Economics for Idiots

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lpm
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Re: Economics for Idiots

Post by lpm » Sun Feb 14, 2021 8:34 am

Millennie Al wrote:
Sun Feb 14, 2021 6:45 am
lpm wrote:
Sat Feb 13, 2021 8:01 pm
bolo wrote:
Sat Feb 13, 2021 6:44 pm

Well yes, within reason, but not for 100% of your portfolio, because then if your company goes south, you might lose your job and your savings at the same time.
Optionality. In UK schemes you can't lose your savings, you get your money back.
Are you referring to the save-as-you-earn (SAYE) schemes? Your money will be at risk after the term when you buy the shares, so you should diversify then.
The scheme began in the Thatcher era as part of the whole "shareholding, home owning masses" thing.

Failed because so few people held onto the shares.

In these schemes you are given the choice to exercise and immediately sell. The choice to exercise and hold the shares is available, but can have extra admin hassle such as a form or setting up a new shareholding account, so it's unusual to see it taken.

But this is a rare case when you can have genuine insider information - have seen the budget for next year for example - and can beat the average investor.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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Martin Y
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Re: Economics for Idiots

Post by Martin Y » Sun Feb 14, 2021 12:50 pm

Millennie Al wrote:
Sun Feb 14, 2021 6:43 am
Martin Y wrote:
Sat Feb 13, 2021 5:01 pm
In related news, my grandma left me some shares that I've just kept, and they send me small dividends from time to time. This isn't the news bit. She died in 1987 which I remember because Black Monday happened while her estate was still going through probate and that evaporated about a third of it, but I digress. So far so category 4.

I just got a letter telling me the company is considering a buyout offer at 880p/share. I checked their share price and saw it was bumbling along at around 600p until 3 days before the letter was sent out when it suddenly jumped to 850p. Just a reminder that by the time we category 4 types learn of an investment opportunity it's already much too late.
You've been holding the shares for over 30 years - you're not too late!
Oh, it doesn't make any particular difference to me, all I was noting was that the market had reacted to the news several days before that news was sent to the shareholders.

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Re: Economics for Idiots

Post by Millennie Al » Mon Feb 15, 2021 5:19 am

Martin Y wrote:
Sun Feb 14, 2021 12:50 pm
all I was noting was that the market had reacted to the news several days before that news was sent to the shareholders.
Yes. That happens routinely. Things like insider trading regulations effectively guarantee that the professional traders have a significant advantage, though that's never given as the justification for the rules.
Covid-19 - Don't catch it: don't spread it.

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Re: Economics for Idiots

Post by basementer » Mon Feb 15, 2021 5:29 am

lpm wrote:
Sun Feb 14, 2021 8:34 am
Millennie Al wrote:
Sun Feb 14, 2021 6:45 am
lpm wrote:
Sat Feb 13, 2021 8:01 pm

Optionality. In UK schemes you can't lose your savings, you get your money back.
Are you referring to the save-as-you-earn (SAYE) schemes? Your money will be at risk after the term when you buy the shares, so you should diversify then.
The scheme began in the Thatcher era as part of the whole "shareholding, home owning masses" thing.

Failed because so few people held onto the shares.

In these schemes you are given the choice to exercise and immediately sell. The choice to exercise and hold the shares is available, but can have extra admin hassle such as a form or setting up a new shareholding account, so it's unusual to see it taken.

But this is a rare case when you can have genuine insider information - have seen the budget for next year for example - and can beat the average investor.
As an aside - SAYE has nothing to do with the matter in hand, it was introduced by the Labour government in the late 1960s in an attempt to get people to put money in bank deposit accounts.
Chancellor Roy Jenkins, 20 May 1969: https://hansard.parliament.uk/Commons/1 ... 4ef5a7c604
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lpm
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Re: Economics for Idiots

Post by lpm » Mon Feb 15, 2021 9:56 am

It's from 1980. "Shareholding democracy". Which wasn't Thatcher's worst idea - the notion that everyday people would invest in shares and share the benefits from economic prosperity.

