By Philip Soos

The Con­ver­sa­tion

Few Aus­tralian hous­ing poli­cies are more con­tentious than neg­a­tive gear­ing.

Despite the pub­lic­i­ty it has received and its pop­u­lar­i­ty with gov­ern­ment and prop­er­ty investors, lit­tle analy­sis of neg­a­tive gear­ing can be found with­in easy reach, with much of it acces­si­ble only in aca­d­e­m­ic jour­nals. Only an occa­sion­al frag­ment is found in the main­stream media.

I had hoped to post this on the day of my pre­sen­ta­tion to UMKC, but the site fell over that day and it has tak­en vol­un­teers sev­er­al days to sort out the prob­lems. I had to buy addi­tion­al stor­age space on the serv­er, and large sys­tem logs had to be delet­ed. These are some of the issues that have moti­vat­ed the devel­op­ment of Debunk­ing Eco­nom­ics as a sub­scrip­tion site: with pro­fes­sion­al staff sup­port, this prob­lem would nev­er have occurred; with­out them, and with me being too busy to do the work myself, it’s result­ed in the site being down for about 4 days.

Irv­ing Fish­er (1867–1947) was a neo­clas­si­cal econ­o­mist. I say “was” not mere­ly because he is dead, but also because he emphat­i­cal­ly reject­ed the neo­clas­si­cal approach after his “Near Death Expe­ri­ence” dur­ing the Great Depres­sion.

Fish­er was worth over $US100 mil­lion in today’s mon­ey when The Great Crash began. Unlike most econ­o­mists, he was also an inven­tor, and he invent­ed a pre­de­ces­sor of the Rolodex – the iPad of its day. He sold his inven­tion to the pre­de­ces­sor of Unisys in return for shares and a seat on the board – and like so many oth­ers back then, lev­ered his wealth by buy­ing shares on mar­gin.

I’ve just uploaded the first 8 lec­tures in my Behav­ioral Finance class for 2012. The first few lec­tures are very sim­i­lar to last year’s, but the con­tent changes sub­stan­tial­ly by about lec­ture 5 when I start to focus more on Schum­peter’s approach to endoge­nous mon­ey.

I don’t have time to write an out­line of the con­tent of these lec­tures here–maybe at the end of the year. For now, here are the videos.

Lecture 1: Individual Behavior

Lecture 2: Market Demand and Supply

Lecture 3: Finance Markets Theory

This is the pre­sen­ta­tion I gave today at the Amer­i­can Mon­e­tary Insti­tute 2012 annu­al con­fer­ence in Chica­go.

Pre­sen­ta­tions were also giv­en by Michael Kumhof of the IMF, who has incor­po­rat­ed endoge­nous mon­ey into a Neo­clas­si­cal DSGE frame­work (a world first), Kaoru Yam­aguchi with an endoge­nous mon­ey ver­sion of his Ven­sim dynam­ic mod­el of an econ­o­my, and Michael Hud­son pre­sent­ing a paper based on “The Bub­ble and Beyond” and a joint paper he’s work­ing on with Dirk Beze­mer and me.

If you are inter­est­ed in more dis­cus­sions about this and sim­i­lar sub­jects, check out my site, Debunk­ing Eco­nom­ics here. SK

I’m off to the USA on Thurs­day for two con­fer­ences:

• The Amer­i­can Mon­e­tary Insti­tute con­fer­ence in Chica­go on Sept. 20–23; and
• The Post Key­ne­sian con­fer­ence at the Uni­ver­si­ty of Mis­souri Kansas City on Sep­tem­ber 27–29

The lat­ter will re-unite the par­tic­i­pants at the Fields Insti­tute MMT-MCT sem­i­nar held in Toron­to  on July 3rd this year: myself, Stephanie Kel­ton, Scott Full­wiler, Michael Hud­son, Steve Keen, Matheus Gras­sel­li and Nathan Cedric Tankus.

I start­ed this post sim­ply because Nathan has been at me for ages to post the pho­tos, and then I real­ized that, though I had put the videos up on Youtube, I had­n’t made a spe­cif­ic post here.

I men­tioned Wynne God­ley’s pre­scient obser­va­tions about the Euro back in 1992 in a debate on the Mind Your Busi­ness pro­gram on Ire­land’s RTE Radio 1 about half an hour ago. God­ley’s remarks–no doubt seen as extrem­ist when he uttered them–have proven to be utter­ly prophet­ic:

As recent­ly as May 2011, the Aus­tralian Bud­get State­ment fore­cast only a grad­ual decline in iron ore prices. “The terms of trade are fore­cast to increase 19¼ per cent in 2010-11, under­pinned by strong increas­es in the prices of Australia’s key non-rur­al com­mod­i­ty exports, before declin­ing grad­u­al­ly over 2011-12 and 2012–13 as increas­ing glob­al com­mod­i­ty sup­ply starts to match growth in demand,” it said.

As is not news to any­one today, the decline in Australia’s terms of trade in the first three months of finan­cial year 2012–13 has been any­thing but grad­ual: it has fall­en five times as much in three months as Trea­sury expect­ed to hap­pen over the entire year.

I’m being inter­viewed about the Fed­er­al Reserve’s QE3 announce­ment today on BBC Radio:

6.15AM GMT on BBC Radio 4 BBC Busi­ness Dai­ly LIVE
8.32AM GMT on BBC World Ser­vice

If you’re not in the UK, you can lis­ten online:

BBC Radio 4 LIVE

BBC World Ser­vice

This is prob­a­bly the most detailed sem­i­nar I have giv­en on my views on mon­e­tary macro­eco­nom­ics. I begin with the data that, back in Decem­ber 2005, led me to expect that a huge eco­nom­ic cri­sis was immi­nent: the ratio of pri­vate debt to GDP. Then I explain why this ratio mat­ters, in con­trast to the argu­ments that Neo­clas­si­cal econ­o­mists put that only the dis­tri­b­u­tion of debt mat­ters. This takes me through the empir­i­cal data, the the­o­ries of Schum­peter and Min­sky, and the math­e­mat­ics need­ed to prove that “aggre­gate demand equals income plus the change in debt” is cor­rect, and that this does not involve dou­ble-count­ing.