tag:blogger.com,1999:blog-5908830827135060852.post4253705254473620054..comments2024-03-29T02:54:56.523-04:00Comments on Bond Economics: The Price Level Does Not ExistBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-5908830827135060852.post-69923164572721906152017-10-10T11:08:16.940-04:002017-10-10T11:08:16.940-04:001) Forward inflation expectations are determined b...1) Forward inflation expectations are determined by a handful of market participants’ views about fair value. There is no guarantee that they are correct.<br /><br />2) If central banks react to the aggregated inflation value, and cause recession when it gets “too high”, forward inflation expectations ahould do exactly what they have done for their limited lifespan - stick around 2% (plus an added premium due to market structure). This is just telling us about central bankers, not the usefulness of the aggregate inflation measure.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-35452927001879035342017-10-10T10:00:31.789-04:002017-10-10T10:00:31.789-04:00Forward inflation expectations follow the business...Forward inflation expectations follow the business cycle almost perfectly. Hard to see how this could be a "random" series.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-29156910508640808132017-10-04T22:53:48.505-04:002017-10-04T22:53:48.505-04:00I wrote a similar post in mid july called "Ar...I wrote a similar post in mid july called "Are General Price Level Indices Theoretically Coherent?"<br /><br />http://www.nathantankus.com/notes/are-general-price-level-indices-theoretically-coherentAnonymoushttps://www.blogger.com/profile/11412437709309556790noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-89452399786761064512017-10-03T01:14:58.429-04:002017-10-03T01:14:58.429-04:00informative post! I really like and appreciate you...informative post! I really like and appreciate your work, thank you for sharing such a useful facts and information about labour process theory and employement relationship strategies, keep updating the blog, hear i prefer some more information about jobs for your career<a href="https://www.perfectprofile.net/search-jobs/hr-jobs-in-hyderabad/" rel="nofollow"> hr jobs in hyderabad </a>. <br />Akhilahttps://www.blogger.com/profile/00845113974172661154noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-35918761519230704602017-10-02T22:43:53.725-04:002017-10-02T22:43:53.725-04:00" however this aggregate price index should n..." however this aggregate price index should not be expected to correspond to any useful theoretical construct."<br /><br />Hmmm. <br /><br />I can envision a theoretical link between money supply (when we include government bonds as part of the money supply), the price of houses, and the price of profitable production organizations. I can envision a theoretical link from production to wages and the price of resources. <br /><br />The actual measurement of these links would require a judgement about what to measure, as you suggest. Certainly taxes would affect the price level of each production item and, by extension, would affect the CPI.<br /><br />One thing that has always bothered me about the Job Guarantee Wage was how to determine a 'fair wage'. How would you differentiate between skill, willingness to work, individual handicaps, and locations of workers to create anything but an arbitrarily-decided bureaucratic distribution? <br /><br />Our current system of competitive prices measures (rather directly) willingness to sacrifice to achieve reward. Some of us hope that CPI measures sacrifice or at least the movement of the standard of sacrifice. <br /><br />If there are links between money supply and CPI (as I have suggested), then measurement of 'willingness to sacrifice' is complicated by changes in money supply.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-8630328174226482832017-10-02T15:16:11.995-04:002017-10-02T15:16:11.995-04:00Thanks. Like I wrote, I had no idea how this fit i...Thanks. Like I wrote, I had no idea how this fit in with the existing literature. I was going to offer more details on my thinking in a followup.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-49195090227806339342017-10-02T13:53:41.590-04:002017-10-02T13:53:41.590-04:00I actually published a bit on this (link below). O...<br /><br />I actually published a bit on this (link below). One point: there is no such thing as the purchasing power of money. What we measure (consumer price index) is the inverse of the purchasing power of income. At the end of my article, I come to the same conclusion as Keynes, in his General theory: it is not about the price level persé, it is about the relation between price levels, for instance wages and consumer prices (i.e. real wages. Which is why Keynes warned against lowering real wages. <br /><br />Which does not mean there is no order to prices. Based upon the national accounts it is for instance possible to establish a taxonomy of price levels: spending prices (government spending, consumer spending, investments, exports, imports); income price levels (mainly wages) and price levels of production (agriculture. manufacturing, restaurants etc.). Aside from these flow prices we have 'stock' prices: houses, stocks, bonds etc. It is clearly not right to use consumer prices as 'the' price level.