mar…. 0.54…. 0.08<br />apr….. 0.46…. 0.09 top<br />may…. 0.41…. 0.01 stocks fall<br />Should see shortly. Stock market makes a double top in Jan & Apr. Then real-output falls from (9) to (1) from Apr to May. Recent history indicates that this will be a marked, short, one month drop, in rate-of-change for real-output (-8). So stocks follow the economy down.<br />And:<br />flow5 Message #10 – 05/03/10 07:30 PM<br />The markets usually turn (pivot) on May 5th (+ or – 1 day). <br />I.e., the May 6th “flash crash”, viz., the second-largest intraday point swing (difference between intraday high and intraday low) up to that point, at 1,010.14 points.<br />Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-9928078398963096772018-04-16T13:57:20.180+01:002018-04-16T13:57:20.180+01:00Don't know about the UK. But in the US, there...Don't know about the UK. But in the US, there is a working model. It is precise. Economics is an exact science. Everyone should read Steve Keen. He almost gets it right. He's on to bank vs. non-bank lending.<br /><br />The time for stagflationist’s recalcitrance “will soon be at an end” (Gladiator). <br /><br />See second verse, same as the first:<br /><br />22 Luminaries (And Dick Bove) Sign Open Letter To Fed Demanding End Of QE2<br /><br />http://bit.ly/2F3T2Xm<br /><br />N-gDp LPT targeting by stagflationist advocates is unwarranted and destructive. It has now produced, since the advocates banded together and wrote a letter to Janet Yellen, higher prices, a breakout in yields, a falling U.S. dollar, and a credit downgrade from China.<br /><br />And after all this "irrational exuberance", stocks have declined into the 4th Elliott wave correction. The Fed acted and produced a “soft landing”?<br /><br />http://bit.ly/2s67De9<br /><br />There’s a very important lesson in the latest failed coup d'é·tat. <br /><br />See the: “Secular Stagnation Project”<br /><br />http://bit.ly/2IsizHR<br /><br />Larry Summers said in December: “And as soon as prices stop rising, the economy will lose one of its important props. Since the 1990s, he says, the U.S. has alternated between bubbles and busts.”<br /><br />It’s once again, FOMC schizophrenia: Do I stop -- because inflation is increasing? Or do I go -- because R-gDp is falling? [Stagflation’s dilemma, viz., the FOMC’s policy mix]<br /><br />And for the gold bugs, that transmogrifies into an inflation/deflation debate.<br /><br />So in case you aren't tracking the markets, targeting N-gDp LPT, caps real-output, maximizes inflation, and exacerbates trade deficits (exporting aggregate monetary purchasing power, and importing underemployment).<br /><br />The advanced change in thinking was pointed out and emphasized by Doug Short: <br /><br />”However, at their December 2012 FOMC meeting, the inflation ceiling was raised to 2.5% while their accommodative measures (low Fed Funds Rate and quantitative easing) were in place.”<br /><br />Steve Keen's on to this: "Banks don’t “intermediate loans”, they “originate loans”.<br /><br />"The fallacy in their thinking is easily demonstrated by looking at the two types of lending – from one non-bank agent to another (Loanable Funds or LF) and by a bank to a non-bank (Bank Originated Money or BOM as an accountant might call it)."<br /><br />Keen: "A 'Loanable Funds' loan simply shuffles existing money from one person’s bank account to another: no new money is created (row 1 in Table 2). A “Bank Originated Money” loan creates a new asset for the Bank, and creates new money as well – which the recipient then spends."<br /><br />http://bit.ly/2GXddnCSalmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-15870086200311119352018-03-07T06:42:14.088+00:002018-03-07T06:42:14.088+00:00his must certainly study. It is the most interesti...his must certainly study. It is the most interesting.Anonymoushttps://www.blogger.com/profile/05275332212839375435noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-47935444758957384732018-03-07T06:34:32.002+00:002018-03-07T06:34:32.002+00:00This comment has been removed by the author.Anonymoushttps://www.blogger.com/profile/05275332212839375435noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-66793679038259837232018-03-03T09:24:12.269+00:002018-03-03T09:24:12.269+00:00While the leading UFT advocates (I like the way yo...While the leading UFT advocates (I like the way you called them "loons") may not be boomers, I suspect they see themselves as insulated from the consequences of their actions in a different way: while boomers may expect to die before the shit hits the fan, people like Bojo and Rees-Mogg may feel protected by their wealth.<br /><br />And while I don't think they have dreams of <i>restoring</i> the British Empire (I can't believe anyone is that deluded, especially given how our military spending has been cut to the bone), it is potentially the case that wealthy rentiers living off the wealth acquired by their imperialist ancestors may feel as if (for them personally at least) the Empire never really fell.