Comments on: The Stimulus: Beyond “Worked” and “Failed” http://thri.ca/archives/392 Veritas Pulchritudo Est Fri, 16 Mar 2012 01:43:58 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: thrica http://thri.ca/archives/392/comment-page-1#comment-10475 thrica Sun, 06 Dec 2009 02:11:42 +0000 http://thri.ca/?p=392#comment-10475 Yeah, same sorts of distortions; both fiscal and monetary meddling will throw off the balance. Yeah, same sorts of distortions; both fiscal and monetary meddling will throw off the balance.

]]> By: Joseph Sileo http://thri.ca/archives/392/comment-page-1#comment-10473 Joseph Sileo Sun, 06 Dec 2009 01:04:53 +0000 http://thri.ca/?p=392#comment-10473 Oh I thought you were using distortions in the context of our conversation in the last note. The Gallon of Gas and the Gallon of milk Oh I thought you were using distortions in the context of our conversation in the last note. The Gallon of Gas and the Gallon of milk

]]> By: thrica http://thri.ca/archives/392/comment-page-1#comment-10472 thrica Sun, 06 Dec 2009 00:51:00 +0000 http://thri.ca/?p=392#comment-10472 >"If the GDP isn't a good measure of the health of the economy then it is equally valid to say that recessions are irrelevant to the health of the economy." I think that's more or less true. An economy in recession is healthier than a booming economy immediately preceding a recession, in that it's trying to get itself back to health. >"But one must consider that price distortions are (in most cases) created by the market itself." To say "distortions" requires that there be an objective from which we're deviating. Prices have to be reducible to something - in this case the preferences of consumers with regard to the supply of goods. Natural disasters and technical advances don't distort prices; they change the supply of goods, and in an unhampered market economy the prices will adjust accordingly. So I distinguish between price shifts, which reflect the preferences of consumers with regard to market supply, and price distortions, which do not reflect this. >”If the GDP isn’t a good measure of the health of the economy then it is equally valid to say that recessions are irrelevant to the health of the economy.”

I think that’s more or less true. An economy in recession is healthier than a booming economy immediately preceding a recession, in that it’s trying to get itself back to health.

>”But one must consider that price distortions are (in most cases) created by the market itself.”

To say “distortions” requires that there be an objective from which we’re deviating. Prices have to be reducible to something – in this case the preferences of consumers with regard to the supply of goods. Natural disasters and technical advances don’t distort prices; they change the supply of goods, and in an unhampered market economy the prices will adjust accordingly.

So I distinguish between price shifts, which reflect the preferences of consumers with regard to market supply, and price distortions, which do not reflect this.

]]> By: Joseph Sileo http://thri.ca/archives/392/comment-page-1#comment-10471 Joseph Sileo Sun, 06 Dec 2009 00:34:48 +0000 http://thri.ca/?p=392#comment-10471 If the GDP isn't a good measure of the health of the economy then it is equally valid to say that recessions are irrelevant to the health of the economy. A recession is defined as two or more consecutive quarters of non-growth. (With the GDP being the measured value). A recession is nothing more then a label applied to a GDP function with a negative slope. As for price distortions being a cause of recession, I can agree with that. But one must consider that price distortions are (in most cases) created by the market itself. e.g. natural disasters, advances in social systems, advances in technology, etc. These uncontrollable variables are what make the market economy work and fail. If we removed risk from the market then it just wouldn't be the market anymore. If the GDP isn’t a good measure of the health of the economy then it is equally valid to say that recessions are irrelevant to the health of the economy. A recession is defined as two or more consecutive quarters of non-growth. (With the GDP being the measured value). A recession is nothing more then a label applied to a GDP function with a negative slope.

As for price distortions being a cause of recession, I can agree with that. But one must consider that price distortions are (in most cases) created by the market itself. e.g. natural disasters, advances in social systems, advances in technology, etc. These uncontrollable variables are what make the market economy work and fail. If we removed risk from the market then it just wouldn’t be the market anymore.

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