tag:blogger.com,1999:blog-7820485130017459619.post7031812933525106757..comments2023-10-24T01:46:47.151-07:00Comments on CynicusEconomicus: The Perpetual Economic Growth MachineUnknownnoreply@blogger.comBlogger14125tag:blogger.com,1999:blog-7820485130017459619.post-57142825922628367992012-10-21T03:00:34.578-07:002012-10-21T03:00:34.578-07:00Or as history shown us war, and I don´t think the ...Or as history shown us war, and I don´t think the next one will be very pretty!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-30706592961960273302012-10-10T19:59:10.491-07:002012-10-10T19:59:10.491-07:00Levels of consumer debt will be limited by the abi...Levels of consumer debt will be limited by the ability of the individual to repay. Levels of government debt can be sustained for much longer(in the US at least) by reducing borrowing costs and shifting the debt onto the Federal Reserve. The US debt will never be paid down. It is no longer possible. But I'm no longer certain that the US will have it's day of reckoning anytime soon.elasticnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-83115177286218422792012-10-09T03:01:20.716-07:002012-10-09T03:01:20.716-07:00@Lord Sidcup
Yes, people still like to pretend th...@Lord Sidcup<br /><br />Yes, people still like to pretend that the economy is the same as a business or household's books ("Greek loan repayments are due on the xx/yy/zz") which seems to make it all above board and sustainable; and at the same time they believe that growth will magically repay all previous debts without any sacrifice needed on the part of the borrowers. <br /><br />I have noticed (I think) that when CE refers to the multiplier effect, he means it as purely illusory growth and that people should factor this into their predictions. However, commenters in the Guardian, for example, always seem to think of it as real growth, and can't understand why it shouldn't be harnessed ad infinitum. This morning on Radio 4, Stephanie Flanders, Evan Davis et al were referring to the multiplier in the negative sense i.e. the more you cut government spending, the lower GDP becomes. (Apparently it was once thought to be a 50% ratio, but is now looking more like 100%.) They left it to the listener to fill in the blanks and conclude that the only true way is higher spending.<br /><br />Where do materials and energy factor into this? CE's central thesis is that we now have many more workers globally, but not greatly increased resources. It seems that a 'digging holes then filling them in again' pseudo-Keynsian strategy may once have been fairly harmless if the workers really were idle and likely to be for some time, but nowadays every useless activity has a real cost in scarce energy and materials for which real money has to be borrowed - and which fairly obviously encourages mal-investment in the manufacture of vans, shovels and copies of The Sun. What's the alternative? Without government intervention doesn't the whole thing collapse anyway? The harder people work, the more resources are consumed until industry grinds to a halt - unless we really do believe that the Invisible Hand will always find a way around resource constraints. Perhaps a way out would be some sort of fanciful international agreement to limit working hours and let everyone take it easy but with a low standard of living - or maybe to release a bird flu virus or similar... Lemmingnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-84079008881336050332012-10-08T12:53:04.205-07:002012-10-08T12:53:04.205-07:00Lemming
I haven't seen documentary you mnetio...Lemming<br /><br />I haven't seen documentary you mnetion, but the excellent Richard Duncan (previously discussed on this blog) suggests an even more extreme version of this solution. He says that as trillions of dollars are going to be borrowed anyway, the US government should use these trillions to create new industries (rather than infrastructure) in energy, medicine, food etc. that will ensure American leadership and economic dominance for years to come. <br /><br />http://www.cbsnews.com/8301-504367_162-57501925-504367/the-new-depression-the-breakdown-of-the-paper-money-economy-by-richard-duncan<br /><br />http://www.youtube.com/watch?v=HwsG-SfHtRg<br /><br />I find CE's 'real' -VS- 'unreal' dichotomy not useful. Maybe it once applied to a world where capitalists were men with 'capital', but we now live in a world of mirrors that Duncan calls 'creditism'. <br /><br />For example - the price of gold has been rising very steadily 12 years ago - is this value 'real'? Of course not. It is purely in the minds of humans -- as we become more fearful, the price increases. <br /><br />Britain, though, is toast. Really tragic. <br /><br /><br />LordSidcupnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-61953685350737842182012-10-08T01:44:37.054-07:002012-10-08T01:44:37.054-07:00I wondered if anyone saw Evan Davis's new prog...I wondered if anyone saw Evan Davis's new programme 'Made in Britain' on the BBC last night. <br /><br />http://www.bbc.co.uk/programmes/b0125v5k<br /><br />In it, he puts the case quite strongly for borrowing to build 'infrastructure' in times of recession, to "give the economy options". Without a new Heathrow runway, or improved roads and railways, Britain will not be ready to create the future growth that everyone agrees we need. In the UK, the population is expected to grow by 10 million over the next 20 years. Do we want everyone to move to the South East (London) or must the economy be balanced away from service industries and back into manufacturing in other areas of the country. Apparently we must expect to make mistakes and build infrastructure that no one will use in the end, but by spending a little more cash we can make it environmentally friendly anyway.