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Debt-Limit Negotiations; and Fay Vincent re “Why We Swear To Tell the Truth”

In a recent Wall Street Journal article (5/10/2023) titled “Why We Swear To Tell The Truth”, Fay Vincent quotes the witness’s oath.

Do you swear to tell the truth, the whole truth, and nothing but the truth, so help you God? The oath taker replies, “I do.”

There are truths (veritas) of testimony and cumulative verifications (veritas) of economic laws. Verification  rests in the isomorphism of the pattern of the mathematical expression and pattern of correlations in the data.

In the current negotiations in Congress regarding a debt limit, the swindle called “inflation” is a significant issue.

… the prime cause of inflation is ignorance.  The principles and laws of the normative macroeconomic dynamics of surplus and basic expansion, and surplus and basic incomes are not understood by academe, not formulated in establishment textbooks, not taught by academe to influential persons….. [CWL 15, 82]

Politicians must place the whole truth above personal glory; they must not make a Faustian bargain with their leaders and voters. Consider the following:

Money is a dummy invented by humans to enable divided exchange. Money is a promise of trust between people. But, simple as money’s functional purposes may seem, the determinations of how much money to create through the credit function is not well understood. There are natural limits to the supply of money, though the menace of so-called Modern Monetary Theory’s unconstrained printing of money would violate these limits and swindle the relatively vulnerable populace.

… money is an instrument invented to fulfill a definite task; it is not the ultimate master of the situation.  One has to place first human society which is served by the economic process, and second the economic process which is to be served by money.  Accordingly money has to conform to the objective exigencies of the economic process, and not vice versa. (CWL 21, 101)

Once the possibility of an unbalanced budget is established, the precedent can be invoked to persuade politicians to carry on other wars: wars on illiteracy, on poverty, on ill health, on unemployment, on insecurity.  Where the profit motive does not prove efficacious, the state must intervene. … the increasing volume of transactions requires a larger money supply, and the central bank can be persuaded to meet the demand. … it appears to be less evident that a vicious circle of ever more demands for a larger money supply with no increase in real income is inflationary … In any case there has emerged in fact if not in name the welfare state. … Its mechanism is rather strikingly similar to that of the favorable balance of foreign trade. The debt once owed by colonies to richer countries now is replaced by the national debt. … now the long overdue basic expansion is doled out to one’s fellow countrymen under the haughty name of welfare. [CWL 15, 85-86]. Continue reading 

“Where Does All The Money Go?”

On a quick drive back from the nearby hardware store, I heard some interviewer on Bloomberg Radio ask some expert “Where Does All The Money Go?”  A better query would have been “How does all the new money circulate? Into what channels might it go for immediate use and, perhaps, to cause inflation; and where might it go only to sit idle without productive purpose?” Continue reading

Significant Passages on this Website

The important excerpts herein are quoted often and at greater length elsewhere on this website. (Click here and here).  Here is another arrangement:

Our aim is to prescind from human psychology that, in the first place, we may define the objective situation with which man has to deal, and, in the second place, define the psychological attitude that has to be adopted if man is to deal successfully with economic problems.  Thus something of a Copernican revolution is attempted: instead of taking man as he is or as he may be thought to be and from that deducing what economic phenomena are going to be, we take the exchange process in its greatest generality and attempt to deduce the human adaptations necessary for survival. [CWL 21,42- 43] Continue reading

Just Thinkin’

Einstein said in connection with Special Relativity Theory, Everything is relative. Lonergan said, The analysis is purely relational. In, normative Monetary Field Theory all flows of products and payments are connected in a purely-relational, unitary system.

How many socioeconomic problems are primarily cultural problems, with leaders throwing more and more money in vain at what are basically problems of culture and its ethos? A president or prime minister or chancellor must not confuse cultural problems with economic problems.  A vast educational effort is called for.

If Faye Vincent’s essays in the Wall Street Journal were gathered into book form, I’d pay money for the book.

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

when a limited liability company has served its day, it goes to bankruptcy court; but when bureaucrats take over power, they intend to stay. … when the pressure of terrorism is needed to oil the wheels of enterprise, then the immediate effect is either an explosion or else servile degeneracy. (CWL 15, Editors’ Introduction xxxiv) Continue reading

Absorbing Several Trillion Dollars; Wishful Thinking vs. Scientific Economics

Our framework is the Macroeconomic Field Theory represented by the two operative circuits connected by “crossovers” shown in the Diagram of Rates of Flow. (See above right and CWL 15, 55)  Important theoretical components of the analysis are a) the abstract explanatory formulation based on the concomitance of basic Expenditures with the basic Outlays, and b) the correlation and normative concomitant variation of the magnitudes and frequencies of flows of products with the magnitudes and frequencies of payments.

P’Q’ = p’a’Q’ + p”a”Q” (CWL 15, 156-62)

Jump to the beginning of this entry and Continue reading

Snippets re Inflation, A Balanced Budget, and Modern Monetary Theory (political quackery posing as abstract, explanatory theory)

… , positive or negative transfers (from the Redistributive Function) to basic demand (D’-s’I’) and consequent similar transfers (from the Redistributive Function) to surplus demand (D”-s”I”) belong to the theory of booms and slumps.  (CWL 15, 64)

The channels of circulation replace the overall dominance claimed for general equilibrium theory, … More positively, the channels account for booms and slumps, for inflation and deflation, (CWL15, 17) Continue reading

Email of August, 2022

Hello again to readers on six continents,

We appreciate the interest of professors and graduate students in Bernard Lonergan’s Macroeconomic Field Theory.   Every department of economics and investment analysis should have at least one staff member who can apply the framework and normative theory of Functional Macroeconomic Dynamics to their investigations.

Recent entries of special interest include:

Entries that may be of permanent interest include:

Continue scrolling down through the Home PageTable of Topicsand Key Notions.

Consider writing a paper on Macroeconomic Field Theory for a scholarly journal.

Thank you again for your interest.

John Costello

Wellesley, MA, USA


Modern Monetary Quackery

We have commented elsewhere on so-called Modern Monetary Theory: See herein So-Called Modern Monetary Theory Does Not Qualify As Scientific MacroeconomicsFMD’s take on Greg Mankiw’s Take on Modern Monetary Theory, Alberto Bisin Re Modern Monetary Theory, and Modern Monetary Theory is Backward.

The economic process, like a motor car, has laws of its own which drivers-participants must respect in order to operate the “vehicle” properly and avoid driving it into a ditch or depression. (Continue reading)