<br /><br />As for ordinary voters, why do you think that older people would feel that voting Leave would improve their children's economic prospects, while those children felt themselves that their prospects would be better within the EU?<br /><br />Arguably the biggest factor in weakening the British economy since the 1980s has been the explosion in urban land prices (due to the abolition of rent controls, the sale of council housing, rising NIMBYism, the replacement of rates with council tax, the end of restrictions on mortgage lending, and falling interest rates). This provided an irresistible incentive for asset strippers to destroy Britain's industrial SMEs, as they could often get more money from selling off the land for housing than they paid for the entire business!<br /><br />It has me thinking of Timothy Snyder's analysis of the Holocaust in the Baltic states: many of the local Nazi collaborators who murdered Jews had previously collaborated with the <i>Soviet</i> occupation, and the Nazi propaganda trope of "Judeo-Bolshevism" provided a convenient way for these people to distance themselves from their earlier treason.<br /><br />Two of the tabloids which pushed hard for Brexit (the Express and the Daily Mail) were also notorious for cheering on house price inflation – perhaps this was partly for commercial reasons, as they made lots of money by advertising housing equity release schemes, as well as products (such as cruises) that were often paid for by means of equity release.<br /><br />I wonder if some of the people who had bought foreign holidays or imported luxuries from the proceeds of housing equity release were subconsciously aware that they had undermined Britain's economy through their actions, and were groomed by the tabloids into believing that a a vote for Brexit would somehow fix this (especially if immigrants could be made the scapegoat for high house prices, just as Jews were made the scapegoat for the Soviet occupations of Estonia, Latvia and Lithuania)?<br /><br />George Cartyhttps://www.blogger.com/profile/12170378024031141482noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-62651410512929769962018-03-02T11:53:04.153+00:002018-03-02T11:53:04.153+00:00The UFT loons aren't baby boomers. Boris Johns...The UFT loons aren't baby boomers. Boris Johnson, Rees-Mogg, Hannan are Generation X. There are some older hardliners, such as Liam Fox and IDS, but I don't think this is a baby boom phenomenon. I do however think that many of them have a desire to bring back something akin to the British Empire. A high proportion seem to come from a colonial background (brought up in Britain's ex-colonies, where they were the children of the Sahibs).<br /><br />I do however think that a considerable driver of the Brexit vote in general was older generations fighting against the loss of their entitlements and the poorer future that their children face. <br /><br />On Brexit supporting businesses: I've previously explained on this blog (see here: http://www.coppolacomment.com/2017/11/the-amazing-conversion-of-sir-james.html) it is wrong to regard Dyson as a UK business at all. It is a Malaysian manufacturer that exports finished goods to the UK. James Dyson himself is a British farmer who benefits hugely from the CAP. So his position on Brexit is this: zero tariffs on imports to benefit his Malaysian manufacturing business, plus continuation of CAP subsidies to benefit his UK farming business. His sole intent is to enrich himself. I do wish people would stop lionising him. He's a hypocrite. Mind you, so are the other two: Next is an import business, buying and distributing goods manufactured by its suppliers, and Tate and Lyle imports commodities. Both stand to benefit from zero tariffs. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-6934478182411966902018-03-02T10:47:26.461+00:002018-03-02T10:47:26.461+00:00Back in 2011 David Frum said of the contemporary U...Back in 2011 David Frum said of the contemporary US Republicans: "this isn’t conservatism; it’s a going-out-of-business sale for the baby-boom generation."<br /><br />How much do you think the same could be said of the current Brexit Tories, particularly those who advocate unilateral free trade? It certainly seems like they's obsessed with making imports cheaper, with scant regard for the UK's already disastrous balance of payments deficit.