Sunday, March 15, 2009

Approaching the Study of Economics

Back in the 1980s (shades of ‘Back in the USSR), I joined the chorus who proclaimed that a centrally-planned economy could not adequately define the Investment needs of a modern economy. It seems according to William Buiter, now it expands to a like position establishes in a market expression economy. Buiter comes at the Problem with the intent of financial stability, though, while it should be viewed as pursuit of correct directional production in the economy. The value of Money itself remains set by the degree and amount of total funds invested in properly directed production. He should recognize that there is a supreme Auctioneer at the end of the linear frame, but the Auctioneer is himself a changeling of extreme chamaeleon exhibition; developed and formed by the motion of the production cycle itself. No economic model works, or will ever work, except a backseat driving view of past economic performance. An economist can tell you what has happened as a specialist historian, but cannot define a future hidden under the fog of competing Uncertainties.

Greg Mankiw gives a relatively similar finding to Buiter, though in explanatory framework serving to explain cogently; Obama is going to spend a deficit in excess of 3% of GDP, so he can spend approximately 27% and 24% of yearly GDP to entice an unrealistic Unemployment rate; one unable to generate even under favorable conditions–which are not Now. Obama may fail to understand he cannot devote any more funding to Environmental industry development, without simply fueling Inflation in these industries; they not being ready for the major Production stage, with Some (Me) doubting they will ever be ready–or necessary! It would advise Readers to read yesterday’s Post by myself, and for Obama to devise a Plan to Pay unemployed Workers to attend Training classes in Skills acknowledged as necessary in the future with predicted Increase. The entire trouble as Greg points out is Stimulus does not stop once started, and Debt continues to mount rather than being repaid.

Try this Post from Daniel Little, where focus is placed upon understanding society. One of the books I found most enlightening is a novel called ‘The Walking Drum" by Louis L’Amour–a favorite Author for light Entertainment. I once made a schematic (like all such things–nothing but speculation) that about 8,000 Ocean-going ships traveled about 1200 Sea miles per year in the year 1000. Trade Caravans traveled an approximate 300 miles in Europe and 1200 miles in Asia and the Mideast in the same Period of Time, and about 7-10% of their impact was in sheer expansion of knowledge and transfer of Books. An estimated One Percent of the total Population of the World was in relatively constant travel in Trading or Military columns at the Period involved, and led to a spread of Knowledge of some 11 Years to become known throughout the World including China and India. I made another estimate of the Time Period in which such Knowledge was assimilated into common practice, and find it took about a Century; compared to about 8 years Today. The Reader should always try to integrate macro facts into economic study, even though it may be as inaccurate as my own meanderings. lgl

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