>Date: Sat Oct 17 14:32:11 1998
>From: j@qmail.com ("Jay Hanson")
>Subject: [JunkEconomics] Nobel Prize etc.
>From: "Jay Hanson" <j@qmail.com>
>The Royal Swedish Academy of Sciences is the organization that awards
>the bank's money. You will never guess the official excuse for
>awarding the Nobel Prize to a couple of crony capitalists.
>It was because of their work on RISK MANAGEMENT!!!! <G>
JCT: Considering the two economists who got
last year's Nobel
Prize in Economics bust in under a year, I can understand the movement
to "Junk" the Nobel Prize in Economics at JunkEconomics@onelist.com:
>From: "Graham Caswell" <graham.caswell@knowledgewell.com>
>Regarding the idea for a campaign to make a very public point to
>economics and the world by causing the so-called Nobel Prize in
>Economic Science to be discontinued....
>Support the Campaign for the Discontinuation of the so -called
>'Nobel Prize for Economic Science'
JCT: When was the last time you saw a real-science
prize winner
flop that quickly? If ever?
If engineers manage to handle the vagaries
of the random physical
stresses on their systems and professional gamblers manage to handle
the vagaries of chance with their systems, why are economists always
such losers? It's the reason economists almost invariably wear big
glasses. It reminds you not to hit them every time they've lost more
of your money again. What government doesn't have a team of economists
helping them lose our money? Not many engineers are helping them lose
our money and no professional gamblers.
Considering economists have never succeeded
in solving the
financial riddle, it might make sense to scrap Nobel prizes for such
losers. But this might be premature considering there is a claim from
an engineer, yours truly, to the solution of that financial riddle.
I've always claimed that my miracle equation and the LETS interest-
free banking prototype warrant not only my receiving the Nobel Prize
in Economics but also the last one. After all, once the currency
system is fixed and working flawlessly like any casino bank, there
would be no more need for more prizes. Perhaps our interests do
converge. See: http://turmelpress.com/bankmath.htm
In all the years I've been posting information
about the solution
to the riddle on sci.econ, I've faced many criticisms but none whose
contradictions couldn't easily be shown. Though I've had economists
state that my mathematics are wrong, I've never had any actually use
any math to do so. They make their criticisms and once answered, fade
into the woodwork. Most know they don't want to cross minds with the
Banking Systems Engineer. When they see the Internet's foremost
economist being pounded with his own contradictions, the smart ones
sit back and listen while only the fools speak up with inane
objections.
For instance, recently I published empirical
evidence from
Argentina of inflation shift B, not more money chasing goods but the
same money chasing less goods after foreclosure caused by interest
rates. The only criticism I heard was from one of the slower readers
in the group who thought that the fact that it happened in 1985 made
the evidence suspect. That was it. Not one economist has attempted
to
explain the Argentinian evidence other than that one silly objection
which I did not bother to answer. I wouldn't try to defend Newton's
theory of gravity because it is over 200 years old either.
Yet, no matter how many times I've successfully
defended my
equation and its LETS prototype, not one economist has had the
integrity to admit that it is correct. I just cannot imagine such an
attitude in real science or engineering which is the reason I am
persuaded that Economics is more a religion than a science.
But despite such empirical evidence that issuing
more government
LETS currency actually reduced inflation, we continue to hear the same
Big Lie repeated in many posts that inflation is a function of Shift
A, the increase in the money supply. Of course, that the Big Inflation
Lie is repeated like a religious mantra in all the news media
certainly helps explain the cognitive dissonance exhibited by almost
all economists when faced with the existence of Shift B inflation.
Just recently, I've noted many new instances of the Big Lie:
19980917 New York Post
"Fed boss squelches rate-cut hopes"
by Kimberley Seals McDonald
- Greenspan sees the first signs of erosion of U.S. growth and an
acceleration of deflationary pressures - those are comments that
justify an interest rate cut," said Stan Shipley, senior economist
at
Merrill Lynch.
19980924 Bloomberg News
"Wall Street's E.F. Hutton"
by Caroline Baum and Laura Cohn
- The Fed chief quashed hopes for a coordinated interest rate cut by
invoking the "D" word, stating that "deflationary pressures are
increasingly beginning to emerge..."
- If he's going to pull the trigger, there could not be a more
appropriate time to do so, when the risk of an economic slowdown is
much greater than that of inflation.
- Since U.S. inflation is so benign, Fed officials have room to reduce
rates.
19980924 Philadelphia Inquirer
"Fed hint of rate cut spurs Wall St."
by Robert A. Rankin
- Fed officials thought that keeping short-term interest rates
relatively high was necessary to restrain the threat of inflation.
19980928 Reuters
"Fed likely to take Greenspan hint and trim key U.S. interest rates"
by Caren Bohan
- Five experts looked for a cut of a half percentage point which could
face resistance from a few members known for their particularly
inflationary-wary views.
- The Fed was more worried about inflation re-emerging.
