Originally posted by JohnnyX: What I'm saying is that real effective demand is represented by production - they are one and the same. Money is just a placeholder. It doesn't matter whether the total supply of money in an economy is $1 billion or $1 trillion. In the former case a DVD might cost $0.10 and in the latter case it will cost $10, as a crude example. Doesn't change the underlying fundamentals. What matters is any sudden change in the money supply. These manipulations send signals that distort production and consumption - this is the boom phase. The result is malinvestment which is not actually supported by the market, and ultimately leads to recession - this is the bust phase.
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You're saying, that increasing the money supply has no effect on Say's Law? Doesn't effect the aggregate and throw it out of balance? That changing the intermediary medium of exchange has no effect in the economy?
Where are you getting this stuff? You're either not reading what I'm writing or you don't get it, or both. It doesn't change Say's Law any more than my sticking my finger in a lightsocket changes the laws of electricity. It does affect the economy in ways I've explained.
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If you accept periodic Depression or deep recesssions as a perfect operation of an economy, then you'll see no flaws in it.
More bullshit. Show me a depression or deep recession that occurred in a relatively free market absent state intervention.
How about Chile which was established as a "free market" economy under Pinochet? Unemployment rate rose to over 30%, slowest growth rate in S. American after Argentina A lot of people had to "disappear" to control the unrest.
Free market economies lead to trusts, cartels, monopolies, concentration of wealth and political power into fewer and fewer hands when they are allowed to operate perfectly under the capitalist economic system. Capitalism has some great things going for it...its "perfect operation" has serious disadvantages.You can look to our own history for that one. Cartels were notorious. Your perfect system of totally "free markets" has flaws for the majority...perfection for a few.
I'm not a socialist, because I can see capitalism's great advantages. I'm also aware that we are playing with the devil.
Liberal Economic Theory of the 1700's (totally free markets) has led to disaster in the past. Democracies following Economic Liberalism ("free markets")tend to become dictatorships or fascist states. In actuallity, it should be called Conservative Economic Theory rather than "Liberal". It isn't liberal political or economic thought by any means. Liberals tend to be odds with totally "free markets" which come out of Liberal Economic Theory.
A heavy solution for inflation usually is drastic reductions in employment. Chile did it with a 30+% unemployment rate.
Brazil handled it differently. They had "institutionalized" inflation. Periodically, zeros were added to your bank accounts figures. $100 became $1,000, etc.
This left out the majority of the working poor, of course, because they had no bank account. It was a means of lowering wages, periodically, letting them rise slowly with increases in pay, then allowing inflation to lower them again.
Investment monies were protected by the addition of zeroes to the account figures. This was explained to my by a correspondent who lived In Rio and did very welll under rabid inflation.
Chile chose the way most nations do...massive unemployment. They did it to the point of military repression and "disappearance" of some of their citizens who opposed it. The military aspect is what "free market" economies usually end up resorting to under such conditions. Most Latin American ountries have had more of a "domestic free market" oligarchy system than the U.S. in many ways...and also brutal dictatorships to maintain them.
Inflation in Chile, again, was a disruption of a balance between production and money supply...including that paid in wages. The money came from somewhere. Chile printed money just like Brazil did. Like Brazil, the aggregate was disturbed.
Increases in money supply, if instantaneous between wages and the amount pumped into the economy would have all things remain equal, albeit at a higher price. There would be no disturbance in Say's Law. That, however, is not how it happens. There is a lag between the printing of money,inflation, and the increases in inflationary wages. You don't seem to get this.
The Depression began before the bank failures in the spring of 1930 when credit was still available at low rates. Already, there was no demand for capital loans. It was disruption in Say's Law that triggered it, not bank failures.
Blame is often blamed on the Fed for The Great Depression by not stimulating the money supply. Yet, if money supply drops, pricing and value drops. Again, lagging the money supply drop
A 5% increase in a money supply isn't instantly converted into a 5% increase in wages. Neither is a 10% increase, etc. The lag brings about disturbance....and the cycle can feed upon itself. This was the choice Brazil made to the point of institutionalizing it.