However it coincided with the great social and economic shift from everyday people having savings, to everyone owing cheap & easy credit.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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Re: Economics for Idiots

Post by plodder » Tue Mar 02, 2021 1:56 pm

More awesome "economics is simple, it's the conspiracy that isn't" stuff:

https://twitter.com/RichardJMurphy/stat ... 2882857984

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Re: Economics for Idiots

Post by Woodchopper » Wed Mar 03, 2021 7:02 am

plodder wrote:
Tue Mar 02, 2021 1:56 pm
More awesome "economics is simple, it's the conspiracy that isn't" stuff:

https://twitter.com/RichardJMurphy/stat ... 2882857984
Similar to what various people in the other place were arguing in 2008-10. Governments can just create money whenever they want to.

There is though one big issue missing from his thread, which is inflation. If a government creates too much money then the value of that money will decline. This would have negative consequences if inflation was too high. Inflation is also the riposte to his conspiracy bollocks.

Bewildered
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Re: Economics for Idiots

Post by Bewildered » Wed Mar 03, 2021 7:15 am

Woodchopper wrote:
Wed Mar 03, 2021 7:02 am
plodder wrote:
Tue Mar 02, 2021 1:56 pm
More awesome "economics is simple, it's the conspiracy that isn't" stuff:

https://twitter.com/RichardJMurphy/stat ... 2882857984
Similar to what various people in the other place were arguing in 2008-10. Governments can just create money whenever they want to.

There is though one big issue missing from his thread, which is inflation. If a government creates too much money then the value of that money will decline. This would have negative consequences if inflation was too high. Inflation is also the riposte to his conspiracy bollocks.
I didn’t manage to finish it last night when reading (it’s a loooong thread), but I got far enough that I saw he acknowledge inflation is why they don’t just print as much as they like. I guess he is generally going to argue it’s not so bad or easier than claimed though. I am bit suspicious of this guy as I would rather listen to people who teach / research macro economics, and as above I didn’t get to the end, but much of what he said seemed standard.

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Re: Economics for Idiots

Post by plodder » Wed Mar 03, 2021 7:33 am

He tackles inflation by saying it’s controlled mainly through taxes (which in his definition includes interest rates), which is true. I have to admit, I like this kind of conspiracy bollocks, because it’s no less conspiratorial than any of the other explanations.

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lpm
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Re: Economics for Idiots

Post by lpm » Wed Mar 03, 2021 8:56 am

Woodchopper wrote:
Wed Mar 03, 2021 7:02 am
plodder wrote:
Tue Mar 02, 2021 1:56 pm
More awesome "economics is simple, it's the conspiracy that isn't" stuff:

https://twitter.com/RichardJMurphy/stat ... 2882857984
Similar to what various people in the other place were arguing in 2008-10. Governments can just create money whenever they want to.

There is though one big issue missing from his thread, which is inflation. If a government creates too much money then the value of that money will decline. This would have negative consequences if inflation was too high. Inflation is also the riposte to his conspiracy bollocks.
Inflation is missing from the thread because it is missing from reality.

There is simply no real world inflation. Even a Brexit and Covid shocked UK economy is not seeing an inflation shock.

In 2008-10 I had to listen to you lot jumping to the "But inflation" myth and I'm not going to hear a word of it now. We're trapped in a deflation world for solid and long lasting reasons.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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lpm
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Re: Economics for Idiots

Post by lpm » Wed Mar 03, 2021 9:05 am

The actual flaw in Murphy is it ignores the labour theory of value.

Every single product and service is created by the labour of a human, from a lump of coal to an iPhone to a legal document. Messing around with money doesn't do any labour in itself. So ultimately MMT just rearranges rather than creates.

This is why the money cost of Covid is irrelevant. Can be wiped out as Murphy says. But the actual loss - people not doing any making and producing for a year - is real. Messing around with money can prompt those human resources back into work.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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bjn
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Re: Economics for Idiots

Post by bjn » Wed Mar 03, 2021 9:19 am

plodder wrote:
Tue Mar 02, 2021 1:56 pm
More awesome "economics is simple, it's the conspiracy that isn't" stuff:

https://twitter.com/RichardJMurphy/stat ... 2882857984
I've gone down a slight rabbit hole, read the thread and found his Blog/Website. Will dig through it more when I'm not shouting at children free.

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Re: Economics for Idiots

Post by bjn » Wed Mar 03, 2021 9:23 am

lpm wrote:
Wed Mar 03, 2021 9:05 am
The actual flaw in Murphy is it ignores the labour theory of value.

