Posted by: graemebird | February 9, 2009

Blood-Sucker-Centrals Loyal Opposition.

It is business-to-business spending that first soars when the banks cash-pyramiding rort is running along at high steam. And it is business-to-business spending that first crashes when these bank ponzi-schemes start to come unstuck. It is business-to-business spending that is the only category of spending that can pull us out of a recession once we have fallen into it.

The ultimate authority on matters economic in this country is Gerrard Jackson. Only Gerrard has the Encyclopaedic knowledge of the history of the British Classical and Austrian schools and the history of economic thought preceding way before that. Only he has the necessary background in this country to be able to sift out the poor doctrine from the valid economic science.  And in Gerry’s second-latest column its pretty clear that he understands that it is neither consumer nor government spending that drives the economy. 

“……Nevertheless, its most basic (mistake) — in my opinion — is that it is staffed by people who adhere to the orthodox view that GDP is a fairly accurate measure of economic activity. Although I realise I am in danger of being accused of beating a dead horse here, allow me to once again stress that with consumption at about 70 per cent of GDP total economic activity comes in at more than twice the GDP figure.

This is because the national accounts ignore all intermediate spending. Therefore we conclude that it is business spending, i.e. Investment and savings, that needs to be stimulated, not consumption. The thoroughly sensible view that consumption springs from production and that it is the latter that needs encouragement if living standards are to be maintained let alone increase was a basic tenet of classical economics, ………..”

Now Gerry has been pointing this out for a very long time. No economist working in this country ought to have missed him pointing this out. And I have been pointing this out also for two years.  And so I don’t see much excuse for any economist not to have got this picture, internalised it and worked through its implications. 

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Whenever an allegedly libertarian economist comes up against a leftist economist in this country, it reminds me of the horror of watching your lawyer getting chummy and telling  jokes, to the enemy lawyer at half time during a court case. This is an attack on both adversarial clients and just a disgrace. And though you are paying this clown it becomes clear that he is not working for you in the normal sense.

It might be that the two of them have stitched up the deal already as a sort of compromise. In any case we call this “professional courtesy” or some other phrase that means “the spiritual betrayal of the client” and it feels as though your lawyer, is the enemy lawyers, loyal-opposition.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

After ruthlessly lying his way out of a corner, hopefully Cambria now agrees that the way to deal with the recession is to cut government spending in half like Harding did.

Now in order to advocate this fundamental truth, you need to show that consumer and government spending are not a big part of econmic activity in total. That is to say you need to show the audience the concept of GROSS DOMESTIC REVENUE.

And you also need to convince the audience that when the thieves increase government spending the money is taken OUT OF THE ONE CATEGORY OF SPENDING THAT CAN REPAIR THE ECONOMY. That is to say their stimulus packages don’t create new spending. All they do is shift spending out of business-to-business-spending where this spending is now visible to the national accounts.  Its the ultimate Keynesian bullshitartistry of pulling the spending rabbit out of the business-to-business hat and acting like he created the rabbit anew. 

That key category of spending is known by me as “business-to-business spending” but elsewhere it is known variously as “productive expenditure” “intermediate spending” or even alternatively “gross investment.”

Now Sinclair ought to know this. I alerted him to the economist who most clearly synthesised this analysis two years ago. And yet when he gets in front of the Senate there is no mention of this gear. In fact from Sinclairs notes on the subject, he appears to have been expecting the Senate to take his assertions on the basis of his marvellous authority or perhaps his beloved persona.

Worst of all Sinclair did not attack the Keynesian multiplier root and branch. He did not call for mass-sackings in the public sector, nor for fiscal triage, nor for the GDR and business-to-business figures to be compiled each month and retrospectively so, so we can judge monetary policy from here on in. Nor did he call for government departments to be closed down by the bakers dozen.

BLOOD-SUCKER-CENTRALS LOYAL OPPOSITION

So in reality Sinclair distinguished himself as bloodsucker-centrals loyal opposition.

Nick Gruen is going to go into that same Senate. He will have charts. He got hauled over the coals last time for spending 10 billions without a running a computer model.  He got hauled over the coals by Senators and by Sinclair as well? What the fuck for would you hassle him, for not running a computer program, when he’s just splurged someone elses dollar ten billion times?

So this time when Nick, or some facsimile of the picture of Dorian Grey, shows up in front of the Senate, there will be computer models and beautiful pictures, and they will follow the logic of the Keynesian multiplier which Sinclair has verified by default. Worse then by default. Explicitly as we shall see.