You can find economists to support your views, just as I can find them to support mine. Economics is not yet a science because it proves nothing in the long term. There is one tinkering after another to find out just what is so, just how economies work, and just how they function.
If you prefer the view that when there is too little money in the economy to purchase the production of a nation, or when their is too much money in the economy that they don't throw pricing out of balance in respect to Say's Law,, do so. They both disrupt Say's Law, both throw the intermediary of exchange out of balance with actual produced wealth and both cause a disruption in the economy.
You're trying to argue that one portion of economic theory has nothing to do with another. Nothing operates in a vacuum. Even a vacuum exists within something outside of itself.
Economists attempt to show how one thing in an economy relates to another and effects it...not how one factor in an economy has nothing to do with anything else.
An acknowledgement of Say's Law as an imporant determination in economics, even as a foundation, would undermine an awful lot of conservative ideologies, so in general, it tries to be explained away. It can't.
When Japan acknowledges it, they'll bring stagflation under control just like We did it without acknowledging it overtly...we just did what had to be done to bring back the aggragate.
If you want to argue the aggregate WASN'T brought back into balance, then begin doing that. It's the only way you can support your position...by showing no such relationship exists.
Retired Monk "Ideology is a disease"
This message has been edited. Last edited by: polycarp,
Posts: 3412 | Location: denver co | Registered: 17 April 2007
I look forward to precise economic theories explaining the effects on the GDP, global trade, and inflationary/deflationary pressures as soon as the article becomes common-place in the academic halls of economic research and study.
I also look forward to their hasty revisions every several years.
Retired Monk "Ideology is a disease"
Posts: 3412 | Location: denver co | Registered: 17 April 2007
Poly, I don't know WTF you're on about now, except that half the things you accuse me of believing are the opposite of what I posted. I can't waste any more time on you. Knock yourself out.
Poly, I don't know WTF you're on about now, except that half the things you accuse me of believing are the opposite of what I posted. I can't waste any more time on you. Knock yourself out.
Johnny, I just want to let you know how much I have enjoyed lurking on your responses to Poly's posts.
I admire your patience and lucidity.
I am beginning to wonder if English is Poly's first language.
Posts: 1807 | Location: West Michigan | Registered: 23 June 2005
Yep. If you can't comprehend, you can't comprehend.On one hand, Johnny says money supply has no relation to Say's Law because it has an instant change on all levels not changing the aggregate, without realizing on the other that it's never instant on all levels.
He supports a view of some economists, and doesn't take in opposing views of economists in disagreement with him. What's so is in the middle.
In 1963, Milton Friedman and Anna Schwartz proposed a different view of the depression. They argued that, contrary to Keynesian theory, the deflationary actions of the Federal Reserve were primarily at fault. In the ensuing decades, Keynesians and "monetarists" argued for the supremacy of their favored theory. The result was a recognition that both explanations had limitations. Keynesians struggled to comprehend why either consumption or investment demand would have fallen so precipitously as to trigger the depression (though saturation in the housing and automobile markets, among others, may have been important). Monetarists struggled to explain how smallish decreases in the money supply could trigger such a massive downturn, especially since the price level fell as fast as the supply of money, and thus real (inflation-adjusted) aggregate demand need not have fallen.
An error is, in devaluation, as in inflation, not all segments in the economy participate at the same rate. There is a lag. A 5% devaluation doesn't translate into immediate 5% devaluation in another, etc.
It was a prior disruption in Say's Law which Say himself indicated could occur.
The Great Depression started in Oct., '29. While there have always been bank failures, they didn't begin falling like dominos until the spring of 1930. They were a result of, not the cause. And it exasperated it. Devaluation then occured at a rate quicker than could be absorbed by the aggregate of Say's Law.
At the time of the crash, Oct. 24, 1929, credit was easy to obtain, interest rates low, and there wasn't a demand for capital goods. So an infusion of money into the money supply by the Fed wasn't an option. Consumer credit was maxed out. Bankers then, as now, ran the Fed.
Canada participated in the World-Wide Depression. It didn't have one bank failure.
