Tag Archives: borrowing
The Idea of Proportionate Flows Applied to Wages: the Great Depression
The Great Depression of the 1930′s has been very thoroughly gone over in the literature and there would be no need to mention it here except that it is necessary to describe it in terms of the concepts presented in these posts and to link it with the present day. … Read more
Value Inflation – the Trigger, not the Bullet
The direct addition of value inflation to the rate of price increases is quite small. The larger effect arises from secondary influences, in whose shaping human psychology plays an important part. These influences are triggered by the small value inflation component and its corollary, a slowing of the rate of net throughput increase relative to gross throughput increase. … Read more
Borrowing to Invest to Get Rich
Governments in many less perfluent countries have borrowed thousands of millions of dollars in attempting to achieve permanent increases in the level of national economic activity and living standards.
The belief was that by borrowing “wealth” from the “rich” nations, they would be able to use it to generate more “wealth” of their own, enough to pay back the original “wealth” with interest and still leave enough to make their own country permanently wealthier. … Read more
Misconceptions in Practice
The inadequate or wrong concepts of current economics lead to a number of misconceptions, some examples of which will be given.
“Soak the Rich”
The “soak the rich” taxation policy sometimes advocated or practiced by the political left is based on a confusion about the nature of wealth. … Read more
Interest Rates and Ratio Distortion
It is necessary for a lender of money to charge interest because the purchasing power of each money unit is generally expected to fall with time. This has been the trend historically and the very operation of the economy tends to make it so. … Read more
Ratio Distortion and Consumption
Before and during the Great Depression there was under-consumption due to chronic under-payment of workers – fewer goods and services were being consumed than available workers and plant could structure. But what of the stagflationary situation, when chronic overpayment of workers was the distortion affecting more perfluent economies? … Read more
When will the Economy get Back to ‘Normal’?
Someone asked me the other day if I thought the world economy would get back to ‘normal’ this year.
By ‘normal’ this person meant the familiar unsustainable economic pattern of ever-growing consumption. I explained that this might well happen for a while, but because it was not sustainable it would run into trouble and be stalled again in some way, as it was late in 2008 and has been before in recent history. … Read more
Demographic Trends and Living Standards
People are agents of throughput and the younger, healthier and less resistant to change are the people (for a given population, state of technology, and resource availability), then the larger and better quality the throughput they can achieve.
In more perfluent countries, in recent years, several factors have combined to effect a steady increase in the average age of the population. … Read more
Full Wage Indexation – Kindergarten Economics
Full Wage Indexation (FWI), indexing wages to the full Consumer Price Index (CPI), that is, increasing money wages at regular intervals by the same proportion as the rate of price increases during those intervals, is intended to maintain living standards by maintaining real wages. … Read more
Aggregate Demand – Components and Internal Ratio
Before going on any further it is necessary to discuss the term aggregate demand.
Aggregate demand is the sum of two components – investment spending and consumer spending. It would be better if these were treated separately as independent channels through which money flows, since the relation between them is by no means constant in the sense that they can be lumped together and boosted or damped down together. … Read more