Author Archives: Functional Macroeconomic Dynamics

An Outline of General Values and Money’s Values

In the first section .I., we’ll list a) a ranking or scale of preferences of meanings and values within the ecology in which humans live, b) money’s values from different points of view, and c) an ordered hierarchy of economic activity. In the second section .II., we’ll add detail to that scale of preferences and situate money’s values and the ordered hierarchy within the scale.  Finally .III., we’ll display excerpts to point readers to original sources.   One might find this outline useful when reading A Must-Read: Fred Lawrence, “Money, Institutions, And The Human Good”: An Ordered Perspective Distinguishing Social and Monetary Values. Lawrence points out that Lonergan properly clarifies the concept of exchange value in a free exchange process so as to destroy with a single stroke the mistaken concepts of Adam Smith, John Locke, David Ricardo, and Karl Marx.

Not only do feelings respond to value. They do so in accord with some scale of preference.  So we may distinguish vital, social, cultural, personal, and religious values in an ascending order. (CWL 14, 31-2/32-3)   (Continue reading)

Bloomberg TV and Intelligence Squared’s “That’s Debatable” — “Stop Worrying About National Deficits”

Recently on Bloomberg TV, Intelligence Squared’s That’s Debatable” featured  James K. Galbraith, Stephanie Kelton, Todd Buchholz, and Otmar Issing arguing for and against the proposition of the program’s title, “Stop Worrying About National Deficits”. (Continue reading)

Alberto Bisin Re Modern Monetary Theory

On Saturday, 12/19/ 2020, John Cochrane‘s blog “Bisin on MMT Rhetoric” cited Alberto Bisin’s review of Stephanie Kelton’s Book “The Deficit Myth. “  Alberto Bisin contends, as do we, that So-Called Modern Monetary Theory, as espoused by Kelton and others,  does not qualify as a theory.  Cochrane quotes Bisin:

The book should be seen as a rhetorical exercise. Indeed, it is the core of MMT that appears as merely a rhetorical exercise. As such it is interesting, but not a theory in any meaningful sense I can make of the word. The T in MMT is more like a collection of interrelated statements floating in fluid arguments. Never is its logical structure expressed in a direct, clear way, from head to toe.

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A Must-Read: Fred Lawrence, “Money, Institutions, And The Human Good”: An Ordered Perspective Distinguishing Social and Monetary Values

For an ordered perspective on the role of culture in the ecology consisting of the schemes of recurrence of a) technology, b) production and exchange, and c) politics, one should read Fred Lawrence’s article, “Money, Institutions, and the Human Good.” Continue reading

A Tale Of Two Faulty Circulations

PART A – Examples and Comments

Our contention is that a large discretionary injection of “free money” into the channels of Demand – whether by the Fed or the Treasury – rather than as “money justified” through the channels into productive supply, (S’-s’O’) and (S”-s”O”), is intrinsically inflationary.  New money channeled into either the market for secondary financial assets or into the market for basic products, without the money being  “justified” by productive output, is dangerously inflationary. (Continue reading)

Principles of Macroeconomics

N. Gregory Mankiw’s two textbooks – Principles of Microeconomics (Fourth Edition, 2007) and Brief Principles of Macroeconomics (Fifth Edition, 2009) – have their first chapter entitled “Ten Principles of Economics.” The first four of the ten principles deal with the concept of efficient cause consisting in the subjective psychology of human participants as they make microeconomic decisions about their personal economic well-being. In contrast, Lonergan’s Macroeconomic Dynamics: An Essay in Circulation Analysis (1999) first treats the objective macroeconomic situation to whose laws the psychological participants must adapt in the conduct of their lives.  Lonergan seeks the immanent macroeconomic intelligibility of the objective system of production and exchange.  Both Mankiw and Lonergan deal intelligently in the micro and macro realms. Lonergan seeks to treat “first thing first.” Continue reading

Modern Monetary Theory is Backward; It Creates “Illegal” Superposed Circuits

Preliminary note: In this section we are addressing the proper understanding and management of the economic process in normal, non-pandemic times.  We affirm that the current pandemic calls for extraordinary measures.


Unwittingly, first out of ignorance and recently as necessitated by a pandemic, some nations, including the U.S., are wandering into the ultimate menace to the financial system, the spending without constraint blessed and recommended by unscientific Modern Monetary Theory. (Click here and here) The systematic result of MMT’s unconstrained printing of money, unjustified by corresponding production of goods and services, is rampant inflation in prices for a) goods and services and/or b) financial assets.  (Continue reading)

Catherine Blanche King’s Comments And Addendum

I quoted Catherine King in the very first line of my previous blog (below) entitled “Functions Are Not Seen, But Must Be Understood.”

I am grateful to Catherine for responding with valuable comments providing needed context to the quote.  Herewith are, first, her original comments, then, Catherine’s recent Addendum to her comments (sent as her Reply to my previous blog):

Hello John:

Glad to hear from you.

About that quote, it’s really brief but probably needs to be in some contexts at least.

But the underlying issue is one of an already-learned idea about opening our eyes and seeing, and then wrongly equating that common activity with what happens when we understand.  The more nuanced point, then, is that we do sense, but also that WHAT we sense we also ask about . . . so that the wrong-view that seeing equates to understanding can give way to the right view that wonder, questioning, and then having insights is what gives way to understanding and then even to knowing.

But the fundamental issue is to understand that the sensible, and much more, is also intelligible; and that we understand that intelligibility through intelligent process.

Just knowing that intellectually, however, is only a beginning to changing one’s already-set but erred viewpoint, which is usually set in our childhood . . . so it takes a good amount of thought to unearth that view and to experience change at the luminous core of our understanding.

As always, good luck and good insights as you undergo your work.


An addendum: Having recently had conversations about functions and the seeing-understanding complex, I’d like to add this: Functions actually occur in the real world that we commonly and wrongly equate with ONLY “the sensible world.” Ride a bike and you are involved with a set of ACTUAL functions–insofar as your bike riding occurs in the continuum of this particular space and time, which involves sensible elements, one of which, in part, is you.

What was missing in my correspondent’s thinking was his understanding: that instantly recognizing and then riding a bike is a highly-contextualized meaningful reality . . . it already involves a huge background of understanding that the rider has undergone and now is “instantly” privy to . . . including functions that flow into concrete reality, for instance, when we ride a bike. So we can think of functions abstractly, but also as concretely operating in the real world . . . a world we could not operate in had we not understood . . . the intelligibility of the sensible and much more.

In this context, then, “functions cannot be seen,” but they manifest regularly in WHAT we see. And WHAT we see is not seen in abstraction but is already an answer to a prior question about its intelligibility . . . or WHAT is understood, or to be understood.

The person I was conversing with still found the above to be problematic. My guess is that the erred idea . . . that reality is sensible-out-there-only, and that anything we think is in-here, and so not really real . . . is still “stuck” so to speak, in his thinking, having been accepted a long time ago. . . . to which I would say: self-reflection must include the hard-won recovery of early-made framing ideas; that is, if any philosophical progress is to be had.


Functions Are Not Seen, But Must Be Understood

Functions are not seen, but must be understood. (Catherine Blanche King, private communication)

A systematic explanation, then, requires a normative theoretical framework.  The basic terms and relations of such a framework would specify the distinctions and correlations that articulate the causes, which are not necessarily visible, of events that are apparent to all.  (CWL 15,  Editors’ Introduction, lv) (Continue reading)