There are interesting parallels to today:
The 1920's saw a great increase in the distribution of wealth from the lower and middle classes to an upper class. A lot of this concentrated wealth went into stocks, creating a "bubble" rather than being spent on consumer goods or purchase of capital goods. We're dismanteling production facilities, not expanding them.
Home prices had reached a "bubble". The mortgages became higher than the value of many homes. Foreclosures began climbing steadily.
People had borrowed against their homes for consumer products.
Credit was pretty maxed out...though savings rates had not yet reached a negative as is now.
Stock market was at record highs as more and more money was pulled out of the production/wage economy.
Domestic auto production was beginning to have trouble. A declining middle class couldn't absorb all the nation's production.
Deja vu
Retired Monk "Ideology is a disease"
This message has been edited. Last edited by: polycarp,
Posts: 3412 | Location: denver co | Registered: 17 April 2007
Boy, this is an awkward moment for Whole Foods CEO John Mackey, not to mention for the Bush Administration's antitrust policy. The Federal Trade Commission recently announced it will sue to block Whole Foods from buying Wild Oats, a competitor in the high-end, organic supermarket space.
The FTC's argument is that "premium" organic-food peddlers don't compete against regular supermarkets, and its justification reads like promotional materials from Whole Foods. The FTC waxes lyrically about "the breadth and quality of their perishables -- produce, meats, fish, bakery items, and prepared foods -- and the wide array of natural and organic products and services and amenities they offer," adding that Whole Foods is not so much a supermarket as a "shopping 'experience.'" Mr. Mackey, the Whole Foods CEO, would have to be tickled if the FTC weren't deploying this talk to kill the merger.
Which is where the awkwardness comes in. In order to fight the FTC, Mr. Mackey will have to argue that Whole Foods is just another supermarket.
Posts: 7939 | Location: Santa Barbara | Registered: 19 July 2005
It is a supermarket. Have you ever been in one? Same basic products, but they are organic. Their products come from a different source of suppliers.
Are they a threat to Safeway or General Mills, Nestles, and Tyson Farm chicken?
Amazing when conservatives stifle competition to protect their own markets....and yell "free trade" when you try to regulate them to a avoid dangerous products and practices.
Rtired Monk "Ideology is a disease"
Posts: 3412 | Location: denver co | Registered: 17 April 2007
Dearest polycarp, et. al, it seems to me that TheCons protect their market, with the fiercness of six Chinese Dragons, however less incredible than at first blush, is their cry against regulation, whereas it amounts to a challenge backed by literally billions of dollars)to organize. na, na, nana, na! **************************************** between the lines, its, "who pays taxes, anyhow! ****************************************** I think America has business. We need to take action! Tomorrow. (sugar!)
Posts: 582 | Location: New York City | Registered: 13 February 2007
Doesn't take a cystal ball to see that statement coming. I suppose they'll go for the usual course of treatment. Continue depressing the economy at the lower 70% or so...so the upper 30% can continue slight expansion.
Retired Monk "Ideology is a disease"
Posts: 3412 | Location: denver co | Registered: 17 April 2007
Let me tell you a few brief things about myself as background. Before I started Whole Foods Market I attended two different universities, where I accumulated 130 hours of electives, primarily in philosophy and religion, and ended up with no degree. I never took a single business class. I actually think that has worked to my advantage in business. I spent my late teens and early twenties trying to discover the meaning and purpose of my own life.
My search for meaning and purpose led me into the counter-culture movement of the late 1960's and 1970's. I studied eastern philosophy and religion at the time, and still practice both yoga and meditation. I studied ecology. I became a vegetarian (I am currently a vegan), I lived in a commune, and I grew my hair and beard long. I'm one of those crunchy-granola types. Politically, I drifted to the Left and embraced the ideology that business and corporations were essentially evil because they selfishly sought profits. I believed that government was "good" (if the "right" people had control of it) because it altruistically worked for the public interest.
With that background, I felt "well prepared" to launch my business in 1978. My initial business, a natural foods market called Safer Way, was a small 3,000 square foot store that I opened with my girlfriend, with an initial $45,000 in capital. We were very idealistic, and we started the business because we thought it would be fun. We were right-we had a blast then, and we've continued to have a great time during the last 28 years. The time has passed quickly.