<br /><br />It is also notable that only a small minority of big businesses support Brexit, and they are disproportionately companies that heavily import from outside the EU, not companies that produce products for export. Examples would be Next (a retailer of clothing, almost all of which is now made cheaply in third-world countries), Dyson (which makes its vacuum cleaners in Malaysia) and Tate and Lyle (with its Caribbean cane sugar).George Cartyhttps://www.blogger.com/profile/12170378024031141482noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-24678893873084101622018-02-25T16:00:40.199+00:002018-02-25T16:00:40.199+00:00Your informal poll is hardly representative. Howev...Your informal poll is hardly representative. However, as I have now added a statement clarifying the meaning, your point is moot. I just find it interesting that you criticised me for not saying explicitly that my comment was relative to the counterfactual, but did not criticise Economists for Brexit for not saying that their figures were relative to the counterfactual. Double standards, much? <br /><br />UFT that was not reciprocated would be considerably worse than a system of TAs. We would be flooded with cheap imports while our own industries faced high tariff barriers to export. This would be offset to some degree by sterling depreciation, but that is not a "free lunch" either, since the price for it would be high inflation. Particularly damaging to industry would be the impact of depreciating sterling on the cost of oil. <br /><br />Even Economists for Brexit don't claim that UFT which was not reciprocated would be beneficial. They assume that it would be reciprocated. The benefits they claim are thus not from UFT but from mutual lowering of trade barriers around the world - which is why they equate UFT with "general free trade". <br /><br />However, we should be very cautious about promoting "general free trade" as an unalloyed good. The reality is that it would tend to benefit larger and richer countries at the expense of smaller, poorer ones. This is because poor countries currently enjoy positive discrimination under the WTO's "enabling clause", which encourages richer countries to give them preferential treatment in tariff schemes. In the EU, this takes the form of the Generalised Preferences scheme, under which less developed countries have lower tariffs and the very poorest countries have zero tariffs for everything except arms. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-2029677573189023252018-02-25T13:01:49.121+00:002018-02-25T13:01:49.121+00:00My informal poll of just 5 people who saw the head...My informal poll of just 5 people who saw the headlines saying 'hit', 'damage' 'suffer' and 'worse off' resulted in 4 people saying they thought that meant relative to now. However, I'd rather not criticise Economists For Brexit on this as I think they covered the point about the future being richer on page 4.<br />Thank you for the link to the bhas.org.uk article. It was interesting although I still disagree with the claim that UFT will make us poorer than systems of TAs with quotas and protections. The swings are low either way and small compared to the known things that make us poorer such as war, communism, and abandoning the rule of law.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-54711785096524034092018-02-24T11:42:12.055+00:002018-02-24T11:42:12.055+00:00I must add that comparing the terminology here wit...I must add that comparing the terminology here with my criticism of journalistic reporting of life expectancy figures is comparing apples and pears. I agree the maths is the same, but the context is entirely different. <br /><br />The life expectancy rate-of-change slowdown is an update of an existing forecast in the light of new data, similar to the OBR updating its forecasts for GDP. Statistical bodies do these updates all the time, whether or not there are policy changes. Journalists misinterpreted a forecast update to mean an actual change in life expectancy. <br /><br />In contrast, the estimates from both the Treasury and Economists for Brexit aim to identify specific gains or losses from a policy change. It's only possible to identify these if the forecast for conditions absent the policy change (the "counterfactual") is assumed not to change. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-38437738499237366402018-02-24T11:14:47.228+00:002018-02-24T11:14:47.228+00:00Anonymous, I believe I have addressed your point i...Anonymous, I believe I have addressed your point in my reply to Andrew Carey. I shall add "relative to the counterfactual" for clarification, but please be aware that Economists for Brexit's figures are also relative to the counterfactual. Their estimates for GDP gains are ON TOP OF whatever GDP growth the UK would have had if it had remained in the EU. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-1395361466686004362018-02-24T11:05:01.499+00:002018-02-24T11:05:01.499+00:00Andrew Carey,
