Posted by: graemebird | November 16, 2009

Modifying Policy Based On Gross Domestic REVENUE ………. Using GDP.

An important caveat has been brought to my attention wherein the use of Gross Domestic REVENUE to guide monetary policy is concerned. The point that Reisman makes is that no one measure can give you all the answers. We have to think with a GDR mindset. But GDP does have a place. Stunningly down the bottom I managed to steal the perfect combination for monetary reform. Soon to be locked in as a righteous election demand.

From elsewhere:

“Graeme, I mean all output on a value added basis, as I am interested in minimizing employment fluctuations”

Yes I can see what you are saying. Since GDP is also national income, you are saying that to let GDP tank, and focus exlusively on GDR would leave the situation beyond the ability of a President, using moral suasion, to bring wages and prices down quickly enough to maintain employment.

If you were advising a President, the socio-politico situation would need to be taken into account, since nominal incomes might be constrained to fall only slowly.

I’m not saying that GDP isn’t part of the picture and does not need to be taken into account at all. But I’ll confuse everyone if I try to nuance matters too much at this point.

So GDP is important to bring back after you have banished it long enough to allow oneself the mental shift to go from one paradigm to another. No easy matter. But either you are going to have a GDR PRIMARY FOCUS or a GDP primary focus. And the GDR focus is the right one for business stability.

Supposing your ideal target was 4% GDR growth per year, looking towards the ideal of growth-deflation. And suppose this requires 8% monetary growth at first and 4% monetary growth later. But then the crisis hits. And GDP starts falling faster than wages can hope to fall in order to bring employment down.

Well I can see in that situation a compromise is in order. To maximise business-to-business spending as a PROPORTION of GDR, but without letting GDP fall by more than one per cent per quarter ……. (for the reason you gave)…

Well this requires you to:

1. Bring GDP back into the focus.

2. It may require a one-off jump in money supply immediately by 5% (lets say)

3. You’ll need spending cuts, tax cuts and moral suasion to get wages, salaries and prices down faster than 1% per quarter.

4. Instead of your goal of 4% GDR growth per year, you increase the target temporarily to 8% growth per year to get that good compromise between GDR growth and prevention of natinal income from falling too fast.

I’m sure I won’t be confusing you with the above. But I wanted to avoid a more nuanced take on this matter when I said that GDR is the right goal. Its the right primary goal. But certainly I can see how a crisis of this sort would force you to bring GDP back into the picture.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
We are not talking about final goods sales. We are talking about the totality of sales. Intermediate production as well. The plastic that we use to shrink-wrap pallets of offal. The cleaning products and electricity used in industry. The same shrink wrap that we use for pallets of ingredients that are thrown away before they get to the consumer.

The new wracking that we put up that we may be able to expense in that same year. All intermediate production. I work in a place where we buy stuff from other businesses and we sell stuff to other businesses. We spend real money and lots of it. We have to have a lot of investment to do all this. And yet all our activity is not included in GDP.

Maybe if we get an accounting profit and we don’t release dividends that will be included in the highly artificial net(I) in GDP. But we want the raw data of Gross (I) to tell us how much activity is going on.

The smaller the time period the less good is GDP as a measure of the comparative trend in activity and output. Since output means producer and consumer goods. Consider the leadup to Christmas. Few people working and and a lot of buying going on. Fortnight GDP would soar even as GDR was in the tank and labour hours going through the floor. Labour hours goes with intermediate production and not GDP. As the example shows. Labour a business expense which forms part of every firms Income statement and not the income statement just of the retailers.

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

I was using Christmas as an example. The fact is that GDP is an irrational measure to use, except in the above nuanced way, for quarter to quarter comparisons. Because the basis of employment and growth is how much resources we are funneling back into business renovation. Not into consumption and government splurging. GDP is only relevant in the short-run, insofar as we are limited in terms of how fast we expect nominal income to fall so as to keep everyone employed from a pricing standpoint.

But the main thing is this:

I was taught in my formal education to value companies using a wide range of ratios. Now of course the bigshots just make sure they’ve infiltrated their people into government. But back then we used to actually try and assess companies by multiple measures. Never to fall in love with one metric.