19980930 Washington Post
"Fed reduces interest rates .25 percent"
- The Fed cut short-term interest rates by a quarter percentage, a
delicate balancing act for the FED, which does not want to ignite
inflation.
- A slightly lower federal funds rate should now be consistent with
keeping inflation low.
19981001 New Jersey Star Ledger Editorial
"One cut at a time"
- The Wall St. crowd was just as avidly demanding the Fed raise
interest rates to head off inflation.
JCT: So the constant drumming of the Big Lie
into people's brains
seems a good explanation for why most people fall for it. But it does
not explain why economists are incapable of even examining empirical
evidence of Shift B inflation unless one accepts that Economics is
a
very effective form of brainwashing.
So go ahead and continue to make fun of economists
and their
failures but I think it would be unfair to junk the prize when there's
not only a claim to the solution but thousands of working LETS models
around the world including the Argentinian provincial LETS currencies
to examine.
I hope you agree that if the miracle equation
is correct and it
is inflation Shift B that is afflicting the world, not Shift A, then
at least one more and last Nobel Prize in Economics is warranted. Of
course, that can't happen if even detractors of Economics refuse to
look into the claim of a engineering solution.
So rather than mounting a campaign to junk
the economics prize,
how about helping mount a campaign to ascertain the solution of the
finacial riddle and awarding one last prize?
-------------------------------
JCT: It's sad that very little can be learned from dealing with
this kind of objection since it fails to deal with the period of time
in question but let it not be said that there was an objection I
couldn't deal with.
>Article #98031 (98035 is last):
>From: "Steven" <shales@pipeline.com>
>Date: Sun Nov 22 12:44:27 1998
>John Turmel <johnturmel@yahoo.com> wrote:
>>For instance, recently I published empirical evidence from
>>Argentina of inflation shift B, not more money chasing goods but
the
>>same money chasing less goods after foreclosure caused by interest
>>rates. The only criticism I heard was from one of the slower readers
>>in the group who thought that the fact that it happened in 1985 made
>>the evidence suspect.
>I posted in good faith to your counterintuitive assertion, thinking
>you were referring to present day Argentina. Silly me. After reading
>your reference I found that it referenced 1985 and only two
>Argentinian provinces whose actions would hardly influence the entire
>Argentinian economy. Your bold claims of asserting that the influence
>of two provinces issuing bonds to fund local government and public
>works was significant upon the entire Argentinian economy is and
>was without basis in fact.
JCT: Actually, you'll notice that:
"Four other Argentine provinces have either begun adopting similar
programs or are preparing to do so."
JCT: So that's a total of 6 provinces. I don't
know how many
provinces there are in Argentina but the effect had to be a little
more significant than you suggest:
"The Argentine government is not smiling,
and world bankers are
worried that other cash-starved states will copy Salta's financial
extravaganza and jeopardize Latin efforts to curb inflation and pay
huge foreign debts."
"The International Monetary Fund (IMF), the
world's main
financial inspector for debt-ridden countries, was concerned enough
to
bring up the issue in recent talks with the Argentine government, said
sources in Argentina and Washington. The IMF does not comment on
negotiations with individual countries."
"But the government of President Raul Alfonsin
says the
provincial bonds are expanding the country's money supply and are
undermining efforts to remove Argentina from the list of world
inflation leaders. Earlier this year, Argentina had a 1,000% annual
inflation rate."
JCT: Evidently, the Argentine government,
world bankers and the
IMF thought that the local currency was a more significant development
than you do.
>In fact your reference provides no evidence of effects outside the
>two provinces.
JCT: Actually, the article mentions
"Earlier this year, Argentina had a 1,000%
annual inflation
rate."
"Since then, inflation has dropped to 3% a
month, a record low in
recent history."
JCT: Seems pretty clear that the effects mentioned
are national
ones.
>The two provinces can exploit the rest of Argentina only because they
>are not self-sufficient. If their economy was closed i.e., no imports
>and no exports, then an increase in the provincial money supply would
>have bid up general prices but because the provinces were not
>isolated they were able to export their inflationary policies.
JCT: If they exported their inflationary policies,
why did the
inflation rate go down rather than up?
>But what you did not realize was that the provinces, by their
>actions, would cause a slight increase in the general rate of
>Argentinian inflation and cause an increase in the costs of goods
>imported to the region.
JCT: If it would cause an increase in the
general rate of
inflation, why was there a decrease.
>Depending on the level of trade between the provinces and the rest
of
>Argentina these effects could swamp the temporary benefits of an
>increase in the local money supply. If Salta exported much more than
>it imported then the effects could be substantially positive for
>Salta.
JCT: And substantially negative for Argentina.
Yet, Argentinian
national inflation went down you your "if" doesn't seem to apply.
>Your claim was that an increase in money supply above the real rate
>of growth of GDP would have a negative impact on general prices.
