Per Bylund Profile picture
Mar 27 6 tweets 2 min read Twitter logo Read on Twitter
There's something about price #deflation (that the purchasing power of money rises) that messes with people's ability to think properly. Instead, they assert/conclude that the economy will go down the tubes if people get more for their earnings and savings.
The only way you end up with such a nonsense conclusion is if you have no conception of value creation in the economy. That is, if you assert that the economy is about simple statistical metrics, not the constant striving to satisfy people's wants (on their own terms, not yours).
By disregarding value creation, you get to the common (but crazy) view that if people expect their money's purchasing power to rise, they will postpone consumption (all of it, indefinitely). That is of course an impossibility. We must and want to consume.
What these anti-deflationists never consider is what consumption is for. We consume to satisfy wants. And produce to be able to consume. Anyone's choice whether and what to consume is part of their value calculus. Incentivizing people to over-consume is pure nonsense.
The fact is that production is undertaken to facilitate consumption--by offering valued want satisfaction. If people choose not to buy the good offered, it is because it doesn't offer them enough value. That's not a problem, but anti-deflationists pretend it is. Because stats.
No matter how you look at it, the anti-deflationist view--both their conclusion and the argument to back it up--lacks substance and offers no insight at all. It's at best based on a misreading of statistics.

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More from @PerBylund

Mar 27
A lot of people spew this type of fallacy. By doing so they commit fundamental economic errors. What are they? Simply put, they disregard time (and uncertainty) and what demand is. Image
The issue of time lies in the fact that production precedes consumption. Production in the present facilitates consumption in the future. So the goods available for sale today were produced previously, not now. People are employed for their contributions to meeting future demand.
In other words, production requires investment before there is demand for what's being produced. Businesses produce for future sales. For what goods have already been produced, the cost is sunk. Whether or not people buy what's already been produced doesn't affect new production.
Read 10 tweets
Jun 6, 2022
#Economics was properly a study of concepts, the recognition of which is important in action/to actors and thus to understanding the economy. But economists have increasingly sought to replace conceptual understanding with measurability, which undermines the value of their field.
This is why we see economists chasing statistical data, using models that bear little resemblance to the actual world. But, as is increasingly evident, sophisticated mathematical analyses cannot replace conceptual understanding, but serve only to hide the lack of actual depth.
An important but overlooked consequence is that economics no longer has a proper basis or ability to explain causality in the economy. In fact, time is only superficially part of modern economic models. The problem? The real economy and economic actions are fundamentally causal.
Read 8 tweets
Apr 26, 2022
People are claiming economics needs to be supported by "evidence" (empirical, anthropological) to prove the origin(s)/emergence of money, i.e. the commonly used medium of exchange. (Some even claim a lack of "evidence" somehow refutes the concept.) That's a fundamental confusion.
Economic theory deals with concepts. The concept of money is an understanding and practice, not the thing that is used. Currency can be money, but it doesn't have to be. Ask anyone in the Weimar republic, Zimbabwe, or Venezuela. It's not the piece of paper that makes it money.
To find empirical evidence of the emergence of money is all but impossible: how can we know the evidence we find of things that were traded were traded for being media of exchange rather than for being goods in themselves? The findings won't tell us what is money and what is not.
Read 7 tweets
Apr 25, 2022
What did I do in early 2022 that you disliked, @Twitter?
November 2021-January 2022.
February-April 2022
Read 4 tweets
Apr 13, 2022
There's some confusion about my quoting Friedman on inflation. The way I see it, Friedman was referring to inflation as the general rise in prices observable as money's lower purchasing power. Prices fluctuate for many reasons, but that's not inflation (to me or Friedman).
Where Friedman and I differ, of course, is that he thought of a 1:1 relationship between the money supply and the price "level" in equilibrium. I think that's an unfounded assertion. Money is not neutral and there is no such thing as a price "level" (it's a conceptual error).
The classical definition of inflation (increased money supply) as not an outcome but a cause of systemic changes in prices is much more appropriate for economic analysis (and understanding). It allows us to trace the effects, varied and uneven as they may be, from a single cause.
Read 11 tweets
Mar 21, 2022
We need to broaden our discussion on #regulatorycapture. The typical understanding is too narrow and based on a faulty understanding of #economy and #regulation as a one-shot game. It's not; the market is a process, and action in it and regulation of it have process implications.
The standard interpretation seems both neutral and innocuous, but it is not. It asserts a certain order of events that has support neither in theory nor empirically: that government agencies are implemented to then be captured/corrupted.
The creation-then-capture logic doesn't hold in what is often called a "repeated game," i.e. in a world where parties can act and react to each other's actions more than once and therefore cause systemic adjustments, adaptations, and even symbiosis.
Read 16 tweets

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