economics

While the US runs persistent current account deficits, Japan runs persistent current account surpluses, which is how these substantially different NIIPs were built.

This will be interesting for the United States over the next decade. Unlike Japan, which funds its own fiscal deficits domestically, the United States has historically been partially

In order that new industries may grow fast enough it is usually necessary that some old industries should be allowed to shrink or die. In doing this they help to release the necessary capital and labor for the new industires.

Of course it is not at all clear that a consumption tax or a tariff would leave the total domestic production of goods and services unchanged. This would depend crucially on how the proceeds of that tax are spent. Depending on how this happens, the total production of goods and services can rise, decline, or remain unchanged.

Item #2: Inefficient Healthcare Spending

The United States government subsidizes the raw ingredients that go into inexpensive carbohydrate-based ultra-processed foods. For example, the high-fructose corn syrup industry gets more federal funds (via subsidies for types of corn that are bred for that purpose and inedible for corn-on-the-cob

Anything that reduces consumption, in other words, without changing total production or total investment, must cause an increase in exports relative to imports.

Restrictive assumptions such as ‘rational expectations’ (Lucas 1976; Muth 1961), representative rational agent modelling, probability theory, and stochastic modelling fail to support understanding as in a crisis we face the uncertainty described by Frank Knight (Knight 1921). Arguably, this is one of the key challenges that Keynes (1936) addressed

Investments & inventory: When a firm buys INR 300 machine, it’s basically an inflow (or income) for another firm which sells it. But for the buying firm, it’s not a cost. It’s an investment. It becomes a cost very slowly as machine depreciates. So for the two firms together, decision of a firm to buy a machine from another firm becomes profit.

Two Economies, Not One

As I have written in previous posts, the are two economies, not one. One is the Flow Economy that produces goods and services. The other is the Balance Sheet Economy that stores wealth

Pricing commodities in US Dollars ensures that the three factors mentioned above are all reflections of the trend in commodity markets. Growth differentials are due to commodity strength, which flows to interest rate differentials, and which finally results in capital flows.