<br /><br />Any views? On the face of it, it all sounds very logical, and indeed it is hard to see how private industry on its own can steer the economy in a particular direction without the infrastructure being there in the first place (chicken and egg) so some pre-planning is necessary (goes the argument). <br /><br />However, my immediate thought is that the argument starts by assuming that the current state of the economy is 'real'. If, as you have pointed out on many occasions, CE, the true economy is much smaller than it appears, then we simply won't need so much infrastructure to support it, nor will we be able to afford to build and maintain it. On the other hand, I sense some desperation in the programme: no one can see any alternative other than throwing the dice and hoping for the best. He doesn't say it as such, but I think there's a suggestion that if we borrow lots of money to build infrastructure and then default, at least we'll have the infrastructure; if we don't do that, we'll still default because we won't be able to grow, and we won't have the infrastructure for the future either.Lemmingnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-80739206645191334042012-10-06T09:31:25.099-07:002012-10-06T09:31:25.099-07:00There is no model/theory of human behavior (psycho...There is no model/theory of human behavior (psychological, sociological or economical) that could male predictions with accurate timing, that doesn't mean that they are wrong or poor models. A theory should explain, not predict: leave this to physics and natural sciences and don't be so self-critical...<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-61592658006047683292012-10-05T01:25:52.063-07:002012-10-05T01:25:52.063-07:00Overly harsh on yourself CE, the defence above is ...Overly harsh on yourself CE, the defence above is unnecessary and seems almost whiny.<br />You got the direction right before just about everyone else. Timing is for traders and damn the rest. <br /><br />I am indebted to you* as this blog first awoke me and allowed me to prepare for whatever-it-is-that'scoming. <br />I found you in the Guardian comments section which indicates how far off the track I was. <br /> <br />Here is someone who is very specific on the mechanics of Western downfall. <br />http://fofoa.blogspot.dk/2011/04/deflation-or-hyperinflation.html<br />An Austrian tinged hyper-inflationist – very verbose, but by far the best Goldbug blogger I know of. <br /><br />For me the big question is whether we are facing collapse by inflation and/or deflation. <br />I am working through FOFOA's back catalogue and there is a lot there that rings true to me. <br />Interested to hear yr thoughts. <br /><br /><br />*This debt is like all the other debt in the world; it will never be repaid :)LordSidcupnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-38507397910165238852012-10-05T01:25:31.562-07:002012-10-05T01:25:31.562-07:00Overly harsh on yourself CE, the defence above is ...Overly harsh on yourself CE, the defence above is unnecessary and seems almost whiny.<br />You got the direction right before just about everyone else. Timing is for traders and damn the rest. <br /><br />I am indebted to you* as this blog first awoke me and allowed me to prepare for whatever-it-is-that'scoming. <br />I found you in the Guardian comments section which indicates how far off the track I was. <br /> <br />Here is someone who is very specific on the mechanics of Western downfall. <br />http://fofoa.blogspot.dk/2011/04/deflation-or-hyperinflation.html<br />An Austrian tinged hyper-inflationist – very verbose, but by far the best Goldbug blogger I know of. <br /><br />For me the big question is whether we are facing collapse by inflation and/or deflation. <br />I am working through FOFOA's back catalogue and there is a lot there that rings true to me. <br />Interested to hear yr thoughts. <br /><br /><br />*This debt is like all the other debt in the world; it will never be repaid :)LordSidcupnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-81649533696645036522012-10-03T12:14:49.292-07:002012-10-03T12:14:49.292-07:00I've followed your blog for some time, and I t...I've followed your blog for some time, and I thought that your original commentary putting a date on the 'coming crash' was unnecessary at the time. It was as if you were forced to make a prediction to establish credibility. I would suggest that your analysis has been good enough all along without trying to enhance it in this way.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-49478161163310311432012-10-03T12:03:53.510-07:002012-10-03T12:03:53.510-07:00Your perpetual growth machine is the same mythical...Your perpetual growth machine is the same mythical beast that our politicians use when they try to convince (con) us that cuts in investment or numbers will produce more productivity in either the private or public sectors.<br />Unfortunately the fools believe both to be the truth.Barnacle Billhttps://www.blogger.com/profile/17257546424880537005noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-74152007822497953112012-10-03T11:36:39.468-07:002012-10-03T11:36:39.468-07:00Wrong?
