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is it ego captain jerry says krugman laffer curve limits long and variable loops malaise matched set fekete math problems medium of account military spending milton friedman mmt money multiplier more debt than money is policy motives moving average new tools of policy non linear not only household debt oil parameters for debt pfi policy predicting recession price controls printing vs spending problem x productivity questions r reading and writing red and green reduction reviews scott sumner sequence 2 serfdom simulacron simulated evidence slack special report spreadsheeting stagflation standard deviation star trek stimulus sumner symmetry in deception taxes taylor rule the difference between debt and credit the economy is transaction the k r shift the long decline the supply side the tint knob they don t know timeline tongue in cheek tot ulc umic unsustainable urgency verdoorn waste fraud abuse withering shoots zoho the new arthurian economics copyright 2010 2018 arthur shipman thursday april 30 2015 john munro the chief object of debasement from professor john munro s archive page c why did medieval princes debase their coinages i a commonly given answer is to increase their money supplies in times of precious metal scarcities i e to make a given or reduced quantity of gold and silver go farther by striking more coins from that metal but the evidence for such a conscious and deliberate monetary policy to achieve such goals is virtually absent and debasements cannot be correlated with specific times of coinage or precious metal scarcities also off the top of my head in times of precious metal scarcities a given quantity of gold and silver coin will go farther because prices are lower due to the scarcities so i m not sure that this commonly given answer makes any sense at all ii most medieval contemporaries thought that the prime motivation for coinage debasement was to increase mint revenues or profits for the prince munro links that thought to this footnote see the comment of nicholas oresme ca 1390 a monetary advisor to king charles vi of france and to the dukes of burgundy i am of the opinion that the main and final cause why the prince pretends to the power of altering the coinage is the profit or gain he can get from it it would otherwise be vain to make so many and so great changes so since medieval times at least it has been commonly thought that governments debase currency for their own gain otherwise says oresme it would be pointless to debase the currency so frequently that s not really a strong argument oresme s argument it s like people today who say the only explanation is and then tell you their favorite explanation people say that kind of thing all the time but that doesn t make it a good argument iv the chief object of debasement when this fiscal motive was present was to encourage merchants foreign and domestic to bring more gold and or silver bullion to the prince s mints rather than to foreign mints and debasements did so by offering such merchants themselves a profit by returning to them more coins of the same face value and current purchasing power though with a reduced precious metal content than they would receive from bullion minted by the former coin standard people since medieval times thought debasement was common because governments did it for their own profit professor munro presents a different motive to enhance the profit of the merchants this is quite an interesting thought if the reason for debasement was to enhance the local economy not just the princely greed posted by the arthurian at 4 00 am 6 comments labels coinage wednesday april 29 2015 i think i m just finessing an idea i only know what i know perhaps it is only ignorance that allows me sometimes to object to the wisdom of people who know more than i so be it then i liked immediately the archive page i found the other day john munro s page i liked it i still like it but i stumbled on this on the different means of payment in the medieval and early modern european economies at the same time you must realize that coined money was not the sole medium of exchange in medieval europe the sole means of effecting payments you must avoid the common pitfall of supposing that actual coins were used merely because the transaction was recorded in monetary terms in some account book or register these notations represent merely the standard of value function of money actual payment munro says may have occurred by barter or by credit and don t make the common mistake of believing in a mythical rise of a money economy that displaced barter transactions there was always from greco roman times some form of a money economy utilizing coinage and conversely barter transactions continued on into modern times even in sophisticated economies thus the following still popular stage theory of economic development advanced by 19th century german economic historians in particular bruno hildebrand deeply influenced by current evolutionary theories is patently unhistorical barter economy coined money economy credit economy according to john munro the stage theory of economic development barter coined money credit the stage theory is patently unhistorical but things lead to other things things have consequences and things have causes i m not afraid to say it oh most people say it sure but they leave it at that when things lead to other things sequences arise and patterns emerge in particular if human nature changes little then we are likely to find repeating sequences and repeating patterns throughout history i think if somebody saw a barter coined money credit sequence in history well that fits with things i already know about the cycle of civilization so i am willing to accept that that sequence probably did happen i don t reject it outright as munro seems to do of course barter continues in modern times of course there was coinage in use in the age of barter of course we don t stop using money because it s the age of barter we ll be glad to use money if we can get our hands on it but if we can t well there is still barter we don t rely less on money because it s the age of barter it is the age of barter because we rely less on money so anyway i was going to leave it at that but i can t because i kept reading professor munro s archive page and i came upon this c factors producing the new silver and then gold coinages i greater commercialization of the economy with a vastly increased volume of money payments transactions demand for money see after the age of barter there was a vastly increased volume of money payments less barter more coin there was a change in emphasis a move away from barter a move toward coined money and this e reasons for the resumption of gold coinages in the west i the vast increase in the volume of money payments and transactions demand for money professor munro confirms the view that there was a transition from a less coined money economy to a more coined money economy later of course there was the transition from mostly coined money to mostly credit posted by the arthurian at 4 00 am 0 comments tuesday april 28 2015 from the archives of john munro there are two fundamental causes of madness amongst students sexual frustration and the study of coinage professor karl helleiner posted by the arthurian at 4 00 am 1 comments monday april 27 2015 finance and the ceteris paribus economy while reading kenneth rogoff s vox piece on the debt supercycle i noticed in the sidebar a link