Re: "Is Macroeconomics Believable?"

["John Gelles" <jjgelles@xxxxxxxx>]

	Charles writes (see message below for full original text):

"In a modern economy, saving, for all practical purposes, is another way
of spending. Long-term it adds to our productive capacity and lower
prices.  ... [Do not assume]  that, ... in a modern system, ... saving
can go to waste, so government must absorb this pool of idle saving
and inject it back into the circular flow.  [For if this is so, ] ... where

in the system does saving go to waste."


	In reply to the above, let me say:

	The question is not the abstract wonder of what
	is wasted.  There is the obvious waste of lives
	due to unemployment and poverty.

	The real question is why does not government spend
	until inflation nearly becomes worse than poverty?

	Naturally, the spending must not be wasteful.

	But, what we see is obvious failure of the modern
	world to provide the equivalent of marginal
	farming, hunting and fishing, as the way to take up
	the slack in the job market while debt is resolved
	and business restarts with new jobs.

	Charles -- are you in agreement with Bolch?  Do
	you see Keynesian based full employment as
	passe, and Friedmanism as triumphant?  Do you
	see all poverty and unemployment as character
	failure and not systemic problems?

	If character creates unemployment, where
	does NIARU fit?  The NIARU hawks think
	THEY cause unemployment and they thereby
	PREVENT inflation.

	I am confused Charles -- my fault -- but are you
	or ain't you a Keynesian -- by your own lights?

	I of course am.  Even if my lights, which demand
	zero-taxes, low interest and less regulation, have
	much in common with supply side theory.

	I see public spending on peace keeping,
	infrastructure, environment and ending poverty as
	being made possible, in the face of potential
	inflation, by massive private frugal saving in IEA's
	and other favored accounts.

	John Gelles

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From: Chas Anderson <chasna@xxxxxxxxxxx>
To: POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
Subject: Re: "Is Macroeconomics Believable?"
Date: Saturday, August 22, 1998 10:09 PM

At 06:22 PM 8/22/98 -0700, you wrote:
>	Charles Anderson joins Ben Bolch in suggesting
>	there is  NO  paradox of thrift  IF  what is saved
>	by one person is in a form to be lent to another
>	(or spent by another if what is saved is invested
>	in equities, etc.).
>
>	One has to agree with this idea for a few people
>	and a few rounds of saving and lending/investing.
>
>	But, as more people save/invest and less money
>	ends up demanding things that people sell for a
>	living, the economic output of a system declines
>	to depression levels.
>
>	The economy that can no longer rely on marginal
>	farming as a stopgap aid in meeting business cycles
>	that destroy debt and then restart, goes 	into severe
>	shock from unemployment and insolvencies.
>
>	Does Charles agree that the best way to make
>	the economy of private frugality bring about full
>	employment and full attention to environmental
>	needs is for government to spend what others save?
>
>	John Gelles

In a modern economy, saving, for all practical purposes, is another way
of spending. Long-term it adds to our productive capacity and lower
prices. Your question assumes that, even in a modern system, that saving
can go to waste, so government must absorb this pool of idle saving
and inject it back into the circular flow.  The question, then, is where
in the system does saving go to waste.

Chas