anyone else read ej's twits?

[gwynedd1]

Re: anyone else read ej's twits?

And you don't find this COMPLETELY ABSURD?



It has price because it has value. It has "use value". It has "exchange value". It has "subjective value". It has "intrinsic value". It has value in basically every sense other than what LTV says. Why else would people pay for something? Because everyone that buys land is acting irrationally? Something that generates rent has value.

I would agree certainly that LTV saying land has no value is absurd. LVT is basically aimed at reducing land exchange value and to increase use value.

http://www.henrygeorge.org/pchp26.htm

[DSpencer]

Re: anyone else read ej's twits?

Think you could afford my canned nanny berry puree?

Maybe you'd trade it for some hand crafted maple syrup?

Did someone not mention that Marx called the value systems distinctly as use value and exchange value? He did not have a single value system so why do people pretend he did?

I thought that the labor theory of value only related to exchange value. Is this not correct?

What's the flaw? Put out a value system of your own and watch me poke holes in it. Value is like defining good and evil.

Someone misses their plane so its bad.
The plane crashes which makes it good that they missed the plane.
Stalin was the one who missed the plan so its bad.

good and evil, value .....

Give me your flawless value system....The only thing marginal utility does is indicate very specific transactions and they often conflict with larger more general value systems.

All those have marginal utility for those that demand it. If someone wants crack then crack has utility according to marginal theory. The same reductio ad absurdum method was used to "discredit" labor theory so don't call the kettle black.

I understand that it is easier to criticize than to offer alternatives. However, the claim was made that Marx predicted our economic crisis working from the LTV and I stated that I believe he was using a flawed methodology. The burden of proof is on those making and defending the claim. Disproving a different theory does not prove yours. If the big bang is disproved it doesn't mean that the Genesis creation story is therefore correct or vice versa.

Had I stated that theory XYZ is correct and therefore it proves that the economic crisis was caused by ABC then it's logical to try poking holes in it. Nowhere have I pushed an alternative theory that I claim is more correct. I have only mentioned subjective theory of value to prove that alternative theories do exist (it was claimed earlier that they don't). For what it's worth I find subjective theory of value to be much more logical. And yes, clearly some people value crack, prostitution, cigarettes and all other kinds of vices that others may find distasteful. That people can make stupid decisions and poor valuations is not in question. In fact, showing that people have different valuations is further proof of the logic of subjective value.

That isn't what the labor theory of value is so I don't know what point your statement makes. Labor theory tries make the costs of things in line to what it takes to produce them as a belief based upon the benefits of human progress. Its the belief that political economies should encourage industry and longer term value propositions, and not to reward wealth by exchange values which net to less than 0. Labor value recognizes the strategic benefits of encouraging production. Private capital does not benefit from maximum public prosperity. Adam Smith said this.

My issue with Marx is that he seems to have started with a goal in mind and created an economic system that attempts to justify it. I don't think his economic theories make sense and therefore don't prove his point.

[gwynedd1]

Re: anyone else read ej's twits?

Maybe you'd trade it for some hand crafted maple syrup?

That is good stuff too.

I thought that the labor theory of value only related to exchange value. Is this not correct?

I would not think so. The classical economists well knew that things sold for something other than the cost to produce, but they viewed it as a dead weight. However it was viewed this way from the point of view of general prosperity. Economics tends to focus on the private interest perspective. Political economy however is quite different. Labor theory somehow became associated with Marx. However from what I recall he looked at capital profits to be sourced from the labor surplus. So his labor theory was somewhat something different than the classical economists.

I understand that it is easier to criticize than to offer alternatives. However, the claim was made that Marx predicted our economic crisis working from the LTV and I stated that I believe he was using a flawed methodology. The burden of proof is on those making and defending the claim. Disproving a different theory does not prove yours. If the big bang is disproved it doesn't mean that the Genesis creation story is therefore correct or vice versa.

As I said before Marx was not the only exponent of labor theory of value. I tend to think his view was flawed on it even if he did point out faults in the assumptions of primitive accumulation. He just looked at capital profits being nothing more than taking the surplus of labor. Value theory is not very formulaic of any kind. That is why I think it must be viewed as an object of complexity.

