Modern Monetary Theory

Its late… so here’s a quicky

Nov 182011

I haven’t written in a while, so I just wanted to write a quick post and show what I’m currently working on. I’ve recently started playing with PowerSim. The optimizer and risk management features are actually very useful. Here’s what I’ve got so far. Will explain more later and show some interesting simulations. This model has three worker classes, the top 1%, the bottom 20%, and the remaining middle. I’ve modeled income tax, a potential federal sales tax (VAT), FICA taxes, and corporate taxes and have put significant effort into creating a fairly realistic disparity of wealth and income. Model download is below and on the download page.

Also… I’m off to India next week. I find it amazing for many reasons. One of which is the insights you get into how different economies function. And anyone who doesn’t think wealth/income disparity isn’t a crushing problem, I dare you to spend some time here.

Model Progress Update

Uncategorized 6 Responses »

Oct 142011

I haven’t written in a while, and thought I’d post a quick update. Thanks to some of the great reading that I’ve been turned on to recently, I’ve taken a step back and started some major refactoring of my model. The new model will use some of Keen’s ideas with significant additions from Godley & Lavoie, and Yamaguchi. I’m going through each of these models and picking parts which I think will work best for the work that I want to do eventually. I’m not ready to post any new models just yet, but I’ve built new systems around capital investment, production decisions by firms, and I’m currently working on a new price setting system. I hope to have something up and running in another week or so.

In addition to this work I can also report that I’m now dabbling in politics with an economic policy advisory committee. More on all this later…

Thanks, And A Call For Model Features

Uncategorized 24 Responses »

Sep 262011

I’ve recently been getting quite a few new leads on fantastic sources of information from new site visitors. So first and foremost, a sincere thank you to everyone who has offered insights, advice, links, papers, models etc. There’s plenty of you around who’ve been at this far longer than myself, so I’m happy to take all this new info and try to understand the current state of the MMT world.

Goodwin’s Class Struggle Model in Vensim

Uncategorized 16 Responses »

Sep 232011

In the main model I work with, I’ve always struggled when trying to interpret Steve Keen’s implementation of Goodwin’s model. I decided to take a step back and build it from scratch, detached from the other complicating pieces of the model. With this approach, I finally had some luck. Here is the result.

Economics in the “Golden Age of Capitalism”

Introductory, Modern Monetary Theory 6 Responses »

Sep 162011

There is a lot of talk nowadays about returning to “real capitalism” as opposed to the perceived state of socialism which many conservatives imagine that they live in today. I’m certain that I could shock nearly anyone by explaining the economic rules which we governed our nation by during the time which is referred to as “the golden age of capitalism” in the US. (roughly defined as the years between the WWII and the early ’70s)

Hows this for a quote…

“An interesting, and to many shocking, corollary is that taxing is never to be undertaken merely because the government needs to make money payments.”

Deficit and Deceit

Circuit Theory, Introductory, Modern Monetary Theory 1 Response »

Sep 142011

Sometimes I like to focus on building detailed models which aren’t easy to explain to non-finance audiences, but I also see the value to being able to take a step back and provide important tools to help anyone understand more about the economic environment they live in. Today I want to focus on some basics which probably should be more widely understood.

Going into election season, I’m dreading the inevitable political discussion of government spending. Everyone is going to tell us that we desperately need to balance our government budget as soon as possible, and I can pretty much guarantee that nobody is actually going to follow through with it… for good reason.

Latest news, download page, manifestos, and True model update

Circuit Theory, Modern Monetary Theory 11 Responses »

Aug 182011

Just a quick update, I’ve created a download page where I’ll keep the latest versions of my MMT models. It’ll be a quick and easy way to find them so you won’t have to dig through blog posts to find links.

The creator of True software has generously taken time to create the basic Keen growth model for me! That should be the jump start I need to get more familiar with how to do things in that software. I’m going to try and update this model to match all the latest stuff I’ve added to the Vensim model. Depending on how it goes, I might switch to True as my default workspace. The basic Keen growth model can be downloaded here:

KeenOriginalWithGrowth-True
KeenOriginalWithGrowth-True.zip

3.4 MB

Details...

Moving Forward With Modern Monetary Theory

Circuit Theory, Modern Monetary Theory Comments Off

Aug 142011

A few days ago I checked out the latest stories over at Pragmatic Capitalism, and found a rather insightful comment by an anonymous user.

“So why do the posts and discussions on this forum focus 90% on the unimportant mechanical process and only 10% on the more critical factor – productivity and economic value of government spending?”

The user has a point. The importance of the insights of MMT has little or no impact if we don’t take a rigorous approach to modelling an MMT system and compare it to a mainstream monetary theory model. Often I see the MMT proponents arguing about these mechanical processes, but the real potential of MMT would be to use it to improve monetary and fiscal policies. This can’t be done without modelling, and there is little work being done in this area. I suppose its easier to sit at a keyboard and argue with each other on the internet.

Keen’s Model in Vensim

Circuit Theory Comments Off

Jun 282011

Well I finally took the time to build Keen’s model in Vensim, and I have to admit, I like the software a lot. In fact, I’ve learned enough from the documentation on that app, that I think I understand True’s software package better. Here’s a screenshot of the whole model in Vensim.

Working with Steve Keen’s Circuit Model

Circuit Theory Comments Off

Jun 232011

A few weeks ago, I discovered this paper by Steve Keen titled Explaining profit with a dynamic model of the circuit. In it, was the first example I’d ever seen of a system dynamics, stock-flow model for monetary theory. The paper is surprisingly comprehensible! In it, and elsewhere on Steve’s website he makes a few fundamental points on the current state of monetary policy. He argues that economists and policy makers have come to accept verbal reasoning as a means to analyze dynamic systems with complicated feedback loops, and subtle interactions. This point is quite timely considering the state of the discussion on US economic policies, debt ceiling theater, and the debt crisis in Europe. How can such different ideologies on policy exist, and be publicly debated with politicians and other policy makers relying only on verbal reasoning and ideology? Aren’t these problems serious enough to warrant a more scientific and mathematical approach?

Suffusion theme by Sayontan Sinha

Modern Monetary Theory

Its late… so here’s a quicky

Model Progress Update

Thanks, And A Call For Model Features

Goodwin’s Class Struggle Model in Vensim

Economics in the “Golden Age of Capitalism”

Deficit and Deceit

Latest news, download page, manifestos, and True model update

Moving Forward With Modern Monetary Theory

Keen’s Model in Vensim

Working with Steve Keen’s Circuit Model

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