Zero Interest Math

Many, many, post keynesians and MMTers have criticized supply and demand curves, as reductive, misleading, and hard to observe. Here is a video clip of Randall Wray doing precisely that. Watch from about 9:40 to 11:40 Randall Wray on Observing Supply and Demand Curves Steven Keen, as well, frequently criticizes supply and demand curves, especially in terms of an aggregation problem . (Varian, Microeconomic analysis) It is often difficult or impractical to mathematically create nice aggregate supply or demand curves, from individual curves.  His book "debunking economics" apparently addresses this.  In both cases, Keen and Wray reference specific research or mathematical results done by others, and use that to make a broader argument about the (non)practicality of supply and demand. I want to criticize the use of supply and demand models as well, but less of in a machine gun fire fashion, throwing out random criticisms, and instead delineate precisely when and why it is usef

Collateral is the Price of Money, Interest is the price of Credit There is a common myth that interest is the price of money.  This myth is easily dispelled by realizing that interest is merely a financial inducement to upgrade one type of money into another.  The cost of this upgrade depends on which form of money one starts with, and what form they want to end up with. The price of money is in fact the collateral one must offer in case of default.  This is what sets the price level. Lenders from pawn shops to banks all require some form of collateral.  How much collateral must be offered against a dollar of lending, is the measure of what a dollar is worth. It is possible for central banks to directly target how collateral value is measured, to manage the price level.  This is generally frowned on for two reasons.  First of all, this requires a thorough assessment AND appraisal of bank assets.  Typically in an audit, what happens is that we check that bank records are accurate.  Howe

Naturally Gifted They say that ugly people often develop a better sense of humor.  I don't know if this is true, but the idea is compelling.  If you lack other talents, humor may be a way for you to compensate, whereas someone with looks might not be as motivated. Well, we live in the age of monetarism, and an age of technology.  We are certainly the envy of civilizations past.  We have massive 18 wheel trucks that can carry tons and tons of cargo across a continent in a day or two.  We have massive shipping barges, that carry our cars and our smartphones between continents.  We order items over the internet and they are produced and shipped on demand. If there were any civilization that could cut a few corners in terms of good public policy or resource management, and simply gloss over it with more trucks, more cargo ships and shipping containers, then it is ours. Middle class people in developed countries live lifestyles better than the king's of ages past, with climate contr

This is a relatively simple idea that can easily get lost in the shuffle of empirical work and variable correlations. How we allocate real resources matters, not only in the total amount of "real resources", but also in relative allocations between industries and sectors. The broader historical trend has been people moving away from subsistence agriculture into a wide array of information services. Establishment economics can be aware of these historical facts, and yet incredibly, completely fail to integrate them into meaningful analysis.  An economy that ran exclusively on entertainment advertising, and netflix shows, would not be a great one to live in.  Any necessities would be so commoditized so as to make our working lives meaningless, in the sense that we would have no impact on our own material well being, and we would be extremely dependent on benefits and transfers to ensure everyone could secure a basic lifestyle. Economists love talking about output, growth, and t

The mechanism of interest based inflation control is affective but not effective The most significant factor to inflation is workers effectively using both capital and technology.  A strong coupling is necessary for these three to work.  Inequality  tends to alienate these three factors of production, leading to less effective production. This is the entire real resource story, whatever is required to get workers, capital, and technology to coordinate effectively.  It is better when the workers have a strong democratic and financial voice, and technology is also democratically managed: open source software, public research(software, science, and arts), etc. On the other hand, you have the conventional mainstream view of how to fight inflation, and it works on an extremely superficial level by manipulating class based income distribution with financial markets, as well as by trying to borrow real resources from abroad. This program is much more "affective" or emotional and ou

I attended university in pursuit of an undergraduate degree twice over a number of years.  At the school I first attended, I studied mathematics and computer science, during this time, I took a course in linear programming and convex optimization.  That course was highly illuminating.  I had already learned what linear programming and the simplex method were, from a previous computer science course on algorithms. A linear program is an optimization problem,  basically involving a set of inequalities, called constraints, and an expression to optimize, called an objective function.  Linear programming and mathematical optimization in general teach you to think about resource allocation problems in very generalized terms.  One could for example, completely ignore the mechanisms of markets and trade, and just measure outcomes.  Then trade and markets could simply be considered an algorithm for resource allocation among a population.  What is optimal, and how to coordinate an optimal outcom