Had I stated that theory XYZ is correct and therefore it proves that the economic crisis was caused by ABC then it's logical to try poking holes in it. Nowhere have I pushed an alternative theory that I claim is more correct. I have only mentioned subjective theory of value to prove that alternative theories do exist (it was claimed earlier that they don't). For what it's worth I find subjective theory of value to be much more logical. And yes, clearly some people value crack, prostitution, cigarettes and all other kinds of vices that others may find distasteful. That people can make stupid decisions and poor valuations is not in question. In fact, showing that people have different valuations is further proof of the logic of subjective value.

Yes I would agree that subjective value is another good model to use. One thing I think of as a definition is deciding between what is most likely to allow human life to sustain itself such as after the dying of the sun verse a short term pleasure. Value depends on this decision.

My issue with Marx is that he seems to have started with a goal in mind and created an economic system that attempts to justify it. I don't think his economic theories make sense and therefore don't prove his point.

Again all the classical economists used labor theory but certainly did not apply this as to what someone would pay. It was what they thought people should pay, and they wanted polices to reflect the cost of production not how much interests could extort from one another. That labor theory is all Marx is a bit of a myth. So also is the idea that all the labor theories were the same. I don't like his theory either since I do not see capital profits as entirely skimming the labor surplus. I believe monopoly does this, not capital. Land is the biggest of them all. Private property is quite literally a government granted monopoly and I find it ironic how many libertarians fail to recognize it as a creature of government and a monopoly at that. This does not mean I am against it in principle but the monopoly rents it creates should be the source of the revenue not labor which is collectively a strategic value.

[Raz]

Re: anyone else read ej's twits?

Mosler attributes the end of inflation because of the Natural Gas Policy Act of 1978 which allowed the prices to rise for gas and allowed energy companies to get off oil. I would also add Alaska and the North Sea. ...

Mosler was dead wrong.

Raise real interest rates high enough and you kill everything: consumer lending, commercial lending, inflation, and economic growth.

[gwynedd1]

Re: anyone else read ej's twits?

Mosler was dead wrong.

Raise real interest rates high enough and you kill everything: consumer lending, commercial lending, inflation, and economic growth.

High interests rates can tend increase loans. Cash is hoarded while higher interest rates cause bond purchases. One reason why low rates had no effect on housing was that "zero risk" is loaned at any rate. Not every asset will attract money at low rates like this. "Housing can't loose" hurt more than low rates. I also think treasury yields make people who hold them feel rich. So there are lots of counter trends. Loans are liabilities and assets . Tampering one side of the equation generally impacts the other. In an environment where people want to borrow money at higher rates and can't because the return is too low for the lender then it may not have the effect people think. Why would banks make risky loans at 3%? I don't think interest rate is a good measure. The rate only matters to the extent that it affects the supply of money and the rate of borrowing. Higher rates do reward the lender and makes them want to loan.

http://www.hoover.org/publications/h...t/article/6549

“After the U.S. experience during the Great Depression, and after inflation and rising interest rates in the 1970s and disinflation and falling interest rates in the 1980s, I thought the fallacy of identifying tight money with high interest rates and easy money with low interest rates was dead. Apparently, old fallacies never die.”

[Raz]

Re: anyone else read ej's twits?

This has nothing to do with my statement. Consider the difference between "nominal" and "real".

[gwynedd1]

Re: anyone else read ej's twits?

This has nothing to do with my statement. Consider the difference between "nominal" and "real".

I did and rejected it.

You can read his opinion here.

http://moslereconomics.com/2012/07/0...ost-article-2/

To me lowering interest rates introduce so many contravening forces that the real effect is rather murky.

Real oil prices dropped like a rock. How can that not receive the bulk of the credit?


http://www.inflationdata.com/inflati...ices_Table.asp


Instead we have the cult of Volcker.

I think fiscal policy is far more influential. Lets not forget the Bush deficits during the housing bubble. Either way people will be happy to buy up GNMA at 9%. Lots of money will be available.

[Raz]

Re: anyone else read ej's twits?

I did and rejected it.