But nowadays we have economists teaching the kids to everything on a GDP basis. More idiotically to try and correlate money growth with GDP, when GDP is an arbitrary subset of spending.

Serious reform is needed.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NGDP contracts? Now there is an excellent idea. Absolutely superb. Because increasing savings and the surplus, and retained earnings in the context of a slowly growing GDR could have GDP collapsing by 20%. Even although the rate at which the economy would be progressing would be massively increased, so long as you could keep everyone employed.

And so NGDP contracts would work like a charm. Because it would deliver the nominal pay cuts to maintain employment even as real pay was increasing. Profitability would be maintained and more resources could be funneled into long-term investment as firms realised they would have to invest to be able to deliver better value for money.

This is the best idea I’ve heard in years. I’m going to steal it and run like a thief in the night.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Well I think we have the ultimate answer to monetary reform on the other threads. Use moral suasion to get all the states on board and companies on board to set labour and salary contracts in terms of NGDP.

Then start setting monetary targets in terms of NGDR.

Just a magnificent combination that will take care of itself. The only outstanding problem being debt levels.

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Responses

  1. Your comment is awaiting moderation.
    ” Short term investments are worng but long term are ok. IS that right , bird. ”

    Thats not right and thats not what I said.

    Under capitalism properly considered, speculation is a most useful function. The valence of speculation comes with opening up a new source of supply and demand that effectively makes both the supply and demand curves more elastic. Hence the market has a solution to inelasticity of supply and demand. But the solution only works to its fullest extent under conditions that I call “growth-deflation”.

    Whereas when we are talking off hot-money we are not talking about opening up a REAL SUPPLY of and REAL THING. Hence the macro outcome of it all can be utterly dysfunctional, since phantom supply of anything is a full frontal attack on the price system.

  2. Your comment is awaiting moderation.

    Here is Phil again. Like all women, married to the man in the moon. But he waxes and wains and cannot keep her out of trouble every day of the month.

    Here is an authentically talented artist from my part of the world. And I wondered what happened to her career. Because I thought she was rather good.

  3. ” Short term investments are worng but long term are ok. IS that right , bird. ”

    Thats not right and thats not what I said.

    Under capitalism (properly considered), speculation is a most useful function. The valence of speculation comes with opening up a new source of both supply and demand, that effectively makes both the supply and demand curves more elastic.

    Hence the market has a solution to inelasticity of supply and demand. But the solution only works to its fullest extent under conditions that I call “growth-deflation”.

    Whereas when we are talking off hot-money we are not talking about opening up a REAL SUPPLY of a REAL THING. Hence the macro outcome of it all can be utterly dysfunctional, since phantom supply of anything is a full frontal attack on the price system.

    But just consider the absolute beauty of authentic voluntarism!!!!!

    The idea of inelastic supply and demand might seem to be a problem!!!! Well what do we have here????

    Human freedom creates an almost insanely clever answer to that problem. So that effectively all demand and supply curves of commodities (ie undifferentiated goods) become elastic.

    The wonderment of liberty and fair property rights is like a beautiful girl. It is aesthetically pleasing as well as mysterious and wondrous.

  4. Your comment is awaiting moderation.
    “GMB,
    I assure you I am interested in any evidence. A friend of mine died in those towers and if there is evidence that it was a conspiracy different from the official version then I would like to know about it. I have read a lot about the attacks and, so far, I see no credible evidence that anything other than the official version is likely to be correct.”

    No you are not the least bit interested. And you have manifestly let your friend down. Since its 8 years on now. And you aren’t interested in finding his killers. Nor were you ever interested in finding his killers. Since if you were interested in that, you would have dwelt for awhile on the evidence. And particularly you would have dwelt on the fact of multiple explosions, the violation of the laws of physics that the official version relies on (forces come in equal and opposite pairs, hence the “pancaking” theory is untenable) and most of all you would have been interested in the molten iron in all three basements.