<br /><br />Metrological arguments are also important. Using the consumer price level to gauge 'real' spending poweris based upon the assumption that preferences, incomes and relative prices do not change too much. This is, contrary to many complaints, imo not a drawback! It enables us to investigate the influence of changes in incomes etc.! But it is at odds with ideas about the existence of something like the stability of currency... As money is, in different sectors, by different people and in different times, used for different purposes, it is utterly misleading to talk about the purchasing power of money. Again: we use money to spend our income! The purchasing power of income or production is hence the important metric. <br /><br />Looking at it from this spending of income angle the enigma of the value of capital also becomes easier to understand. As relative prices as well as interest rates change over the years, it becomes quite difficult to arrive at a 'real' value of a capital good in a base year as this is supposed to be a function of these every changing relative cost and product prices in the future. It's all quite confusing. But remember that any price index is a construct, unlike nominal production and income.<br /><br /><br /> http://www.google.nl/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwihveLdu9LWAhXNLVAKHfriC0UQFggnMAA&url=http%3A%2F%2Fwww.tandfonline.com%2Fdoi%2Fabs%2F10.1080%2F00213624.2015.1042733&usg=AOvVaw2qHph70FB0zWxNNZ5sW9hu<br /><br /><br />Merijn Knibbehttps://www.blogger.com/profile/02028625365326471593noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-76159579024787299972017-10-01T14:32:18.109-04:002017-10-01T14:32:18.109-04:00"The government should aim to keep the prices..."The government should aim to keep the prices it pays for wages, goods, and services stable, and have those prices act as a pricing anchor for other domestic prices. As a result, the hope is that citizens would face stable prices during their day-to-day lives"<br /><br />"The Job Guarantee wage would be a critical price anchor. It would act as the effective minimum wage in the economy"<br /><br />I agree 100% with that. That's also my interpretation of MMT, although I'm also not a spokesman for MMT.<br /><br />I believe that stable government prices would guarantee a stable value for the currency.<br /><br />But if some sort of disease affects the tomatoes crops, than tomatoes value would probably rise, while the value of currency wouldn't change. Tomatoes price would rise, even with the stability of government prices.<br /><br />Currency value stability is not the same as price stability.Andréhttps://www.blogger.com/profile/10935332922520483975noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-46661418242262436692017-10-01T11:01:22.525-04:002017-10-01T11:01:22.525-04:00I basically agree with the points made in this pos...I basically agree with the points made in this post, but I would put it a different way. The price level is a fine ex-post measure of the average price mark up in an economy. Minsky has a good chapter on this in Stabilizing and Unstable economy. But like you say, it is most useful looking at the components of the mark up instead of just looking at the aggregate level.<br /><br />The real problem is when the price level is considered an ex-ante behavioral variable. In particular, the concept of "inflation expectations" is totally incoherent, yet is the dominant paradigm for mainstream central bank policy.<br /><br />This also means that the real interest rate is only useful as an ex-post measure.<br /><br />Indexation is an under studied topic. They have insane pro-cyclical indexation policies in brazil, that I suspect add to their inflation problems.A Hhttps://www.blogger.com/profile/06916657901677009228noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-62445098653006538642017-10-01T10:21:31.764-04:002017-10-01T10:21:31.764-04:00"Nevertheless, if a tight labour market manag..."Nevertheless, if a tight labour market manages to buoy the wages across the employment spectrum, we would expect inflationary pressures"<br /><br />Only if firms in any particular market segment runs out of price competition, i.e. they all start to do things in the same way at the same time. (If there is effective competition then quantity adjusters should always out-compete price adjusters.)<br /><br />However once you start to see inflation happen then the benefits of capitalism on that market segment (you can do more with less by investing capital) have expired and the segment ought to be nationalised (i.e. you lay off the capitalists since their job is clearly redundant). <br /><br />So you could argue that any inflation is an indication that the competition authorities ought to get involved and start laying off capitalists. This is an inversion of the current method where if there is any inflation the central bank gets involved to cause the lay off of workers. <br /><br />The mistake in the Beveridge form of Keynesianism, from what I can tell, was to assume that firms would do the right thing under wage pressure rather than sticking their prices up. <br /><br />NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.com