Every single product and service is created by the labour of a human, from a lump of coal to an iPhone to a legal document. Messing around with money doesn't do any labour in itself. So ultimately MMT just rearranges rather than creates.

This is why the money cost of Covid is irrelevant. Can be wiped out as Murphy says. But the actual loss - people not doing any making and producing for a year - is real. Messing around with money can prompt those human resources back into work.
Isn't the point that worrying about national debt instead of real world costs is putting the cart before the horse? The former should be at the service of the latter.

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lpm
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Re: Economics for Idiots

Post by lpm » Wed Mar 03, 2021 9:29 am

bjn wrote:
Wed Mar 03, 2021 9:23 am
lpm wrote:
Wed Mar 03, 2021 9:05 am
The actual flaw in Murphy is it ignores the labour theory of value.

Every single product and service is created by the labour of a human, from a lump of coal to an iPhone to a legal document. Messing around with money doesn't do any labour in itself. So ultimately MMT just rearranges rather than creates.

This is why the money cost of Covid is irrelevant. Can be wiped out as Murphy says. But the actual loss - people not doing any making and producing for a year - is real. Messing around with money can prompt those human resources back into work.
Isn't the point that worrying about national debt instead of real world costs is putting the cart before the horse? The former should be at the service of the latter.
Yep. National debt (better described as government debt) is a measure of history - sunk costs. It's not a future looking measure.

But you need to put in labour to breed a horse and build a cart.

The scenario to imagine is a world where Corbyn is PM and Murphy is chancellor. Corbyn asks if he can have £20 billion to build fibre optic broadband to every home in the country. Of course you can, says Murphy, and he creates the money on the spot and hands it over.

But what happens then? Corbyn has the money in his pocket, but money is not a fibre optic cable buried beneath a road and leading to a house.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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bjn
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Re: Economics for Idiots

Post by bjn » Wed Mar 03, 2021 9:34 am

lpm wrote:
Wed Mar 03, 2021 9:29 am
bjn wrote:
Wed Mar 03, 2021 9:23 am
lpm wrote:
Wed Mar 03, 2021 9:05 am
The actual flaw in Murphy is it ignores the labour theory of value.

Every single product and service is created by the labour of a human, from a lump of coal to an iPhone to a legal document. Messing around with money doesn't do any labour in itself. So ultimately MMT just rearranges rather than creates.

This is why the money cost of Covid is irrelevant. Can be wiped out as Murphy says. But the actual loss - people not doing any making and producing for a year - is real. Messing around with money can prompt those human resources back into work.
Isn't the point that worrying about national debt instead of real world costs is putting the cart before the horse? The former should be at the service of the latter.
Yep. National debt (better described as government debt) is a measure of history - sunk costs. It's not a future looking measure.

But you need to put in labour to breed a horse and build a cart.

The scenario to imagine is a world where Corbyn is PM and Murphy is chancellor. Corbyn asks if he can have £20 billion to build fibre optic broadband to every home in the country. Of course you can, says Murphy, and he creates the money on the spot and hands it over.

But what happens then? Corbyn has the money in his pocket, but money is not a fibre optic cable buried beneath a road and leading to a house.
Which is an entirely separate problem, which is picking things that should have money spent on them, and spending it competently.

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lpm
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Re: Economics for Idiots

Post by lpm » Wed Mar 03, 2021 9:44 am

It's not an entirely separate problem at all. It's the very heart of the problem. Economics exists because resources are limited.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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lpm
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Re: Economics for Idiots

Post by lpm » Wed Mar 03, 2021 10:25 am

This BBC article is worth a read. It's utter bollocks from beginning to end.

