Olivier Blanchard is criticizing the Aggregate Supply-Aggregate Demand model… “Turning to the supply side, the contraption known as the aggregate demand–aggregate supply model should be eliminated.” (link) Let me show you something good… I am the only one in the world using this model of Effective Demand with Aggregate Supply… What you are looking at […]
With the temperature reaching 120 degrees here today in Phoenix (almost a record), allow me to have a little fun with my theoretical model of Effective Demand. There are two equations in my effective demand research that will be integrated in this post. First the Effective Demand equation… Effective demand limit upon real GDP = […]
The soul-searching at the Fed is beginning. I have written many times for over a year that the Fed will have a period when they start soul-searching. They will realize that the business cycle got away from them and they will not be able to normalize rates. They just got too far behind the curve. […]
On January 6th, I made some predictions for 2016. (link to post). Let’s look at some of them. #1. I saw a higher probability than Tim Duy for a recession. He did not predict one. We do not have a recession yet. I wrote, “It is possible that the economy could stabilize by the end […]
Looks like the Fed is finally understanding that they are behind the curve and not able to catch up to the curve without triggering an economic contraction. Now we will see how long the business cycle can hold on. I still see an economic contraction starting by 2nd quarter 2017. Still a 70% chance by […]
An idea to ponder… When labor share is lower, the optimum level of capital utilization is lower. Is this not obvious?
Brad DeLong wrote recently concerning the Uncertainty at the Fed… “The heart of the trouble consists in the fact that neither financial-market participants nor, it seems, the Fed itself know the true state of the economy or how best to model it – especially in the wake of the 2008 financial crisis” (link) It is […]
What is an attractor state? It is a state around which a dynamic system organizes itself. “Self-organization is the spontaneous often seemingly purposeful formation of spatial, temporal, spatiotemporal structures or functions in systems composed of few or many components. In physics, chemistry and biology self-organization occurs in open systems driven away from thermal equilibrium. The […]
In the study of economics, one learns the circular flow of the economy between firms and households. This post however presents another circular flow model based on capital and labor. (It is a closed economy with no government for simplification.) There are 4 pools within this circular flow related to the income and utilization of […]
The Mormon church reaches out over the whole world to get converts. Their missionaries present pamphlets about their history and doctrines. The pamphlets paint a picture of wholesomeness and purity. Yet the pamphlets are propaganda that distorts historical truth. It is important to know the truth behind Mormonism because members of the church have become […]