>Recent results in Argentina show that a monetary policy that targets
>short term interest rates is effective in controlling inflation and
>money supply growth seems to be trending toward equivalency with the
>underlying rate of growth of the Argentinian economy
JCT: These are recent results. I was talking
about the period in
the mid 1980s after the states had issued their local currencies when
inflation went from 1000% to 36%, a quite amazing result. So far, I've
heard no explanation for that mid 1980s result to which your recent
results to not apply.
>The monetary base of Argentina grew at about the same rate as real
>GDP from 1996 to 1998. That's the reason no one paid any attention.
JCT: Again, I'm not sure what data relating
to 10 years after the
situation in question has to do with answering why Argentinian
inflation went down, rather than the predicted up. I'm still waiting
for you to deal with the 1980s situation, not the 1990s situation.
>The monetary authorities in Argentina are providing a proper amount
>of liquidity quite a reversal from the early 1990's when the monetary
>base was growing at an annual rate of 30% and inflation was over 7%
>per year. The public sector in Argentina has also shrunk in the past
>two years. All of these are reasons why the rate of inflation is low
>not your counterintuitive claim of increasing the money supply causing
>price indexes to decline. When these other factors are considered
the
>Argentinian CPI is behaving exactly as we would expect.
JCT: Again, you're stuck in the 1990s with
very low inflation
rates while I'm trying to deal with the 1980s with massive
hyperinflation which was not exacerbated by the increase in local
currency. I state that my postulation of a Shift B inflation is the
only possible answer and I've still not heard you provide any kind
of
explanation to contradict that information.
>>JCT: And the Argentinian Provinces have shown that not only does
>>printing money not cause inflation, it reduces inflation when
>>inflation is actually shift B, the same money chasing less goods.
>I direct you to
>http://www.latin-focus.com/countries/argentina/argindex.htm to find
>that lower inflation tracks a slowing growth in the monetary base
more
>in line with the growing economy and a shrinking public sector. The
>reality in Argentina today is the exact opposite of what you posit.
JCT: What is going on in today's small inflation
climate has no
bearing on what went on in the stated high-inflation period.
>And I then responded when I discovered the context of your post was
>data from just two provinces (in 1985) effectively printing currency
>and why when this "currency" was converted to Argentinian central
bank
>currency it would have a multiplier effect on the entire money supply:
JCT: If it would have had such an effect,
again, why did the
inflation rate not go up?
>I just read your little archived article on the Argentinian provinces
>issuing IOUs to public employees in the form of bonds. It is from
>1985!!! It mentions IMF funding, Argentina does not borrow at the
IMF
>window any longer. It also mentions an inflation rate of 1000%
>clearly a thing of the past in Argentina. And to top it off you claim
>that those bonds would not cause inflation, wrong. The bonds are like
>a loan and when exchanged for cash will have a multiplier effect
>throughout the Argentinian economy, Alfonsin was right to be
>concerned.
JCT: Since you argued that the actions of
these two provinces was
so insignificant, why do you now argue that Alfonsin was right to be
concerned? And since the inflation rate went down, not up, it would
suggest that he was not right to be so concerned.
>I wonder what effect these bonds had on the bank's capital
>structure in Salta? If this is the best you can do to support your
>claim try again. The tacky buzzer sounds...
JCT: Just like LETS local currencies free
up national currency in
the hands of its users, so too, provincial currencies freed up
national currency with which to pay down bank loans and reduce the
foreclosure rate which is at the root of Shift B inflation.
>Your example showed no evidence that inflationary effects of the
>issued bonds were tracked outside of the province of Salta. What
>probably happened was that Salta exported its inflation to the rest
of
>Argentina and because Salta is small relative to the rest of Argentina
>this kind of transfer had little or no impact on the rest of
>Argentina.
JCT: Again, why was there all the concern
if it had so little
impart on the rest of Argentina. And if it did export even more
inflation to the rest of Argentina, why did the inflation rate go
down, not up?
>But if the policy had been widely adopted then it would have
>accerbated Argentina's already hefty inflation rate of +1,000% in
>1985.
JCT: And since the police was only adopted
by at most
six provinces at the time, again, why did inflation not go up a little
rather than go down a lot?
>You've still failed to respond in substance to what Argentinia's
>experience is today as opposed to 1985 vis a vis inflation and the
>causes of a lower rate of inflation today vs. 1985 when inflation
was
>+1000% per year.
JCT: And you've failed to deal with the period
in question.
Today's inflation is .1%. Even if the central bank's actions made
inflation go from .2% or .3% down to .1%, it is of little interest
to
the question of why inflation in the 1980s went from 1000% to 36% in
such a short time.
>I've pointed you to some obvious causes, primary of them is a
>vigilant central bank. Also, you've failed to note the reasons why
>Argentina no longer needs to borrow at the IMF window.
JCT: Why they no longer borrow from the IMF
has nothing to do
with the period in question. So far, you've offered nothing to explain
such a drastic drop while inflation being Shift B explains it
completely. Until you do, I see no reason to change my opinion about
the Shift B cause of inflation though I doubt you can even restate
where inflation Shift B comes from.