In the fifties, the economic model for the economy that was in common usage was a system of plumbing.
http://conversableeconomist.blogspot.co....llips.html
Problems with the economy would show up in this model, as bottle necks, where wealth would build up in some parts and not flow out properly thus reducing the general flow rate.
The solution to this came about with the idea that bottle necks could be overcome by facilitating easy access to borrowing. Thus if one part of the system was short of finance the banks could draw from reserves where there had been a build up and direct finance to areas which had a shortage. In doing this the general flow should be unaffected.
This was used by many governments as a template in the seventies, to drive down workers wages to make the individual goods more competitive, but to facilitate more general lending in the form of credit cards, and looser controls on credit to redress the balance.
Personally what I have identified to be the problem is that the banks role is not seen as part of the system, but external to the model. This simply cannot be. Debt and borrowing must affect the model. Current economists will no longer use the model, in fact there is no longer a coherent model used in economics, just partial explanations for individual interactions.
When teaching university level economics, issues of debt are dismissed in the very first lessons and it is shown that debt can basically be ignored as having a general effect on the economy.
http://www.scribd.com/doc/96161468/Paul-...-Economics
When Steve Keen and others have pointed out that this dismissal of debt as an issue, cannot work they are dismissed with what he terms 'effortless superiority'. That there is a refusal to even question whether the current theory could need adjustment.
Now it might seem odd that I should be posting this stuff upon an atheist forum, but doesn't the refusal to question, dismissal of evidence, and pig headed continuance with a dogma against knowledge of the real world as we are experiencing it look a lot like religion?
http://conversableeconomist.blogspot.co....llips.html
Quote:Hydraulic Models of the Economy: Phillips, Fisher, Financial Plumbing
Part of the lore of earlier economists as it was passed down to me around the campfire back in the Neolithic era is the story of how Alban William Housego (Bill) Phillips, the originator of the famous 1956 paper that drew the "Phillips curve" tradeoff between unemployment and inflation, also built a hydraulic economic model: that is, a physical model of the economy in which flows of consumption, saving, investment and other economic forces were represented by liquid moving through tubes and pipes. What I hadn't known until more recently is that Irving Fisher also created an hydraulic model of the economy.
Problems with the economy would show up in this model, as bottle necks, where wealth would build up in some parts and not flow out properly thus reducing the general flow rate.
The solution to this came about with the idea that bottle necks could be overcome by facilitating easy access to borrowing. Thus if one part of the system was short of finance the banks could draw from reserves where there had been a build up and direct finance to areas which had a shortage. In doing this the general flow should be unaffected.
This was used by many governments as a template in the seventies, to drive down workers wages to make the individual goods more competitive, but to facilitate more general lending in the form of credit cards, and looser controls on credit to redress the balance.
Personally what I have identified to be the problem is that the banks role is not seen as part of the system, but external to the model. This simply cannot be. Debt and borrowing must affect the model. Current economists will no longer use the model, in fact there is no longer a coherent model used in economics, just partial explanations for individual interactions.
When teaching university level economics, issues of debt are dismissed in the very first lessons and it is shown that debt can basically be ignored as having a general effect on the economy.
Quote:Paul Mason Interviews Steve Keen Critic of Economics
Keen argues that if we keep the parasitic banking sector alive the economy dies. Steve Keen is professor of economics and finance at the University of Western Sydney in Australia
http://www.scribd.com/doc/96161468/Paul-...-Economics
When Steve Keen and others have pointed out that this dismissal of debt as an issue, cannot work they are dismissed with what he terms 'effortless superiority'. That there is a refusal to even question whether the current theory could need adjustment.
Now it might seem odd that I should be posting this stuff upon an atheist forum, but doesn't the refusal to question, dismissal of evidence, and pig headed continuance with a dogma against knowledge of the real world as we are experiencing it look a lot like religion?