MMT is good because it explains clearly why it's bollocks, but it's bad because it sounds too much like a conspiracy theory. And so people think it can't be true and revert to the old nonsense of "borrowed too much on the nation's credit card and must pay it back".

https://www.bbc.co.uk/news/business-52663523

Today's budget will fundamentally stay true to austerity theory, even if in a more generous form. There needs to be some way for economics to break through and consign austerity theory to a scraphead of shame. The English are stuck with austerity thanks to the fundamental mistake that is endless repeated by articles such as this BBC one.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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Re: Economics for Idiots

Post by discovolante » Wed Mar 03, 2021 10:38 am

lpm wrote:
Wed Mar 03, 2021 8:56 am
Woodchopper wrote:
Wed Mar 03, 2021 7:02 am
plodder wrote:
Tue Mar 02, 2021 1:56 pm
More awesome "economics is simple, it's the conspiracy that isn't" stuff:

https://twitter.com/RichardJMurphy/stat ... 2882857984
Similar to what various people in the other place were arguing in 2008-10. Governments can just create money whenever they want to.

There is though one big issue missing from his thread, which is inflation. If a government creates too much money then the value of that money will decline. This would have negative consequences if inflation was too high. Inflation is also the riposte to his conspiracy bollocks.
Inflation is missing from the thread because it is missing from reality.

There is simply no real world inflation. Even a Brexit and Covid shocked UK economy is not seeing an inflation shock.

In 2008-10 I had to listen to you lot jumping to the "But inflation" myth and I'm not going to hear a word of it now. We're trapped in a deflation world for solid and long lasting reasons.
I was listening to a relatively young American economist who used to work for the Fed who seemed to be trying quite hard to look at this quite empathetically, in that the senior economists she worked with had lived through the inflation of the 70s so it was understandable that their 'lived experience' would make them wary of it happening again, and as a younger person who didn't experience it first hand she felt she had a different perspective (which of course she thought was right!). Obviously this kind of reflects lots of disciplines where there's an old school and a new school and I can see why the old school might have concerns given their experience. But that perspective seems to involve worrying more about theoretical damage in the future much more than what is happening now, and maybe a natural reluctance of people to intervene when there are two potentially bad outcomes, but one potentially bad outcome is seen to be the result of that intervention and the other bad outcome happens 'naturally' (in big inverted commas).
socialism is when the government does stuff

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Re: Economics for Idiots

Post by El Pollo Diablo » Wed Mar 03, 2021 10:52 am

What's MMT?
Mike Patton wrote:"You overdo it sometimes. There I am, peeing on Axl Rose’s teleprompter." He looks rueful: "I didn’t really have to do that."

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Re: Economics for Idiots

Post by discovolante » Wed Mar 03, 2021 11:03 am

El Pollo Diablo wrote:
Wed Mar 03, 2021 10:52 am
What's MMT?
Modern Monetary Theory
socialism is when the government does stuff

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Re: Economics for Idiots

Post by lpm » Wed Mar 03, 2021 11:06 am

Which is what Richard Murphy and others argue for. Basically saying the current govt debt can be ignored - which is true.

Ultimately MMT is a variant of basic Keynesian economics. Bits of the variation are usefully, others are incorrect.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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Re: Economics for Idiots

Post by plodder » Wed Mar 03, 2021 11:10 am

Dunno.

I think lpm would like this economist who is a capitalist who believes in tax and spend.

https://marianamazzucato.com/

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Re: Economics for Idiots

Post by plodder » Wed Mar 03, 2021 11:13 am

lpm wrote:
Wed Mar 03, 2021 9:29 am

Yep. National debt (better described as government debt) is a measure of history - sunk costs. It's not a future looking measure.
Not sure. I quite like the definition that it is a promise of future work, floating around until it is recouped as tax.

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Re: Economics for Idiots

Post by Bird on a Fire » Wed Mar 03, 2021 11:58 am

discovolante wrote:
Wed Mar 03, 2021 11:03 am
El Pollo Diablo wrote:
Wed Mar 03, 2021 10:52 am
What's MMT?
Modern Monetary Theory
Ah. I was reading it as Magic Money Tree, which seemed to make sense in context.
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Re: Economics for Idiots

Post by insignificant » Wed Mar 03, 2021 12:23 pm

Bird on a Fire wrote:
Wed Mar 03, 2021 11:58 am
discovolante wrote:
Wed Mar 03, 2021 11:03 am
El Pollo Diablo wrote:
Wed Mar 03, 2021 10:52 am
What's MMT?
Modern Monetary Theory
Ah. I was reading it as Magic Money Tree, which seemed to make sense in context.
I don't think MMT meaning both Modern Monetary Theory and Magic Money Tree is a coincidence </conspiracy>

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