As a regular reader since 2008 I thought yo...Wrong?<br />As a regular reader since 2008 I thought you had be amazingly accurate.<br />You have dared to stick your neck out and enlightened us on what was approaching way before the media "got it".<br /><br />When you where questioning why Iceland was offering high interest, our local councils were investing our money there. I actually stopped a friend putting £30,000 there a couple of weeks before it went.<br /><br />Another that comes to mind was the mention of us losing some famous car makers.<br />Well Saab and Rover went and the Chinese bought Volvo.<br /><br />Our local council has to save millions next year, lets hope "forget care for the elderly" doesn't come too soon.<br /><br />a4b44doorfordhttps://www.blogger.com/profile/17419701493276514210noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-39204386411671157902012-10-03T04:54:56.930-07:002012-10-03T04:54:56.930-07:00> If I borrow money, and use that money to pay ...> If I borrow money, and use that money to pay for <br />> consumption, it generates activity in the economy. The <br />> borrowed money circulating through the economy creates <br />> activity, and that reflects in the GDP figures. Take away <br />> the borrowing, and GDP falls.<br /><br />First, if this is supposed to be a description of government spending, the latter includes a large public investment component, which turn strongly supports the private sector (e.g., better transport for business, applied R&D leading to technology gains, health care for workers, increasing their productivity). <br /><br />And secondly, the consumption spending will also generate private investment activity, for demand and sales drive the level of private investment.<br /><br />Whether the debt is public or private, this is the way capitalism has always worked throughout modern history. <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-85809860051320177402012-10-02T13:12:38.554-07:002012-10-02T13:12:38.554-07:00Not related to this post but just a message to say...Not related to this post but just a message to say thanks for taking the time and effort to continue this blog.<br /><br />As a complete novice to economic and financial matters your posts have helped me understand things clearly.Anonymoushttps://www.blogger.com/profile/02278394183702146144noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-50974095864245785242012-10-02T12:23:09.259-07:002012-10-02T12:23:09.259-07:00'The perpetual borrow and spend, create revenu...'The perpetual borrow and spend, create revenue, repay borrowing machine is a truly unique idea. It is unique in that so many people have persuaded themselves of its possibility. We laugh at the perpetual motion machine, but many view this perpetual economic growth machine as possible. No loss. Just gain.'<br /><br />The perpetual growth delusion is founded upon hopes for endless gains from capitalized geo-rent. <br /><br />Foldvary explains how the 18 years land cycle drives the business cycle, leading to inevitable boom/bust:<br /><br />Fred Foldvay: The Progress Report: Real Estate Forecasts 2012–2026 <br />http://www.progress.org/2012/fold787.htm<br /><br />Fred Foldvary: The Business Cycle: A Geo-Austrian Synthesis <br />http://www.foldvary.net/works/geoaus.htmlFourhttp://twoplustwoequalsfour.orgnoreply@blogger.com