The Wall Street Journal of Wednesday, August 2, 2023 featured an article by John H. Cochrane (Hoover Institution and Cato Institute) entitled What We’ve Learned About Inflation.

Preliminarily we state some ideas which, it seems, neither John H. Cochrane nor Alan S. Blinder understand and appreciate:  Continue reading →

The foregoing Section 13 (entitled Rates of payment and transfer) defined two circuits of outlay, income, expenditure, receipts, a pair of crossovers, and four pairs of transfers between the redistributive function and the demand and supply functions. The present section is concerned to watch the circuits in motion, and more particularly to inquire into the conditions of their acceleration. The inquiry involves three steps: first, one asks what is the possibility of circuit acceleration when the crossovers balance and each of the four pairs of transfers cancel, so that the quantity of money in each of the circuits remains constant. [that is, when (S’-s’O’), (S”-s”O”), (D’-s’I’), (D”-s”I”), and G are each zero]. Secondly, we ask what is the possibility of circuit acceleration when the crossovers balance, transfers to the demand functions balance, but transfers to the supply functions do not [that is, when (S’-s’O’) (S”-s”O”), are positive or negative but (D’-s’I’), (D”-s”I”) and G remain zero]; thirdly, one asks what happens if the crossovers or the transfers to demand do not cancel [that is when none of these is zero].  (Continue reading at CWL 15, 56)

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Einstein said in connection with Special Relativity Theory, Everything is relative. Lonergan said regarding macroeconomic dynamics, The analysis is functional and purely relational. In normative Monetary Field Theory all flows of products and payments are connected in a purely-relational, unitary, coherent system.  And coherence means that all the explanatory conjugates and equations “hang together.”

On one hand, in Centesimus Annus we affirm and emphasize the freedoms of the person, including the right to own what he/she crafts, and we emphasize the dignity of the person.  On the other hand, we note in the totalitarian system of government:

 As healing can have no truck with hatred, so too it can have no truck with materialism.  For the healer is essentially a reformer; first and foremost he counts on what is best in man.  But the materialist is condemned by his own principles to be no more that a manipulator.  He will apply to human beings the stick-and-carrot treatment that the Harvard behaviorist B.F. Skinner advocates under the name reinforcement.  He will maintain with Marx that cultural attitudes are the byproduct  of material conditions, and so he will bestow upon those subjected to communist power the salutary conditions of a closed frontier, clear and firm indoctrination, controlled media of information, a vigilant secret police, and the terrifying threat of labor camps. [CWL 15, 104]

Einstein would characterize Faraday’s and Maxwell’s electromagnetic theory as the “greatest alteration … in our conception of the structure of reality since the foundation of theoretical physics by Newton.” (quoted in Hirshfeld, 2006, p. 212) Perhaps we might say something comparable about Lonergan’s macroeconomics, gnoseology, and theology.

Let intellectually and personally weak individuals gain unmerited power and glory and many will do whatever they perceive necessary to hold onto that power and glory.  They will deceive even themselves.  They will develop a god-complex and come to consider their twisted inclinations the supreme truth. For those many, no lie will be too big; and no giveaway to buy votes will be too profligate, or damaging to the public welfare and the good of order.  So, we ask, Do our empowering systems of politics and communication – executive, legislative, judicial, deep-state, academic, electronic and print – allow the general public to become hostage to deceitful individuals?

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 Fay Vincent’s essays in the Wall Street Journal were gathered into book form, I’d pay money for the book.  A welcome respite from egoistic claptrap.

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 →

This set of excerpts has been assembled so as to inform and inspire.  In its own way it informs the reader of the minds of Lonergan and key commentators.  And it will, we hope, inspire the serious macroeconomist to reach up to those minds.

The section has not been arranged in a rigorous manner.  On the contrary, it is a sort of random walk.  But we hope the benefit of one’s reading it attentively will be great.

Schumpeter acknowledged that dynamic analysis called for a new light on equilibrium.  Such new light arises when, over and above, the equilibria  of supply and demand with respect to goods and services, there are recognized further equilibria that have to be maintained…..Moreover, such macroequilibria are more fundamental than the microequilibria assembled by Walras.  The former are the conditions of a properly functioning economy [CWL 15, 92] (continue reading)

 

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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 with the 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 

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 →