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Brad DeLong's Grasping Reality 2019-05-16 22:33:10

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Macroeconomic policy management and nowcasting according to Robert A. Heinlein: Robert A. Heinlein (1948): Beyond This Horizon https://books.google.com/books?isbn=1625793146: "'Not "about time"—it is time. I had just completed the first inclusive run when you arrived. Want to see it?' He stepped to the machine, pressed a stud. A photostat popped out. Monroe-Alpha undipped it and handed it to Hamilton without looking at it.... Hamilton examined the photostat. The reinvestment of accumulated capital called for an increase in the subsidy on retail transfers of consumption goods of three point one percent and an increase in monthly citizens’ allowance of twelve credits—unless the Council of Policy decided on another means of distributing the social increment. ‘"Day by day, in every way,

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Macroeconomic policy management and nowcasting according to Robert A. Heinlein: Robert A. Heinlein (1948): Beyond This Horizon https://books.google.com/books?isbn=1625793146: "'Not "about time"—it is time. I had just completed the first inclusive run when you arrived. Want to see it?' He stepped to the machine, pressed a stud. A photostat popped out. Monroe-Alpha undipped it and handed it to Hamilton without looking at it.... Hamilton examined the photostat. The reinvestment of accumulated capital called for an increase in the subsidy on retail transfers of consumption goods of three point one percent and an increase in monthly citizens’ allowance of twelve credits—unless the Council of Policy decided on another means of distributing the social increment. ‘"Day by day, in every way, I’m getting richer and richer,"’ Hamilton said. 'Say, Cliff, this money machine of yours is a wonderful little gadget. It’s the goose that lays the golden egg...

..."What I want to know is this. If nobody computed the amount of new credit necessary to make the production-consumption cycle come out even—what would happen?”

“Your hypothetical question is too far-fetched to be very meaningful,” Monroe-Alpha stated, “but it would result in a series of panics and booms of the post-nineteenth century type. Carried to extreme, it could even result in warfare. But of course it would not be—the structural nature of finance is too deeply imbedded in our culture for pseudo-capitalism to return. Any child understands the fundamentals of production accounting before he leaves his primary development center.”

“I didn’t.”

Monroe-Alpha smiled tolerantly. “I find that difficult to believe. You know the Law of Stable Money.”

...“‘In a stable economy, debt-free new currency must be equated to the net re-investment,’” Hamilton quoted.

“Correct enough. But that is Reiser’s formulation. Reiser was sound enough, but he had a positive talent for stating simple things obscurely. There is a much simpler way to look at it. The processes of economic system are so multitudinous in detail and involve so many promises to be performed at later dates that it is a psychological impossibility for human beings to deal with the processes without the use of a symbol system. We call the system ‘finance’ and the symbols ‘money.’ The symbolic structure should bear a one-to-one relationship to the physical structure of production and consumption. It’s my business to keep track of the actual growth of the physical processes and recommend to the policy board changes in the symbol structure to match those in the physical structure.”

“I’m damned if you’ve made it any simpler,” Hamilton complained. “Never mind—I didn’t say I didn’t understand it; I said I didn’t understand it as a kid. But honestly—wouldn’t it be simpler to set up a collective system and be done with it?”

Monroe-Alpha shook his head. “Finance structure is a general theory and applies equally to any type of state. A complete socialism would have as much need for structural appropriateness in its cost accounting as do free entrepreneurs. The degree of public ownership as compared with the degree of free enterprise is a cultural matter. For example, food is, of course, free, but...


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Bradford DeLong
J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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