Nick will not, like Sinclair, be relying on his fabulous authority or sex appeal. He won’t just be making assertions. He’ll be using every rort in the Keynesian playbook to swindle the Senators, many of them lifelong bloodsuckers, into thinking they’ve got to splurge NOW and pray that its not too late.

Lets go through Sinclairs lame effort:

Look at this. Absolutely no calls for spending cuts from Sinclair:

“I gave evidence to the Senate inquiry into the fiscal stimulus today. Some of the important bits.

In summary, it is my view that the Senate should reject the fiscal stimulus package in its current format.

WELL YES OBVIOUSLY. BUT LOOK AT HOW HE IS EXPLICITLY ENDORSING SOME SORT OF FISCAL “STIMULUS”. EVEN THOUGH THERE IS NO SUCH THING AS FISCAL STIMULUS. THE EXTRA SPENDING IS MERELY TRANSFERRED FROM BUSINESS-TO-BUSINESS SPENDING. 

 The package contains a lot of spending and little actual stimulus.

DO YOU SEE THE THAT SINCLAIR IS AGAIN ENDORSING THE KEYNESIAN CONCEPT OF A STIMULUS PACKAGE???!!!•

The proposed spending is poor quality expenditure of Federal funding.

RIGHT, BUT WHAT ABOUT MASSIVE SPENDING CUTS SINCLAIR? HOW COULD YOU FORGET ABOUT THE NEED FOR MASSIVE SPENDING CUTS?

 Discretionary fiscal policy has a poor track record of success.

BUT WHY RELY ON THE EMPIRICAL RECORD ALONE WHEN THE VERY IDEA IS IDIOTIC IN THEORY?

 While the government needs to respond to the current economic down turn in a timely manner,…… WHAT WITH A FISCAL STIMULUS PACKAGE??? CLEARLY SINCLAIR IS ENDORSING THE ANTI-ECONOMICS OF KEYNESIANISM RIGHT THERE……

there is no immediate urgent need to rush the package, rather a better quality package should be designed and implemented.

ON WHAT REASONING IS THERE NO URGENCY? OF COURSE THERE IS URGENCY. WE NEED THE MASSIVE SPENDING CUTS NOW SO THAT THE SPENDING WILL WIND UP IN BUSINESS TO BUSINESS SPENDING AND QUICKLY CATAPULT US OUT OF RECESSION AND INTO GROWTH-DEFLATION.

And to finish off:

It also needs to be pointed out that Australia has just experienced a catastrophic failure in economic policy making. While the root causes of the current economic crises are non-Australian, nonetheless both the Treasury and the Reserve Bank of Australia failed to anticipate the impact of the crisis which commenced in mid-2007. The government has already spent $10.4 billion in a previous stimulus package and now proposes to spend an additional $42 billion. An inquiry into how and why the official economic government agencies failed to warn or forecast the local impact of the crisis needs to be undertaken.”

WELL THEY ARE IDIOTS. BUT EVIL LEFTIE POINTED OUT THIS WAS A BIT UNFAIR. ITS NOT LIKE SINCLAIR PREDICTED EVERYTHING.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

NOW I ALERTED SINCLAIR TO THE THEORETICAL STORY OF GROSS DOMESTIC REVENUE MAYBE TWO YEARS AGO. AT THE VERY LEAST I ALERTED HIM TO THE ECONOMIST GEORGE REISMAN.

NOT GOOD ENOUGH SINCLAIR. YOU HAVE TO LEARN ECONOMICS OR YOU OUGHT NOT BE TESTIFYING IN FRONT OF THE SENATE.

IF YOU ARE NOT WILLING TO MASTER THE SUBJECT YOU OUGHT TO PERHAPS RETRAIN AS A PLUMBER.

To be fair Sinclair is a pretty righteous live performer.  So hopefully the disdain for this economic vandalism came out in his intonation, body language, and turn of phrase. Hopefully he expressed the sheer idiocy of what was being proposed by way of performance, to make up for what was lacking in the implied theory of what his notes on the matter had to say. 

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Responses

  1. http://mises.org/journals/scholar/Johnsson2.pdf.

    Hopefully the above link works. All of you need to study this pdf very closely. Its one of the few references to the subject where the theory is being applied to good effect. Particularly study the implications of the 2nd diagram. Some of which are contained in the above thread-starter.

  2. ““In any event many economists are backing large deficit spending. Same problem.”

    EL, that was my point only writ large.”

    The two of you and Boris could try learning to think for yourselves. I’ve been lecturing daily on this matter and I’ve even given you the answers. Sort of like the teachers version of the textbooks.

