Duncan't Economic Blog
Hi there my five unique readers, I’d like to introduce you to yet another rather interesting blog that I’ve recently found. It’s someone’s, called Duncan, economic blog I liked especially this post and this one.
About the first one I like the correlation with energy production limits… that I am actually investigating myself in my own researches trying to derive the Wicksell’s model from the Hubbert’s model.
The other one, points out in a very plain way a couple of limits of the Austrian Economic School that I am uneasy with too. And in particular:
“For me, and this is what I’m writing up, the Austrians are correct on both the ability of unfettered monetary expansion to cause a boom. But they (i) are out of date on what they term ‘money’ and (ii) whilst offering some good diagnosis of problems they fail entirely to suggest solutions that are in anyway practical or attractive. Austrian economics as a school of political economy totally falls down. But then I can see why Libertarian types like it. The debate has to be moved on from ‘what economic theory works best’ to what ‘mode of political economy do we want.’ The dismal science cannot be seperated from fundamental questions of the type of socieaty we want to live in. No matter how much some argue against this.”
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“… I like the correlation with energy production limits… that I am actually investigating myself in my own researches trying to derive the Wicksell’s model from the Hubbert’s model.”
And… what about a model derived from Volterra’s equations, instead?
Rather than the net quantity of crude oil left, it could be more interesting a focus on secondary energy sources’ trends of competitive utilization. Kind of “Stone Age did not ended because of stones’ scarcity…”.
Actually I fully agree with you. But to cut a long story short, I’m trying to correlate the marginal lifing profit with the money velocity and the power consumption to get back to the Wicksell model.
But that’s exactly the approach, it is not that there’s oil anymore, is that it’s getting to costy to lift it.
[..]But that’s exactly the approach, it is not that there’s oil anymore, is that it’s getting to costy to lift it[..]
But that’s exactly the approach, it is not that ther isn’t oil anymore, is that it’s getting too expensive to lift it.
Makes more sense
P.S.:
“…I’m trying to correlate the marginal lifing profit with the money velocity and the power consumption…”
Have you ever considered the following option about “money velocity” topic?
http://mises.org/story/918
I’ve read the article,
but I partially agree.
I believe there’s a mistake in the meausrement system that is underlaying here.
First of all… Shostak claims that moeny is not a measurement of worth because, as in the examples mentioned his piece, 10$ aren’t neither 10kg potatoes, nor 10 loaves bread and either 10kg of sugar.
In fact, from my point of view, it is all of them together.
Then there’s another logical mistake in my opinion that is as follow:
10 loaves of bread are worth 10$ not because there’s a certain amount of flower used in it, but because the baker had to bake it, the farmer had to crop the grain, the miller had to mill the flower.
Then the sugar is worth 10$ not because it is bought with 10 loaves of bread, but because the amount of work required to extract sugar and prepare it for sale is equivalent to the amount of human work required to produces 10 loaves of bread.
And equally for the potatos. They are not worth 10kg of sugar or 10 loaves of bread because they are worth 10 $ but because there’s a human being that as to pick the potetoes out of the soil and transport them to the market and prepare them for sale.
So money represents work not goods.
Climbing up to the root of the production of goods there’s the extraction of raw materials, they are worth something not because we have to exchage goods with the soil into which raw materials are buried, but because there’s a certain amount of human work that is spent to extract them.
Then there’s the scarcity factor that has an impact of course: gold is worth more than alluminium, for example, because is scarcer, although to extract gold is much easier than extract alluminium. Alluminium is technologically scarce, meaning that it require heavy technology and a power intensive process to be exctracted, but is extremely widespread and abundant.
Then back to money velocity, does it make any sense?
It is correct that it is not independently defined , but… because of ossequious and a-creative block-quoting approach that treats the words of Von Mises and Rothbard equally to the Word Of Our Holy Lord, Shostak doesn’t realizes that velocity is always defined as a ratio of two euclidean meausrements, so there’s no wornder if money velocity is defined only in relationship to other measurements.
There can be a more subtile criticism to the use of money velocity. Using it to link up power consumption and money it is used in a projective space and not in euclidean dimentions.
Does it make sense? Lorentz’s transformation in the Extendend Einstein’s theory is used aswell to link two otherwise unrelated euclidean spaces.
I’m not there yet… and in between there’s the absence of a closed algebraic form to link Hubbert’s or Volterra’s models to the monetary base.
But considering the money velocity a measure of how much work is being exchanged to the production or mere exchange of goods is the only parametre I have found so far to link growth and its power consuption to the monetary base with the purpose to highlight that it is the raw power availability the upper limit of work exchange expressed by the monetary base.