    People murdered your friend. You aren’t interested. I’m disgusted with your attitude. There is no official story Reynolds. You might have thought there was one but there is no official story. Since no official will stand by any of the debunked nonsense anymore.

  5. Your comment is awaiting moderation.
    Lets test your concern for your friend Reynolds. See if you can justify your theory.

    Show how your theory describes the collapse of the buildings from the top down. In defiance of all known principles of demolition and physics. The collapse at near free fall speed. And all the way down to the grounds.

    THE BUILDINGS WERE TAPERED

    When, since the buildings were tapered, and since forces come in pairs, had the falling top section of the building pulverised one floor as it fell, at least one of its OWN floors as well would have been destroyed. Hence, if we allow that the collapse could have begun at all, under your anti-scientific notion that you won’t justify, then it could only go so far before that section was pulverised.

    Nor would this action send tell-tale squibs exploding up the building. And since the girders were made of steel and not iron, nor do we have any reason for molten iron to flow to the basements like in a foundary. Nor do we have any reason for metal brought to air six weeks later to burst into flame.

    So you are just full of it Andrew. You were never interested in this matter. I’m not laying it on you to kill Putin over it. But you could so some mild interest given your friend was murdered there.

  6. Your comment is awaiting moderation.
    You mean me pointing our our Orwellian language whenever you talk about this subject?

    Chodorov

    17 Nov 09 at 4:57 pm
    Your comment is awaiting moderation.
    The idea is to speak English.

    Don’t say “Climate change” when you mean CO2-Emissions. Don’t say AGW when you mean CO2-Emissions.

    If you say AGW and you mean AGW, it might be nice if you can find any examples of it at sea level not to do with the heat island effect.

    When you say “Worst Case Scenario” mean it. Don’t mean slightly warmer winter mornings for the Siberians and the Laplanders who will now be energy-deprived thanks to this conspiracy.

    I think that due to all this Orwellian talk its about time Saint Jerome reminded us just what is meant by a worst case scenario:

    “a dreadful rumour came from the West. Rome had been besieged 3577 and its citizens had been forced to buy their lives with gold. Then thus despoiled they had been besieged again so as to lose not their substance only but their lives.

    My voice sticks in my throat; and, as I dictate, sobs choke my utterance. The City which had taken the whole world was itself taken; 3578 nay more famine was beforehand with the sword and but few citizens were left to be made captives. In their frenzy the starving people had recourse to hideous food; and tore each other limb from limb that they might have flesh to eat. Even the mother did not spare the babe at her breast.”

    This is the worst case we seek to avoid. Not lesser frost damage to strawberries in August in Hawkes Bay, New Zealand.

    You take care of the worst case scenarios and the good times take care of themselves. But we cannot even reason with a human brain if we do not speak using a human language.

    You ask these people. They won’t be able to give a straight answer to what they mean by the phrases that they use. Which mean all calculations in their head will be confused and dangerously unreliable.

    Chodorov

  7. Mr B

    Did you see the Usurper bow to the King of the Japs? Truly the American Republic is now dead replaced with a Ponzi Caliphate.

    PS I have given the Cat the arse ever since Sinclair Davidson aka Shlomo Davidowitz become Chief Rabbi. It used to be a place where a Patriot could speak his Mind. No more.

  8. In fact it’s a Ponzi Caliphate with Oriental Leanings. Surely no place for a White Man to raise a family.

  9. Your comment is awaiting moderation.
    “Bird, why were the Twin Towers set up for controlled demolition by your unnamed culprits? What was the point of the planes?”

    What do you think CL? I don’t know who they are. I cannot read their minds. But I do know the answer to this question. In the context of the history of terrorism, what is the two purposes of the terrorist organisation insofar as it relates to the relevant regimes or regime factions?

    You know the answer. So don’t hold out on me.

  10. Your comment is awaiting moderation.
    “Kudos to the demolition team. Managed to install all those explosive without even raising suspicions. Shocking coincidence those hijackers flying into the Twin Towers on the same day the demoliton was planned.”

    Right. So are you able to answer CL’s question Warwick. Since the answer to CL’s question is fully contained and implied by what I have just quoted you are writing.

