tag:blogger.com,1999:blog-8595404115121834255.post8311642600989692103..comments2024-03-28T03:24:05.678-04:00Comments on NAKED KEYNESIANISM: The Economist on the end of economic historyMatias Vernengohttp://www.blogger.com/profile/09521604894748538215noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-8595404115121834255.post-81304192355321579432015-04-12T09:03:30.152-04:002015-04-12T09:03:30.152-04:00The positive feedback must include something that ...The positive feedback must include something that pushes prices up. Depreciation and wage spirals, which are behind every hyper I know, increase the price of imported goods, and labor. The depreciation in Japan, which is not worse than in any other country (there is a global appreciation of the dollar going on) is not caused by any significant external problem in Japan, which is a surplus country. So there is zero risk of a hyper in Japan. Deflation is more likely.Matias Vernengohttps://www.blogger.com/profile/09521604894748538215noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-16976563866421017882015-04-11T19:18:26.979-04:002015-04-11T19:18:26.979-04:00Sorry, in your paper that you link to you talk abo...Sorry, in your paper that you link to you talk about a path of causality. I think the most important thing to understand about hyperinflation is that there are feedback loops of causality. The path of causality is a loop.<br /><br />Let us look at Japan. They have a huge amount of bonds and their currency has not done well the last couple years as they are printing a lot of money. A feedback loop may develop (I think so). The more people get out of bonds, the more the central bank will print money to buy bonds to keep interest rates under control (otherwise the government can't handle the interest on the huge debt). But the more the central bank prints money and buys bonds, the more people will want to get out of bonds. This makes a positive feedback loop. It is a death spiral or panic type thing. Positive feedback is the key to explaining hyperinflation. The reason the exchange rate will get out of control is that people will rush to get away from the Yen. <br /><br />Here is more on positive feedback stuff:<br />http://howfiatdies.blogspot.com/2014/08/positive-feedback-theory-of.html Vincent Catehttps://www.blogger.com/profile/06502618776820144289noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-76121243802646876802015-04-11T08:14:06.790-04:002015-04-11T08:14:06.790-04:00The idea of of a shock and a propagation mechanism...The idea of of a shock and a propagation mechanism for inflation (for the cycle is Frisch) is due to Latin American Structuralists. Noyola Vazquez, in particular. Didn't get what you mean, who is trying to get the causality? And we disagree on Japan. No reason why the exchange rate will get out of control, which is at the heart of all hypers.Matias Vernengohttps://www.blogger.com/profile/09521604894748538215noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-35865112725128112112015-04-10T21:12:04.596-04:002015-04-10T21:12:04.596-04:00By the way, I am very convinced that the advanced ...By the way, I am very convinced that the advanced economy of Japan really is at risk. It fits the setup requirements for most of my explanations.Vincent Catehttps://www.blogger.com/profile/06502618776820144289noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-27831212428979221502015-04-10T21:10:09.374-04:002015-04-10T21:10:09.374-04:00Thanks. On pages 475, 476 and 482 he is trying t...Thanks. On pages 475, 476 and 482 he is trying to figure out what the path of causality is. He has different people proposing different orders. It seems clear to me that the core problem in hyperinflation is a positive feedback loop. The causality goes in a circle (several actually). It feeds on itself. It spirals out of control. All my favorite explanations have some sort of feedback loop.Vincent Catehttps://www.blogger.com/profile/06502618776820144289noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-80556495420453884222015-04-10T17:23:14.222-04:002015-04-10T17:23:14.222-04:00I don't have a personal theory. There is a wel...I don't have a personal theory. There is a well established heterodox view of hyperinflations. I wrote a few papers in which it is described. See here https://www.academia.edu/2634094/Money_and_InflationMatias Vernengohttps://www.blogger.com/profile/09521604894748538215noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-52816412361270093952015-04-10T17:19:03.674-04:002015-04-10T17:19:03.674-04:00"Not just because there is no risk of hyperin..."Not just because there is no risk of hyperinflation in any advanced economy at the moment (and that shows lack of theoretical understanding of what causes this phenomenon),..."<br /><br />I collect explanations for hyperinflation. Can you give me your own theoretical explanation for hyperinflation?<br /><br />http://howfiatdies.blogspot.com/2013/09/hyperinflation-explained-in-many.htmlVincent Catehttps://www.blogger.com/profile/06502618776820144289noreply@blogger.com