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Tuesday, October 23, 2012

Get Out the Vote: A Scourge of Modern Politics

Many polls are open early across this country.   And everyone from celebrities, to Super PACs to special interest groups to politicians are pleading with the American people to get out and vote.  It's every American's civic duty, they say.

Even though most don't know what galaxy you are living in, Americans are told to vote on matters of domestic policy you likely know or care little about.

Even though a third don't know who the current Supreme Court Justice is, Americans are asked to decide the fate of judicial branch with your vote.

Even though half don't care to follow whether Obamacare was ruled constitutional or not, Americans are asked to decide the fate of it.

Even when one in ten think our sitting president is Muslim, they are asked to decide on the role of religion in our discourse.

Even though nearly half think that China is a greater economic power than the US, Americans are asked to decide the outcome of our foreign and economic policies.

Even though that scientists say that all the stupid Americans are dooming us with  voting, many will listen, and will cast uninformed biased votes based on what your friends, celebrities tell you, or what your gut feelings say to you, or the fact that your skin color matches the candidate....   These are not reasons to vote.  These are reasons to do your real civic duty and abstain from your vote.  

The saving grace for our country is that due to the corrupt nature of our modern political process, most votes likely will not count anyway.   Unless you live in Ohio or Florida or one of the few 'battleground' states, one should have no incentive to vote other than as a symbol.   Most of you that vote anyway, whether you are stupid or not, will use your vote to symbolize your belonging to either the Democrats or Republicans.   The rest will be disenfranchised - locked out from the process.  We will continue to have 2 overly-powerful parties beholden to their Super PACs and special interest deciding the fate of the future with little to no hope for process changes to how congress or our electoral system could operate more effectively.

My friends may not agree with me now on this broader point, but in time I hope they do.   The only solution is to demand real change from outside the system.   So I urge every American not to get out and vote, but to boycott our political system - shock it into changing.   Only when we eliminate the legitimacy of the system can we fix it.   We must sacrifice any individual gains via party-support for true long-run gains for our country.

Thursday, October 4, 2012

Keen Connects to MMT

Continues to interest me:

or for a more encompassing version of lesser quality (sound):

Keen has a unique definition of Aggregate expenditure (closed economy):
=C + I + NetAssets + (G-T)

....he didn't explain that enough for me to fully understand what he's saying here.  But here is my take (updated since I previously mentioned I too was confused) since many bloggers are just outright calling Keen's work nonsense.  This is partly Keen's fault for not clearly defining things.

He goes on to say that:
Income + Change in Debt = Output + Net Asset Turnover

...which suggests to me he thinks that changes in assets (prices bubbles)are a result of changes in debt (a la Minsky, which makes sense).

From what I understand, what Keen means by Net asset turnover is speculative and ponzi financing.  That is, financing of financial instruments that do NOT have a backing of a physical good or service and therefore are not expected to fully repay the principal and interest of the financing absent bubble formation.

In this way, Keen income and debt partially financing real goods and services, but also partially financing speculative and ponzi investments (the value of which is not based in real output).

In this view, neoclassical economics ignores this new class in the usual Y = C + I + G formation.  The real question to me is then, why does he include G-T instead of just G in his above formula.  That is still unclear to me.

UPDATE: had a brief back and forth with Prof. Keen about why he nets out taxes in his effective demand function.  Not very insightful.   He just said it's "cash flow."....hope he describes his re-formulation of the usual demand function in a more user-friendly way in the future.... Maybe he's too in-the-weeds.