… the prime cause (whether it be of inequity or inflation) is ignorance. The dynamics … are not understood, not formulated, not taught….. [CWL 15, 82]
man as external agent has not the systematic guidance he needs to operate successfully the machine he controls. [CWL 21, 109]
Academia’s failure threatens economic liberty.
Lonergan realized that failure to understand correctly what is needed if the economic process is to perform well is gravely threatening to democratic liberty. That is why he undertook his serious study of economics. [CWL 15 Editors’ Introduction, xxx]Continue reading →
The macroeconomics textbooks feature three key macrostatic models, all three of which are sublated by the purely relational field theory called Functional Macroeconomic Dynamics. The textbooks’ three featured graphs are two momentary intersections of supply and demand curves plus the Phillips Curve correlation of unemployment and interest rates:
the intersection of the supply and demand curves at a certain price of goods and services (the macrostatic AD-AS model),
the intersection of the supply and demand curves at a certain interest-rate, rental-price of money (the macrostatic IS-LM model), plus,
the now-debunked Phillips Curve correlation of unemployment and interest rates.
The key elements grounding the discovery and formulation of the immanent, field-theoretic intelligibility of the organic, unified, whole economic system include: (Continue reading)
Recently the Executive and Legislative Branches, through the agencies of the Treasurer and the Federal Reserve Board, have flooded the economic system with free money. Much of the resulting surfeit of new money is detached from any productive contribution. This free, intrinsically inflation-constituting money has had to sit or go somewhere and constitute an effect in circulations of the basic circuit, the surplus circuit, and the secondary market for stocks, bonds, housing, etc. Thus, in order to understand the present inflationary situation, an explanatory “Essay in Circulation Analysis” is a present need.
Please keep in mind that Lonergan, in his purely theoretical essay, does not treat specifically the actualrecent flooding of the money supply, and the associated ultra-low interest rates, in the two operative circuits and in the Redistributive Function. But one can easily glean from his treatments the inflationary implications of this actual flooding and the manner of its correction. Herein, as opportunity allows we graft onto his orthodox treatment comments regarding recent quantitative flooding. We trust the reader to discern what are graftings and what are the underlying matters under discussion at that point. (Continue reading)
The Wall Street Journal of 10/29/2021 featured Alexander William Salter’s article “Fed Tapering Won’t Beat Inflation”. Professor Salter is courageously tackling an important issue. We respectfully suggest that he consider the following: Tapering is not reversing. It is a negative acceleration but, still, a positive velocity. Continue reading →
A sound theory is a good thing to keep around. Clerk-Maxwell’s electromagnetic theory and Kirchoff’s lawsof electric circuits are good systematics to consult when one is designing a system to deliver electricity. Similarly, when one is seeking to understand, affirm, and manage the economic process, a reliable, scientific macroeconomics, which both explains how the process actually works and yields norms for adaptation by human participants, is a good thing to have around.
Common sense is different from science. Common sense describes; science explains. Common sense relates things to us; science relates things to one another. And scientificMacroeconomic Field Theory, also called Functional Macroeconomic Dynamics, is different from the mere commonsense compilation of descriptive accounting aggregates called Gross Domestic Product. Continue reading →
We ask all serious graduate students and professors of macroeconomics, government economists, conscientious politicians, poorly educated journalists, and financial-talk-show “pundits” to please read Bernard Lonergan’s Macroeconomic Dynamics, (CWL 15), Section 26, “The Cycle of Basic Income”. That section addresses several important economic issues:
the adjustment of the rate of saving to the phases of the pure cycle of expansion in the economic process
the complementarymechanism of changing prices
the significance of a relative and an absolute rise or fall of monetary prices
the difficulty with the theory of manipulating interest rates in that a) it lumps together a number of quite different things, and b) overlooks the order of magnitude of the fundamental problem
the ineptitude of the procedure of manipulating interest rates.
Then, after the first reading, please read that section a second time.
[CWL 15] Lonergan, Bernard (1999),Macroeconomic Dynamics: An Essay in Circulation Analysis, ed. Frederick G. Lawrence, Patrick H. Byrne, and Charles Hefling, Jr., vol 15 of Collected Works of Bernard Lonergan, (Toronto: University of Toronto Press)
In our Thanks section we have emphasized our debt to Professor Peter Burley. With a PhD in physics (Adelaide, 1965) and a PhD in Economics (Princeton, 1968) he was well qualified to understand the revolutionary nature of Lonergan’s Macroeconomic Field Theory. (Continue reading)
We are commenting with respect to Andrew Lilley and Kenneth Rogoff’s “conference draft” discussing the advisability of a FRB policy of negative interest rates:
Lilley, Andrew and Kenneth Rogoff, April 24, 2019: “The Case for Implementing Effective Negative Interest Rate Policy” (Conference draft for presentation at Strategies For Monetary Policy: A Policy Conference, the Hoover Institution, Stanford University, May 4, 2019, 9:15 am PST) [Lilley and Rogoff, 2019] (Continue reading)
Harvard Magazine’s podcast, “Ask a Harvard Professor,” recently featured an interview of professors Doug Elmendorf and Karen Dynan – two good people – under the title Doug Elmendorf and Karen Dynan: How Much Can the Federal Budget and the Deficit Continue to Grow? (Click here for video and print versions of the interview)