  3. Well will you look at this:

    “Homer, the retail spending figures at the ABS (and RBA which sources the ABS) go up to November 2008. It is only when the Decembe figures come out and we compare the actual spend and the seasonally adjusted spend that we’ll be able to say definitively what has happened. But it does seem to me that the effect will be very short-lived. Spending multipliers are overall small relative to tax multipliers except in the first first quarter, after that they drop off and the tax multiplier kicks in and remains operating for a substantial period.”

    Sinclair confessing to being a total Keynesian stooge.

    You could get in shape and learn how to shear sheep Sinclair. But you’ll never be an economist.

  4. How is this for total lack of logic on the bootniggers part. He quotes me saying the followingL

    “Beats me Fisk. The point about using new cash to increase spending is that this is the only way to increase spending. I’m not saying you necessarily wish to increase spending. But if you want to increase spending, then cash creation is the way to increase spending.

    There is a lot of fuss going on at the moment where they want to increase spending by stealing another 42 billion dollars off us in addition to the billions they are already stealing off us.”

    Which is all just a fact. But look at the total lack of logic in his conclusion:

    “Bird the inflationist. Who would ever have thought that was possible.”

    What can you say when someone is that much of an idiot? There is just no answer to unreason on that level.

  5. “Question for economists:

    Given that Australia hardly makes anything these days what is the point of providing money to consumers when they will buy products with the result being that most of that money will go to overseas manufcturers; thereby increasing our trade deficit?”

    Why indeed. And thats precisely the effect the “stimulus” packages would have even if we made a bunch more.

    But why are you asking those guys. They don’t understand economics.

  6. Fred Schwartz has passed away.

    http://www.quadrant.org.au/blogs/muehlenberg/2009/02/fred-schwarz-rip

  7. Holy Crap. I never knew the great man was still alive. When is the funeral. I ought to show up. What a brilliant man he was.

  8. Why do you never correct Cambria on the swill he spouts. Now he’s talking more idiocy as an answer to evil lefties question.

  9. “If we buy Chinese products creating a deficit on our current/trade account, it means by definition that it also creates a surplus on our capital account….”

    Listen to this crazy-talk from Cambria. If he wants to call this a capital-account surplus thats fine. But he thinks that nice-sounding words makes this some sort of good thing and a fitting goal of policy.

    If we buy more than we sell, we also borrow more than we lend. A capital account surplus? If you want Cambria, but you are implying this “surplus” is just bloody-marvellous.

    Has he gotten Alzheimers Soon?

    You should pick him up on this stupidity. Or are you yourself too unfamiliar with the subject-matter?

  10. Here is my new security system at Gosford to stop thieves from stealing the copper:

    The little pricks, if they are game, can probably get under the defenses on the way in. But if they are foolish enough to grab some copper they have no chance on the way out. No matter how fast those skinny little streetkids move, there are things that move faster still.

  11. “The same story could be told about Australia, where the Scullin Labor government made the decision in adopting the “Premiers’ Plan” which sought a cut in public spending, a return to budget surplus and cuts to wages. In the light of later Keynesian theory, nothing would have been seen as less likely to have achieved a return to prosperity, but a return to prosperity was most assuredly the result …”

    Exactly. At last you are doing your duty. Why did you take so long. I have been right. And anybody who disagreed with me was wrong.

  12. So is everyone on board now? The solution is and always was massive spending cuts. There is never any valid argument to the contrary. Kates doesn’t seem to understand matters as well as I do. But he understands them good enough. It remains the case that massive spending cuts and running surpluses is where its at.

    We would want at least 50 billions net spending cuts. Maybe ten billions increase, with 60 billions decrease. Something like that. And that means closing government departments by the bakers dozen and mass-sackings. If we can get more spending cuts then that well lets have them. Lets have them at State, Federal and Local level. Its not that you don’t want new spending. Its that you want to deep-six massively more old spending.

    You’ve got to stop this bullshit about anything fiscal being capable of stimulus. Thats rubbish. Thats the inability to stick to a consistent definition of what stimulus means. Stimulus means an increase in NOMINAL spending and only monetary policy can do this.

  13. Here is my new security system at Gosford to stop thieves from stealing the copper:

    But didn’t you tell Tillman you have already ripped out he copper wires.

    YES YOU ARE RIGHT. FINALLY THROUGH THE FOG OF ALZHEIMERS, A DIM MEMORY POKED THROUGH. WELL THATS ONE JOKE RUINED I GUESS.


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