You can read his opinion here.

http://moslereconomics.com/2012/07/0...ost-article-2/

To me lowering interest rates introduce so many contravening forces that the real effect is rather murky.

Real oil prices dropped like a rock. How can that not receive the bulk of the credit?


http://www.inflationdata.com/inflati...ices_Table.asp


Instead we have the cult of Volcker.

I think fiscal policy is far more influential. Lets not forget the Bush deficits during the housing bubble. Either way people will be happy to buy up GNMA at 9%. Lots of money will be available.

I now remember reading this years ago. I rejected it then and I reject it now.

In 1985 I was sitting in front of a Bunker Ramo quote machine with two clients who were short crude oil when it collapsed. It had little to do with NatGas abundance and everything to do with the Saudis who were fed-up with quota cheating by other OPECkers. At the same time the "invisible hand" of Adam Smith had been working since 1975 to effect conservation and we were fortunate to see new oil supplies brought online, particularly the North Slope and the North Sea. Cantarell's production was also rising, but the key to the lock then was Saudi Arabia.

If higher REAL rates pull money into GNMAs and other long-dated paper the funds have to come from somewhere. At a high enough real rate of interest on a AAA Rated 10-year note it makes little sense to keep ones capital in equities, and much less in gold.

Mr. Mosler is a smart man. I just don't happen to agree with his theories.

[gwynedd1]

Re: anyone else read ej's twits?

I now remember reading this years ago. I rejected it then and I reject it now.

In 1985 I was sitting in front of a Bunker Ramo quote machine with two clients who were short crude oil when it collapsed. It had little to do with NatGas abundance and everything to do with the Saudis who were fed-up with quota cheating by other OPECkers. At the same time the "invisible hand" of Adam Smith had been working since 1975 to effect conservation and we were fortunate to see new oil supplies brought online, particularly the North Slope and the North Sea. Cantarell's production was also rising, but the key to the lock then was Saudi Arabia.

If higher REAL rates pull money into GNMAs and other long-dated paper the funds have to come from somewhere. At a high enough real rate of interest on a AAA Rated 10-year note it makes little sense to keep ones capital in equities, and much less in gold.

Mr. Mosler is a smart man. I just don't happen to agree with his theories.

Starting to look more like a complex cause situation. Based upon what you are saying natural gas was not the only thing chasing higher oil prices. It was also oil itself. It still does not point to Fed policy.

Again so what about the high rates pulling in money from AAA rated bonds? If someone is raking in 20% on a 10 year he doesn't feel rich? Doesn't the seller get the cash? Where does the seller put the cash? People with treasuries can sell them to make large purchases as good as cash. Why does rising home prices make people feel rich but 20% return on another can't lose investment won't? Its Fed double speak and it why Fed policy is way overrated. So again I agree that it was oil prices and fiscal policy that ended inflation. I just fail to see large differences between interest bearing same as cash and non interest bearing same a cash. That is why all this QE isn't really changing the behavior of the security.

[Raz]

Re: anyone else read ej's twits?

Starting to look more like a complex cause situation. Based upon what you are saying natural gas was not the only thing chasing higher oil prices. It was also oil itself. It still does not point to Fed policy.

Again so what about the high rates pulling in money from AAA rated bonds? If someone is raking in 20% on a 10 year he doesn't feel rich? Doesn't the seller get the cash? Where does the seller put the cash? People with treasuries can sell them to make large purchases as good as cash. Why does rising home prices make people feel rich but 20% return on another can't lose investment won't? Its Fed double speak and it why Fed policy is way overrated. So again I agree that it was oil prices and fiscal policy that ended inflation. I just fail to see large differences between interest bearing same as cash and non interest bearing same a cash. That is why all this QE isn't really changing the behavior of the security.

I honestly can't follow your logic. Perhaps you should ask EJ to explain why the real cost of money affects all asset prices.

There is no such thing as a "can't lose" investment. And surely you don't believe that "all this QE" hasn't affected the price of bonds and equities, do you?

[radon]

Re: anyone else read ej's twits?

Have you ever watched The Money Masters? ;)

Enslaving one group of people in debt to make another group that intentionally committed trillions of Dollars of fraud whole is more aligned with fascism than capitalism, unless one doesn't distinguish between the 2.

