- 14 May 2020 04:03
#15091488
Main stream economists have this theory based on BS (only BS) that there is a NAIRU or NAtural Non-Inflationary rate of UE. It should not change as the UE rate changes, but it does. In Spain now it is over 15%, while UE is over 25% (covidvurus!). Before the GFC/2008 it was about 2%tage pts less than the UE rate which was then about 5%. What changed? I and the Econ Prof. in the link think it is because MS economists need it to stay just under the actual measured UE rate for ideological reasons. That is, the whole theory is BS, but is is necessary to keep the Gov. from using fiscal policy (i.e., Keynesian deficit spending) to reduce unemployment. Or to help the mass of the people for that matter.
. . The whole idea of a NAIRU is bogus. It can't be measured, it can't even be seen. It is imaginary. It seems to be [-]calculated[/-], estimated (calculated implys a precision that it does not deserve) in a black box where only the result is seen. No one who is not an economist can understand how it is estimated or why it's estimated in that way. Everyone else is expected to take it on faith.
"Never trust a NAIRU estimate"
http://bilbo.economicoutlook.net/blog/
MMTers hold that a Main Purpose of US Gov. deficit spending is to replace savings. That banks don't lend savings and most savings are in the form of US Gov. bonds in any case. But, savings are a leakage just like dollars going overseas. MMTers hold that it is far better to replace the dollars leaking into savings with US Gov. deficit spending than it is to rely on banks doing it by making loans. Private debt must be paid back starting day one, while Gov. debt can be rolled-over for at least 325 years. And most Recessions and Depressions are caused by the borrowers being unable to make their debt payments. [The Dot-com Recession of 2001 was caused by the US Gov. surplus and not by private debt. So Pres. Bush II was right to cut taxes because that ended the stupid surplus. He should have weighted the cuts toward the mass of the people though, and then let the money flow up to the rich, which leaves behind some stuff in the hands of the masses on the way. Giving the cuts to the rich does nothing for the masses or for the GDP (i.e. economy) for that matter because the rich save (a leakage) most of it.]
. . The whole idea of a NAIRU is bogus. It can't be measured, it can't even be seen. It is imaginary. It seems to be [-]calculated[/-], estimated (calculated implys a precision that it does not deserve) in a black box where only the result is seen. No one who is not an economist can understand how it is estimated or why it's estimated in that way. Everyone else is expected to take it on faith.
"Never trust a NAIRU estimate"
http://bilbo.economicoutlook.net/blog/
MMTers hold that a Main Purpose of US Gov. deficit spending is to replace savings. That banks don't lend savings and most savings are in the form of US Gov. bonds in any case. But, savings are a leakage just like dollars going overseas. MMTers hold that it is far better to replace the dollars leaking into savings with US Gov. deficit spending than it is to rely on banks doing it by making loans. Private debt must be paid back starting day one, while Gov. debt can be rolled-over for at least 325 years. And most Recessions and Depressions are caused by the borrowers being unable to make their debt payments. [The Dot-com Recession of 2001 was caused by the US Gov. surplus and not by private debt. So Pres. Bush II was right to cut taxes because that ended the stupid surplus. He should have weighted the cuts toward the mass of the people though, and then let the money flow up to the rich, which leaves behind some stuff in the hands of the masses on the way. Giving the cuts to the rich does nothing for the masses or for the GDP (i.e. economy) for that matter because the rich save (a leakage) most of it.]