Economic Theories don't work. We cannot hope to analyze and predict economic activity through any economic theory in general : 1) economic theories would always be tied to politics, power and money and will therefore be biased and useless most of the time. 2) even if the author is thoroughly honest, social environments can never be replicated and little differences (if ever there were ever little differences in two places at two times?) may be sufficient to render the predictions and solutions from economic theories bad. Better just analyze every economic situations from first principles using the barest of principles like :- 1) Man must eat. eg application - someone in another thread mentioned "if I can pay everyone for not working, ... it is a sign of the success of technology... ", meaning stimulus and bailouts are right. Yes! - provided you have total robots that can plant and harvest wheat, rice, potatoes, vegetables, etc.. stimulus to provide idle workers with money to keep GM making and selling cars just make cars, but don't make food. Man does not live by cars alone... 2) money represents human economic efforts - this is one of the most controversial of principles in economics. eg application - fractional reserve banking that creates money out of "thin air" is flawed. Even a big name like Ann Pettifor made this mistake in one of her recent articles. She seems to consider fiat money to be a human invention of great genius. She gave the reason that with this ability to create money/credit through "thin air" ( she added with discipline) it allows the poor peasant the chance to receive a loan without the need for someone to first make a saving. Thus FRB credit liberates mankind from bondage to savings. The flaw is in the Big Bang of money. We are already far far away from the "big bang" when society has a zero money supply. Cavemen worked and used cowrie shells as money and life goes on stably for a long time. An intelligent The Caveman started FED and pronounced his sand particles as legal tender and a law punishable by stoning to death when it is breached. So "sand money" now is thin air and life would be stable no more. Chaos reign. 3) Gross Domestic Product means potatoes and only potatoes (?). Value added through derivatives is not potatoes and not to be added to GDP. 4) Economics means everyone "have enough". Simply put, economics means jobs for everyone so they have money to buy things. Does the current Obama stimulus/bailouts create jobs that creates potatoes.
Too many look for micro answers in macro data. Try plotting some leading, coincident and some lagging indicators over a few decades. You'll see the relationships and smooth transitions from growth to recession to recovery.
Since when? Money is a medium of exchange - nothing more, nothing less. The only thing it genuinely represents is trust.
if you are interested in people having enough you might want to look at minimum income standard economics. it is best way to achieve a sufficient standard without holding back the economy.
I like where he is going with this. Look at New Orleans when Katrina cut off normal food supply lines. You can philosophize all day on it, but the bottom line is that hunger can bring down the most civil of societies to primitive levels.
I wrote: money represents human economic efforts Economics is as much a religion as it is a science. When certain ideas due to past influences have been accepted, they would be hard to dispel irrespective if they be "right" or "wrong". Your concept of money is based on the meaning of three words "medium", "exchange" and "trust". Let's assume a simple economy. A person works in a bakery and monthly receives wages. He spends his gold sovereigns in buying bread. This gets repeated monthly. So Wages = Money = Economic Labour. It cannot get simpler. Because things are simple, things don't change - wages, prices of bread, quantity of Sovereigns circulating don't change. So 1 Sovereign is always equal to 3 loves of bread and it is easy to compute a person's monthly economic labour in number of gold sovereigns. As for trust, the word does not exists as they don't have concepts of distrust nor betrayal of trust. A cow is an animal and is also a living thing. A cow that do not belong to the category of "living thing" is a dead cow. Money in the above model is a medium of exchange as well as economic labour. Take away the connection that money is "earned", you have dead money - money that don't respond in the decent world, but alive and resurrected in the ponzi nether world.
That is already out of the realm of "simple economy", as it is has the concept of "wages", which means you're already out of the realm of direct swaps of goods & services for other goods & services. In a simple economy, the guy growing the grain swaps some of it with the baker for bread, and the baker swaps the excess bread production for other food. And so on down the line.