This situation reminds me of The Confidence Man. It is in a way easier to cheat another con-artist. Nobody forced them to commit financial suicide by signing those loans, or to commit fraud by falsifying things like income on loan documents. We are quick to blame the bankers but forget that their supposed victims were once their accomplices.

[gwynedd1]

Re: anyone else read ej's twits?

I honestly can't follow your logic. Perhaps you should ask EJ to explain why the real cost of money affects all asset prices.

There is no such thing as a "can't lose" investment. And surely you don't believe that "all this QE" hasn't affected the price of bonds and equities, do you?

When did reality matter so much? Rational expectations is a hoot. What I am saying is people have operated on the assumption of can't lose investments. Real Estate is one of them. In the long wave it might actually be true. That is why real estate mortgages still have buyers. The other is sovereign debt. Does not mean they are can't lose. However the least likely to lose acts like a can't lose investment. Interest rates don't matter as much as preservation. It just seems pretty clear that interest rates , as I have said, are not unalloyed. Changing them makes some people feel rich while others feel poor. Fixed income investors now feel poor so how does that stimulus work? When savers are not getting returns they don't just turn into spenders. They try to save more. As institutions buy housing this will worsen since renters will not feel richer paying higher rents. Gold is a 0 yield money and its held. No one dumps it because it has no effective yield. What does swapping a 10 year note for cash when its 2% of a difference? All the Fed is doing is swapping same as cash. If this fails then all it will do is slow monetary growth since lower yields means lower deficits.

[radon]

Re: anyone else read ej's twits?

When did reality matter so much? Rational expectations is a hoot.

Like that for a loan to exist there must a borrower, and that when leverage becomes more expensive you would expect fewer of them. Fixed income investors will feel poor when interest rates rise and the bonds in their portfolio are worth diddly squat.

[gwynedd1]

Re: anyone else read ej's twits?

Like that for a loan to exist there must a borrower, and that when leverage becomes more expensive you would expect fewer of them. Fixed income investors will feel poor when interest rates rise and the bonds in their portfolio are worth diddly squat.

Right that's my point. Its netting out to nothing but only so long as interest rates keep dropping. Now they have little hope of any future gains which is the end game of low interest rate environments. In a glut what does more investment capital vs consumption mean? Now companies have money they still can't use even cheaper while the consumption buying power drops. When you have an oxygen starved fire piling on more wood cuts off more oxygen while there was already lots of wood.

As of now corporations are sitting on large cash hoards. How much will raising interest rate affect them offsetting the fixed income buying power?

Its also causing all the havoc in public pension funds.
http://www.american.com/archive/2012...-low-low-rates


It does not just pull the rope in one direction and in this environment its particularly feckless. And QE is particularly damaging in this regard because low short rates might imply long term inflation but QE pounds down that nail as well.

Fed influence is overrated.

[jk]

Re: anyone else read ej's twits?

this is an interesting thread to catch up on [after several days without electricity]. overall, i much enjoyed the discussion, save the long detour into the labor theory of value versus other theories. re the longer-term evolution of the economy, and the rising cost of energy in suppressing economic activity, i think we need to keep in mind that we are in the midst of another industrial revolution. when agriculture was mechanized in the late 19th century, agricultural employment plummeted while the value of production continued to increase. we are now seeing the same in manufactured good, where:

The atrophying of the country’s ability to “make real things” has been much lamented, but the truth is that U.S. manufacturing has never been stronger. While there are no universally accepted numbers, the United Nations Statistics Division calculates that the dollar value of goods made in America is at an all-time high of $1.9 trillion, just about even with China. The catch is that the number of American workers needed to create all thatvalue has dropped steadily. In the mid-1940s, more than half of the New Jersey work force was in factories; today around 7 percent do. There are the same number of manufacturing jobs nationwide as there were in 1941, when the country was just more than one-third its current population.

http://www.nytimes.com/2012/11/04/ma...pagewanted=all

where are the new jobs going to be? service jobs which can't be done more cheaply remotely over the internet. some of those jobs are high-paying, but most are not. overall, global wages are rising, but mostly in china.