to a historical look at deflation with claudio borio s name attached i ve looked at borio s work on financial cycles before so i was interested finishing up my response to rogoff i dove into the deflation article here are the opening paragraphs concerns about deflation falling prices of goods and services have loomed large in recent policy discussions see e g cochrane 2014 muellbauer 2014 the economist 2015 the debate is shaped by the deep seated view that deflation regardless of context is an economic pathology that stands in the way of any sustainable and strong expansion however the almost reflexive association between deflation and economic weakness is not so obvious seen as a symptom deflation need not only arise from an aggregate demand shortfall but also from greater supply which would boost output and seen as a cause while it may be damaging by pushing up real wages and unemployment raising the real value of debt debt deflation or inducing consumers to delay spending it may also be beneficial by raising real incomes and wealth and making export goods more competitive the cost of deflation is ultimately an empirical question five words went off in my brain like fireworks making export goods more competitive i don t know really how that works if deflation makes the dollar stronger that affects exchange rates and makes us exports more expensive i m sure there are trade offs but they use those five words as if there can be no question that deflation makes exports competitive but before i confused myself with the exchange rate consequences of domestic deflation before that unfinished thought diffused itself like a puff of smoke there were those five words and the fireworks in my head when costs are falling borio et al say that s good for exports by extension then when costs are rising that s bad for exports the mind goes to adam smith to of the component parts of the price of commodities to smith s look at factor costs and the principles that regulate them the mind goes to the cost of finance a cost that competes with smith s wages and profits and rent imagine a stable economy a ceteris paribus economy where nothing changes other than the size and scope of finance consider a period of time during which the size and scope of finance begin at a low level but grow persistently so that by the end of the period finance has grown very large ceteris paribus it takes just as many hours after that time period as many as it took before to produce an apple to produce an automobile to produce a skyscraper it takes just as much capital consumption just as much raw material just as much managerial oversight the only thing that has changed is the cost of finance but because the cost of finance increased among producers profits fell and prices rose because the cost of finance increased among consumers there is a chronic shortfall of demand these changes have consequences chronic shortfall aside when the cost of finance increases as a share of output cost it drives up the price of output it makes the basket of goods more expensive it makes exports more expensive i make that argument that the rising cost of finance in the us economy increased the prices of us exports putting the us at a disadvantage and contributing much to our unfavorable balance of trade i make that argument that was the fireworks in my head when i read those five words the u s balance of trade was really pretty stable until after the 1974 recession graph 1 u s balance of trade since 1950 some people attribute our trade imbalance to nixon breaking the link to gold could be nixon took us off gold in 1971 but milton friedman says it was the economic policy of the 1960s the kennedy and johnson administrations that ultimately forced us off gold nixon had to do something because the situation had become very critical in 1971 friedman says according to friedman then even if our trade imbalance was created by breaking the link to gold the underlying causes go back a decade before the link was broken at least a decade i should say posted by the arthurian at 4 00 am 3 comments sunday april 26 2015 rogoff debt cycles and optimism the name ken rogoff ring a bell how about reinhart and rogoff or maybe you remember the notion that once central government debt reaches 90 of gdp economic growth falls off you remember that one right and the name thomas herndon too maybe reinhart and rogoff growth in a time of debt our main result is that median growth rates for countries with public debt over roughly 90 percent of gdp are about one percent lower than otherwise average mean growth rates are several percent lower you might expect ken rogoff to be a man of principle not a man of science you might expect his economic analysis always to come up heads for the right and tails for the left if so you might be surprised by his recent article at vox rogoff writes there has been far too much focus on orthodox policy responses and not enough on heterodox responses that might have been better suited to a crisis greatly amplified by financial market breakdown in particular policymakers should have more vigorously pursued debt write downs that s downright arthurian from rogoff s article has the world sunk into secular stagnation with a long future of much lower per capita income growth driven significantly by a chronic deficiency in global demand or does weak post crisis growth reflect the post financial crisis phase of a debt supercycle where after deleveraging and borrowing headwinds subside expected growth trends might prove higher than simple extrapolations of recent performance might suggest i will argue that the financial crisis debt supercycle view provides a much more accurate and useful framework for understanding what has transpired and what is likely to come next all in all the debt supercycle and secular stagnation view of today s global economy may be two different views of the same phenomenon but they are not equal the debt supercycle model matches up with a couple of hundred years of experience of similar financial crises the secular stagnation view does not capture the heart attack the global economy experienced slow moving demographics do not explain sharp housing price bubbles and collapses it s an important topic and because i think in terms of debt as cause of problem and problem that fits a cycle of civilization rogoff s debt supercycle catches my eye in the introductory paragraph above rogoff s vox article we read unlike secular stagnation a debt supercycle is not forever i like the clarity in that secular stagnation is long term stagnation by contrast we expect a cycle to have its ups and downs the introductory continues after deleveraging and borrowing headwinds subside expected growth trends might prove higher than simple extrapolations of recent performance might suggest so if we think in terms of a cycle or no but if the economy actually moves in a cyclic pattern of sorts then we have reason for optimism rogoff says simply because of the cyclical pattern good times are bound to return secular unexplained stagnation offers no reason for optimism unexplained yes rogoff observes the view that the world is suffering from long term secular stagnation due to a chronic shortfall of demand well that s circular for sure a shortfall of demand is stagnation but if the problem is a debt supercycle it s the pattern that s circular not the argument and if it is a debt supercycle then we can be pretty sure the problem aro...
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