    Not that none of what either of you has said can change the fact of the molten iron in all three basements.

  11. Your comment is awaiting moderation.
    The idea when assessing what happened with 9/11 and coming to some preliminary findings as to who was likely involved……………. is simply to work back from the molten iron in all three basements. That tells you the likely suspects right there and gives you enough to handball onto a serious non-Whitewash, investigation team.

    Of course the team must somehow be protected from being murdered. Given the scope of the conspiracy.

    The second relevant fact is that anything requiring a great many US traitors has to be ruled out. So the emphasis has to be on foreign intelligence regimes.

    The methodology then is a lot more productive and easier than you think. It consists of never keeping these two realities out of the picture.

    You’ve got two forces keeping you on track as you doodle around for answers using the methodology which is appropriate for all epistemology. The idea is simply to think the matter through, letting these two guiding factors help you along and keep you on track.

  12. Your comment is awaiting moderation.
    Okay so we are still dealing with a species who cannot recognise evidence that they cannot process and integrate in with what they think they already know. But if you have scientific humility about these things, you ought to own up to the fact that you don’t know these things you imagine yourself to know, and that even denying one small piece of evidence is a total betrayal of the scientific method.

    Since we are now talking about 9/11 and we are stuck on this matter of not recognising evidence AS evidence, its better to flip to another subject to get distance from the one at hand.

    No-one yesterday could own up to seeing the faces on Mars and recognising them AS EVIDENCE. It was a 100% Catallaxian failure. One person said that he could see the face. But its still a 100% failure. Since he didn’t recognise the face AS EVIDENCE. And since its apparent that he sees things, and particularly the male penis, everywhere he goes.

    This is what WARWICK/PEDRO said:

    “I can see the face. In the interests of full disclosure, I also see faces in clouds and once chanced upon a tree that looked like a penis.”

    But he was lying. He was seeing the male penis in the clouds. And penises hanging from the trees. And things have now gotten so terrible that he’s seen that the entire tree itself is the male homo-sapien penis.

    “I can see the face. In the interests of full disclosure, I also see faces in clouds and once chanced upon a tree that looked like a penis.”

    He goes to the fridge and he sees penises. And when it first happened he’d rub his eyes and see if they went away. Now he doesn’t bother. Thats how bad things are.

    “I’ve lost faith in the agency. Our top agent in the field can’t even distinguish between a man and a woman.”

    Its getting to bad that he’s seeing penises on women. Seeing his wife with a penis. And every woman he sees down the street he sees them covered with penises.

    “I can see the face. In the interests of full disclosure, I also see faces in clouds and once chanced upon a tree that looked like a penis.”

    Worst of all he’s begun to see penises on extremely feminine women that he’s never met.
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Now the fact remains, that you cannot find out anything if all of you persist in pretending that non-evidence is evidence, and also ignoring actual evidence.

    We have seen a complete inversion of the way we are to treat evidence. At Catallaxy the idea is to ignore the real stuff and take the make-believe stuff to be the fair dinkum thing.

  13. Your comment is awaiting moderation.
    “GMB,
    No, I have read the official report and, in combination with much other reading I have done, it makes sense. If you have some evidence that casts doubt on that I would be interested to see it.”

    You are lying. The reports don’t make sense. And they don’t explain the molten iron in the basements (all three. You are lying Reynolds. You are not the least bit interested. Since despite your friend being murdered you have not looked for this material yourself.

    Now I will prove you are not interested.

    Can you recognise these two faces as evidence for a prior space age? Do you even see the faces?

    http://herotwins.hypermart.net/Crowned/CrownedFace.htm

    You’ve insisted a number of times that you are interested in the evidence. You have lied every single time. You make me sick. You have let your friend down. If you were the least bit interested you would go away and find that evidence and present it to me.

    But the very first thing you ought to do is get to a different mental state where you can recognise evidence AS evidence. And cull pseudo-evidence from being taken into consideration.

    Lets have that report you were talking about. Lets have that evidence for your faith-based paradigm. Its not there Andrew. You are lying if you say it is.

