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John Quiggin 
I asked a question last week, but it got derailed by someone from the Gamma Quadrant.
Is there any reason why the Treasury cannot have an unsterilized stimulus ready if needed to prevent deflation? For example a payment into the accounts of all Australians or possibly just welfare payment recipients?
This seems far fairer and probably more effective than making people who own Australian bonds richer through US/European style quantitative easing.
Ronald, it’s called helicopter money and yes it’s been implemented thousands of times throughout the world, but is often disguised as something else. In 2009 the Rudd government implemented it in its most overt form in the way of a $950 one off cash payment to everyone earning $80k or under, $650 for $80k-90k and $300 for $90-100k as a method of combating the global GFC.
Pros are it gets the economy pumping faster like no other stimulus measure, the cons are it doesn’t really end up flowing into the big ticket items like infrastructure or housing directly (there’s lag) so its purpose is pure short term economic stimulation.
“Pros are it gets the economy pumping faster like no other stimulus measure, the cons are it doesn’t really end up flowing into the big ticket items like infrastructure or housing directly (there’s lag) so its purpose is pure short term economic stimulation.”
Red ink doesn’t do that. Keep asking yourself WHERE IS THE MONEY COMING FROM. If the money isn’t created ex-nihilo then there is no demand increase. The alleged stimulus under Kevin Rudd created a new round of job losses.
There is no such thing as unsterilised stimulus unless there is new cash creation. You are insanely mouthing economics error. And its error obviously meant to stick up for parasitical usury. We have been over this before. The oligarchy splits the economics profession into people who don’t see government debt they don’t like and those that never see private debt they don’t like. If you go out of those two narrowly defined camps they will take action.
Troy, the 2009 stimulus was sterilized. I’m suggesting an unsterilized stimulus. The treasury creates money ab initio and dumps it into people’s accounts. Of course, this only makes sense to avoid deflation or a significant risk of deflation. This plan should avoid all the whining from the Coalition about how the last stimulus increased the deficit and so is something both major parties could agree on.
Sorry, that was my sense of humour showing there.
Mr Bird, last week I thought you were upset with me because you misunderstood me and thought I was suggesting a sterilized stimulus to avoid deflation. Now you seem upset at the idea of sterilized stimulus. This makes you seem hard to please. I don’t even know if you think deflation is a bad thing. If you do think deflation is something to be avoided, why not tell us how you think it should be done? I promise to read at least the first 400 words of your reply.
Computer Scientist Constantinos Daskalakis on Tackling High-Dimensional Data
“The 2018 Nevanlinna Prize winner describes his interest in economics, statistics, machine learning and the application of game theory in raising children.
“In 2018, he won the International Mathematical Union’s Nevanlinna Prize for transforming the understanding of computational complexity in markets, auctions and other economic structures. His work provides algorithms and defines limits on what can be performed efficiently in these domains.”
https://www.simonsfoundation.org/2019/07/24/watch-computer-scientist-constantinos-daskalakis-on-tackling-high-dimensional-data/
https://en.wikipedia.org/wiki/Nevanlinna_Prize
https://www.mathunion.org/imu-awards/rolf-nevanlinna-prize
Question. What dataset has the highest dimensions anyone has encountered?
Me: yellow pages xref every head entry to every category / advertising spend / location / and match to every Statistical Area Level 1 (SA1) of census. We ended up having to hand match several entries. Several very long days ensued.
As soon as Telecom (1989) saw final dataset and ease of segementation and lists produced they did not hesitate to buy their own data. They copyrighted all white and yellow page data the year after. The software writer was not recognised for his amazing effort.
“Mr Bird, last week I thought you were upset with me because you misunderstood me and thought I was suggesting a sterilized stimulus to avoid deflation. Now you seem upset at the idea of sterilized stimulus.”
There is no such thing. Its a fantasy. When I did my degree in economics we had this sort of nonsense under the heading of “The Balanced Budget Multiplier” for a sterilised stimulus or some sort of horrifically damaging spending spree as we saw from Obama and Rudd, for an unsterilised one. Or the tax cuts that we saw under George W Bush. In all these cases more people were thrown out of work by the (make-believe) stimulus. This happened even in the case of the Bush tax cuts, where the reported GDP growth rate hit 8% in one of the quarters. Thats not success. Thats failure. Its a false positive that comes from using just GDP as a metric. Its this “one true metric” foolishness the profession tends to have in most cases. But even in the tax cut case people were thrown out of work directly by the (anti)stimulus and last week I explained in great detail why this is the case.
Don’t pretend to understand what I wrote. Go back and read it over until you actually understand what I wrote. This is error in the economics profession. Its oligarchically motivated error. Its bad theory. It fails on both logical and empirical grounds. The state of the profession is largely controlled by those who control the central banks, so any consensus view often gets many technical details wrong.
Here is Catherine Williams, abc today, after JQ in 2003, pointing out what many of us here would say about THE MARKET.
“Unfortunately, it feels like another example of where profits are for the few, but losses are borne by many.
Market failure doesn’t really capture it.”
Catherine Williams holds a builder’s licence, degrees in Civil Engineering and Law and is a dispute resolution consultant in the construction industry.”
Today – in 2019…
“How have legislation changes influenced profits?
https://johnquiggin.com/2019/08/19/sandpit-138/comment-page-1/#comment-213425
Mr Bird, I am actually of the opinion the Australian financial stimulus in 2008 and 2009 help avoid job losses. If you want, you can put yourself in my shoes and then try to explain in a sentence or two why I think that. Showing you are able to understand my point of view, or at least making an effort to do so, would indicate you are willing to have a discussion in good faith. At the moment I am not taking you seriously.
This is a good documentary. I watched the first half last night with my 5 year old, and she found it really engaging. “Why are all the children working?” was a burning question.
Plastic China
No it didn’t avoid job losses. Thats not what the data said at the time. It boosted GDP. This is not the same the same thing and GDP is not the only relevant metric as I explained in great detail already. Are you going to go back and try and actually understand what I wrote? Or will you take the failth-based approach?
Check the employment details of the time. The stimulus threw people out of work. I mean objectively. In the data. No-one should have been surprised that the GDP metric was manipulated to paint a rosy figure by these measures. The measures can be shown to be expected to throw people out of work and boost nominal GDP. Which is what they did do. And earlier, the Bush tax cuts did the same except even more effectively. The GDP measure soared to 8% for only one quarter, and people were thrown out of work.
This is very straightforward in terms of national accounting. If you are going to get confused between the GDP metric, and what is actually happening on the ground, you will remain clueless.
Click to access the_grossly_problematic_gross_domestic_product.pdf