Established 4/14/2012. Version 2.19 (11/21/2015)
In spite of a long absence, I’ve been busy digging deeper into the various critiques of the Quantity Theory of Money (QTM), in particular Monetary Circuit Theory. Core elements of Circuit Theory have only strengthened my confidence in my new economic model of protectionism. After 6 years of fine tuning the economic model, it was time to condense the theory to its very essence. The tab “Just Measures” is an ideal starting point for the reader new to my writings. The foundation laid in “Just Measures” tab was used today (11/21/2015) to argue that capital and growth theory is fundamentally flawed (see Money and Machines tab).
I have intentionally avoided tackling inflation, since it struck me as noise in the system, not the signal itself. My goal was to first establish a sound foundation model (i.e the signal), before trying to analyze the noise in the system (i.e.inflation). The entire history of economic thought has always struck me as models built on theories regarding the noise in the system, ultimately leading into a logical cul-de-sac.
Even so, I feel I’ve had one small epiphany regarding what I propose to call the “base” inflation of capitalism which results from bankruptcy. It is therefore inherent in the capitalist process. Normally, industrial loans created out of thin air are extinguished by the final sales of finished goods (see Just Measures tab for basic model). But if under competitive pressure, a company goes bankrupt, the industrial loan can no longer be extinguished. A similar argument could be made for real-estate defaults. Unlike “healthy” bank deposits which all have their origins in wages, the deposits resulting from defaults will never be removed from the economy. This is similar to digging gold out of the ground in the Wild Wild West days–there was no associated production of an industrial good associated with its introduction into the economy. Thus, when these “orphaned” deposits are spent they are effectively inflationary (more dollars than goods or service produced).
I suspect this will be the end of the road for me in my journey into economic theory unless someone should take interest in my arguments.
For reader seeking more of my writing, I refer them to where I have previously written: http://www.economicpopulist.org/content/myth-middle-class-economics-5665.
To keep abreast of recent trade news and opinion, I recommended the following sites:
My Amazon Kindle book: Just Measures by Van Geldstone
And finally one big thank you to my one new follower! :)