    Chodorov
    17 Nov 09 at 7:45 pm
    Your comment is awaiting moderation.
    “imagine Birdie as a top CIA anal(yst). He’d have the country fighting 6 wars…..”

    See how primitive you are Cambria? You haven’t made that molten iron go away BUT YOU THINK you have. A lot of people have said a lot of things on this subject this evening. Or have they?

    See I argue that they haven’t said but one thing.

    All any of you have said in reality is abracadabra. abracadabra…. MAKE THE MOLTEN METAL GO AWAY.

    We have already got a thread of doom at Prodeo. FDB and Reynolds have both participated. They haven’t mentioned any evidence. They haven’t made a valid argument. All they are doing is trying to use incantation to make the evidence go away.

    Chodorov
    17 Nov 09 at 7:54 pm
    Your comment is awaiting moderation.
    Leftie isn’t going to help me out here. So can anyone answer for him?????

    You are regime intelligence. Your main concern, above all others, is to GET AWAY WITH THE CRIME. This is about 10 times more important than participating in the crime.

    Leftie thinks he can make a better fist of it then what the demolition theory would imply. He has some advice to give the regime intelligence.

    But what could that advice be?

    Suppose we are talking about Putin? Has Leftie got advise to give Putin? You could have done it better Putin? If you had not gone the demolition route you would have made a better fist of it.

    Putin says….. Fire away? What is your suggestion?

    So what is it? Anyone?

    Chodorov
    17 Nov 09 at 8:00 pm
    L

  14. Your comment is awaiting moderation.
    “Here’s the thing… where is the proof that there was more to the story than we know.”

    HAHAHAHAHAHAHAHAHAHAHAHA You stupid wop. You are just not getting it. Your request is obviously premature. Seldom do you let me down. You have a gift for idiocy.

    1. You do not yet know the difference between proof and evidence.

    2. You do not yourself have a paradigm of 9/11 which explains the molten iron in all three basements.

    Without 1 you will simply not understand anything I’m telling you. Without 2 you don’t have a competing paradigm to rank against anything I come up with.

    Chodorov
    17 Nov 09 at 8:24 pm
    Your comment is awaiting moderation.
    “So what if molten iron was in the three basements, you fucking moron. There was also a pretty important power sub-station that was taken out there was also a lot of heat. I saw the place 4 weeks later and it was still smoldering.”

    So is THIS the competing paradigm we were looking for? I don’t THINKso. Rather its a trip down memory lane. Wherein you reckoned all the explosions that people heard and were injured by may have been cars backfiring in the basement.

    Chodorov
    17 Nov 09 at 8:26 pm
    Your comment is awaiting moderation.
    What Warwick thought he said:

    “I think they’d have to avoid the tree tops. If not for themselves, then at least for the spectators who paid good money to watch them answer our question.”

    What Warwick really said:

    “Bubble, bubble, toil and trouble, make the iron in the basements go away”

    Warwick. Rub your eyes until the penises go away instead, and the iron in the basements comes back, and take a look at Michael Cremo. See if you can find some evidence for Cremo being right about the mainstream being wrong.

  15. Your comment is awaiting moderation.
    “Oh – and if there was molten iron in the basements what is your story to accommodate it?”

    The situation is your story cannot accommodate the fact that there was molten iron in all three basements, your mate was murdered in one of those buildings AND YOU DON’T CARE.

    Chodorov
    17 Nov 09 at 9:17 pm
    Your comment is awaiting moderation.
    “GMB,
    More assertions. I have seen no real evidence of molten iron in any basements.”

    Of course you haven’t. Because you don’t care. And it wouldn’t matter. Video evidence and human witness testimony does not matter to you.

    You must realise. I think you are just despicable. But how about you prove that you even know what evidence is, and then go and find the evidence so pertinent to your friend being murdered. If you had any honour at all you would act just a little bit more like Greg Shackletons wife and a little less like a banker.

    Now look at this. Its too big to be a pyramid. Its about as big as Walshes Pyramid at Gordonvale. Does it look altered to you? Does that look natural to you?

    Does it look like a Volcano?

