Economics 101 - The federal government cannot create jobs

[ducati916]

I can see that my challenge has been roundly ignored. However, here is another economic argument to be refuted.

One of the more common beliefs about the operation of the U.S. economy is that a massive increase in the Fed’s balance sheet will automatically lead to a quick and substantial rise in inflation. [However] An inflationary surge of this type must work either through the banking system or through non-bank institutions that act like banks which are often called “shadow banks”. The process toward inflation in both cases is a necessary increasing cycle of borrowing and lending. As of today, that private market mechanism has been acting as a brake on the normal functioning of the monetary engine.

The link between Fed actions and the economy is far more indirect and complex than the simple conclusion that Federal asset growth equals inflation. The price level and, in fact, real GDP are determined by the intersection of the aggregate demand (AD) and aggregate supply (AS) curves. Or, in economic parlance, for an increase in the Fed’s balance sheet to boost the price level, the following conditions must be met:

1) The money multiplier must be flat or rising;
2) The velocity of money must be flat or rising; and
3) The AS or supply curve must be upward sloping.

The economy and price changes are moving downward because none of these conditions are currently being met; nor, in our judgment, are they likely to be met in the foreseeable future.

jog on
duc

 

[wayneL]

I can see that my challenge has been roundly ignored. However, here is another economic argument to be refuted.



jog on
duc

Academic refutations require academics versed in theories contrary to Keynesianism and its derivatives. The vast majority of academics are indoctrinated into the Keynesian mindset.

We're all just bush economists here.

We need someone like Krassimir Petrov or the guys at Von Mises blog to argue these points properly.

 

[ducati916]

Academic refutations require academics versed in theories contrary to Keynesianism and its derivatives. The vast majority of academics are indoctrinated into the Keynesian mindset.

We're all just bush economists here.

We need someone like Krassimir Petrov or the guys at Von Mises blog to argue these points properly.

Indeud.

The macro-picture is however currently driving markets. Unless you come to grips with it, you're fumbling in the dark.

jog on
duc

 

[wayneL]

Indeud.

The macro-picture is however currently driving markets. Unless you come to grips with it, you're fumbling in the dark.

jog on
duc

I think many have a reasonable abstract grasp, but cannot argue on academic terms.

 

[Temjin]

Academic refutations require academics versed in theories contrary to Keynesianism and its derivatives. The vast majority of academics are indoctrinated into the Keynesian mindset.

We're all just bush economists here.

We need someone like Krassimir Petrov or the guys at Von Mises blog to argue these points properly.

Nicely put.

Except that the vast majority of the same academics would completely ignore the validity of the theories put out by those alternative economists and make the whole "academic debate" like little kids shouting each other to satisfy their ego.

I've seen a lot of these "debates" on the net and I come to the conclusion that it's pointless to argue. Might as well accept for what you know and act on that knowledge for your own benefit instead of trying to fight over the seemly overpowering confirmation bias of those who don't agree with you.