Along with the for-profit business, I also created a business of "heart" and I think I have been equally successful with that venture. After running Safer Way for a couple of years, we decided to relocate to a much larger building and we opened Whole Foods Market in 1980. No pun intended, but we grew the business organically from there.
At the time I started my business, the Left had taught me that business and capitalism were based on exploitation: exploitation of consumers, workers, society and the environment. I believed that "profit" was a necessary evil at best, and certainly not a desirable goal for society as a whole. However, becoming an entrepreneur completely changed my life. Everything I believed about business was proven to be wrong. The most important thing I learned about business in my first year was that business wasn't based on exploitation or coercion at all. Instead I realized that business is based on voluntary cooperation. No one is forced to trade with a business; customers have competitive alternatives in the market place; employees have competitive alternatives for their labor; investors have different alternatives and places to invest their capital. Investors, labor, management, suppliers—they all need to cooperate to create value for their customers. If they do, then any realized profit can be divided amongst the creators of the value through competitive market dynamics. In other words, business is not a zero sum game with a winner and loser. It is a win, win, win, win game—and I really like that.
However, I discovered despite my idealism that our customers thought our prices were too high, our employees thought they were underpaid, the vendors would not give us large discounts, the community was forever clamoring for donations, and the government was slapping us with endless fees, licenses, fines and taxes.
Were we profitable? Not at first. Safer Way managed to lose half of its capital in the first year—$23,000. Despite the loss, we were still accused of exploiting our customers with high prices and our employees with lower wages. The investors weren't making a profit and we had no money to donate. Plus, with our losses, we paid no taxes. I had somehow joined the "dark side" — I was now one of the bad guys. According to the perspective of the Left, I had become a greedy and selfish businessman.
At this point, I rationally chose to abandon the Leftist philosophy of my youth, because it no longer adequately explained how the world really worked. With my Leftist interpretation of the world now shattered, I looked around for alternative explanations for making sense of the world.
Upon reading the entire link, it seems to me he threw out the baby with the bathwater.
If all corporations subscribed to his DENOUNCING of Ayn Rands' "selfishness is good" philosophy, laisezz faire capitalism might actually work...unfortunately, in the real world that isn't the case.
Comparing his business with Haliburton, GE. or Exxon Oil is like comparing kindergarten to High School. Not in the same league. His own philosophies aren't shared by the transnationals.
Regulations weren't put in place because all corporations tended to be socially responsible. They were put in place because they aren't.
Regulation wasn't put into place to slow pollution because corporations weren't spewing pollutants into the air.
Regulation wasn't put into place because corporations were wisely not poisoning the water supply.
The FDA didn't come into being because food and drug industries didn't refrain from selling poisonous products.
Anti-trust laws weren't put into being because larger corporation conglomerates weren't devouring their competitors with price fixing to drive competitors out of business.
Regulation of railroads wasn't put into place because competitor's prices for transport weren't way higher than they charged their own subsidiaries.
Child Labor laws weren't enacted because business saw the wisdom in putting a 7 year old child in school rather than a coal mine.
He studied philosophy and religion. Perhaps he should have studied the history of laissez- faire capitalism as well.
If he isn't one of the "bad apples", good. History has shown that the apple barrel of business contains a lot of rotton ones that if not controlled infect the whole barrel.
Last week's overturning of major components of the Sherman Anti-trust Act of 1890 will show just how rotton those apples can be. It wasn't enacted by all but one vote in both Houses because it would be a "fun" thing to do. It was done out of absolute necessity.
Retired Monk "Ideology is a disease"
Posts: 3412 | Location: denver co | Registered: 17 April 2007
British corporations were never regulated. After their ascendency during the industrial revolution, due to a geographical centerness, they faded as the Crown protected the 'royal jewels."
Posts: 582 | Location: New York City | Registered: 13 February 2007
The index has been above 50% for 51 straight months. On Monday, the group reported that the ISM manufacturing index also rose in June to the highest level since April 2006. See full story. "Both manufacturing and nonmanufacturing surveys point to the economy picking up momentum as the second quarter drew to a close," wrote Bear Stearns economists John Ryding and Conrad De
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(sugar!)