    Is it evidence for a former space age? Is it proof of a former space age?

    You see we’ve got to get the basics right. Evidence, proof, convergent evidence, paradigms, competing paradigms in parallel.

    In terrorism we must differentiate between planted evidence aka low-hanging fruit. And real evidence. That might be hard. For example the iron in all three basements…. that evidence might be low-hanging fruit. Concocted by conspirators and employing actors. It could be. It could be all made up. Along with all the evidence linking Saddam to the plot.

  16. Your comment is awaiting moderation.
    “If you say “thermite” (as daggett keeps going on about) then I would doubt it – thermite burns really intensely for a short period and needs no environmental oxygen to burn, so it there was molten iron down there after any more than a day or so then it could not be thermite, as that would have burnt out within a few minutes, above or below ground”

    This is all rubbish. We are talking about THERMATE not Thermite for starters. But the above is all idiocy. And yet IT DOESN’T MATTER that it is completely wrong.

    Its simply another incantation to make the molten iron in the basements go away. As is every last thing that others have said about this story today.

    Chodorov
    17 Nov 09 at 9:38 pm
    Your comment is awaiting moderation.
    “The Six Million Dollar Man versus Sasquatch.”

    If he had of had a basketball and Robert Duvall’s gravitas, he could have sorted out that tall kid pretty quickly.

    But the iron was still in all three basements. CL. I’m surprised that you are looking at matters the wrong way around. Working backwards from the conclusion, and taking the terrorist, and not the regime-intelligence, point of view.

  17. Your comment is awaiting moderation.
    ” Now, wiring up both buildings would have taken at least a few months – maybe six months. It would cost millions of dollars. How did they do that without being noticed? Who were “they”? (Please don’t answer this latter question with a question. Just name who wired the buildings).”

    If no-one investigates they cannot possibly know. But there was a major renovation of the lifts if that is any help. And the conspirators may have gone to the trouble of hiring George Bushes brother to the board of the company that ran security. A pretty clear case of low-hanging fruit if you ask me.

    Taking months to wire up the building is based on the assumption of demolition done at a profit. Rehearsed demolotion, where money is no object, is not going to take anything like that length of time.

    The only outfit which could pull it off was the former Soviet Union. The Americans would have absolutely no chance whatsoever of doing it to themselves.

    Its important to get this right. Since what it means is that the former KGB has gotten up off the ground like a Phoenix.

  18. Your comment is awaiting moderation.
    “So other than basic rancid abuse and bullshit you have no freaking evidence……”

    Evidence for what Cambria you dumb wop? What is your paradigm? 3 buildings fell down for what reason in your view?

    See you don’t even have a competing point of view.

    Chodorov
    17 Nov 09 at 10:36 pm
    Your comment is awaiting moderation.
    I’ve got the evidence you dumb wop Cambria. But it doesn’t matter. Because you don’t care about evidence. I’ll tell you what. You find evidence that could justify a carbon tax and I’ll see what I can do.

    You don’t know what evidence is Cambria. Every day people get to see you act like an idiot. But if you can show you know what evidence is I’ll see what I can do

  19. Your comment is awaiting moderation.
    “Why does she drive folks crazy?”

    tal. You’ve been making a lot of quiet snide comments while these blokes have been swarming around this girl, throwing slime and penises on her online persona. Not a lot of these comments. But at regular intervals. Now I expect sisters to stick together on some things. You pull these boys in when they are being gross towards her. They will listen to you. It ought to be a girl-friendly environment here. Even a girl-power friendly environment. You should be telling these boys off when they act like pigs.

    CL was mostly retaliating, but even he ought to have pulled back maybe 20%. But the rest of them it was just bad-boy behaviour. And something of a witch-hunt. We want to have sensible people stopping that sort of thing before they get this sort of momentum again.

    “Why does she drive folks crazy?”

    Its like Bad-Boy-Bubby getting sodomised in prison. The left weren’t sticking up for her because they demand conformity. The right weren’t sticking up for her because she is coming from a Marxist background. And when no-one is sticking up for you society fucks you over. Ask any whistleblower.


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