The textbooks’ two momentary intersections of supply and demand curves: 1) at a price of goods and services (the macrostatic AD-AS model), or 2) at the interest-rate, rental-price of money (the macrostatic IS-LM model), plus, the textbooks’ now-debunked Phillips Curve correlation, are – all three – sublated by, and driven into the shadows by, the purely relational field theory called Functional Macroeconomic Dynamics.
The key elements grounding the discovery and formulation of the immanent, field-theoretic intelligibility of the economic system include: (Continue reading)
This entry should be read in conjunction with the reading of The Road Up is the Road Down; The Mechanism of Rising or Falling Prices. Also, in “the Road UP …”, note well the phrase “a merely theoretical possibility.”
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 actual recent 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)