1) The "loss" of 2 to 8 p...Andrew Carey,<br /><br />1) The "loss" of 2 to 8 percent of GDP growth is of course relative to the counterfactual. I would have thought this was obvious, but since it clearly isn't, I shall add that in. However, if you are going to criticise me for sloppy terminology, you should also criticise Economists for Brexit, surely? Nowhere in their piece do they say that the 2 to 4 percent of GDP growth gain is relative to the counterfactual. It is implied, just as it was in my comment. Do be consistent, please. <br /><br />2) I used an anecdote to illustrate the parlous state of British farming because the fact that agriculture declined considerably under unilateral free trade is discussed in the history link two paragraphs before. However, if you would like to know more about the Long Depression, here is a link: http://www.bahs.org.uk/AGHR/ARTICLES/20n1a3.pdfFrances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-66777677779158413922018-02-24T10:58:33.623+00:002018-02-24T10:58:33.623+00:00This comment has been removed by the author.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-57694327473147633412018-02-24T10:01:45.553+00:002018-02-24T10:01:45.553+00:00But the argument that ‘we won’t be worse off compa...But the argument that ‘we won’t be worse off compared to now’ is akin to saying ‘it’s okay to fall a decade behind everyone else by the late 2020s’. I would rather continue to live in the present, thanks very much.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-2171822805493310442018-02-24T09:14:57.853+00:002018-02-24T09:14:57.853+00:00Economists cannot even predict whether growth will...Economists cannot even predict whether growth will be positive or negative or whether employment will be up or down one year ahead. The whole Brexit forecast business is a charade.<br /><br />And on projections of future growth, what matters to individuals is not what percentage rise the shelf-stacking wage has seen but but whether their children are engineers, nurses, or shelf stackers. People voted to leave a system that found it better to import labour and throw their own children on the scrap heap than invest in their children.<br /><br />I agree with the person who wrote "The Euro is a misbegotten, deformed creature that exists for one thing only, and that is to deny sovereignty to members of the EU." Yes, that in spades to everything the EU does. If only I could remember who that person was.<br />Dippernoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-17909633350185728272018-02-23T21:28:35.258+00:002018-02-23T21:28:35.258+00:00That's a very good point about the 'GDP lo...That's a very good point about the 'GDP loss' statement. <br /><br />In the 'calculus for journalists' blog dated August 8 2017, the point was made that life expectancy was not falling, but the rate of growth in life expectancy was. Further;<br /><br />"I spent long hours on Twitter and Facebook trying to explain this to people, to no avail. I was presented with numerous articles, most of them repeating the same error. Never mind the fact that life expectancy is actually rising, all we need is Robert Peston to say that it is not, and the whole world is convinced. Fake news, entirely caused by the fact that some journalists don't understand rates of change".<br /><br />So what is the situation here? Is GDP forecast to fall, or to grow at a slower rate? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-51961315255571209262018-02-23T20:37:11.543+00:002018-02-23T20:37:11.543+00:00"the Government's recent forecast that Br..."the Government's recent forecast that Brexit would cause a GDP loss of between 2 and 8 percent over 15 years"<br />That's an odd interpretation of scenarios that say we will forego gains in GDP of between 2 and 8%. Most people do not read reports, just headlines, and their takeaway from this is that people are predicting that in some trading futures the predictions say we will be worse off than now which is not at all what is being projected. Many supporters of the transfer of public funds to the owners of qualifying land ( for that is the EU's primary fiscal purpose ) are endorsing this false narrative and I cannot figure out why.<br />"By 1911, Britain's agricultural industry was in such bad shape that the sons of farmers were emigrating to Australia to farm sheep because there was "no money in farming" in the UK. "<br />No. That's an anecdote and it was ONE son. But even if there was no money in farming would this be a bad thing. It's getting fed that matters. Based on the UK and Commonwealth putting half a million soldiers into South Africa for the Boer War and millions more in 14-18 food security wasn't a problem. Of course by the 1930s farm subsidies had returned to the UK in a massive way ( bigger than now in relative terms ) and then we did have security problems.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-73858195286581405092018-02-23T17:40:20.288+00:002018-02-23T17:40:20.288+00:00The distant past is too different, the immediate p...The distant past is too different, the immediate past we cannot be sure about, the now is too confusing, the future is elaborate guess work. What if the USA were to have a major debt crisis? But is already has one and the consequences for the world are entirely unpredictable. Also, you only need one badly informed ruler to start a serious war somewhere or perhaps in the wrong place to send it all into a spin.Demetriushttps://www.blogger.com/profile/17198549581667363991noreply@blogger.com