It’s good to see you’re trying to play the ball and not the man. It’s also good to see you’ve reconnected your home computer after 5 or so years.

This ancestor worship is really muddying your thinking. Keynes didn’t address any of the flaws of his critics in any meaningful way. Keynes also made egregious errorss.

An example of the overly generous pass you give Keynes is that 120 000 temporary jobs were “created” at the cost of $358 000 per job, with borrowed money, unamortised. Have a look at the figures. 180 k plus added to labour market. A couple of thousand permament jobs, net. An increase in part time work largely due to labour market flexibility. The labour market flexibility belies Keynes’ argument about sticky downwards wages. The effectiveness of inflation to otherwise clear these markets also belies Keynes’ point about the ineffectiveness of monetary policy. He said this generally, and not just with regards to liquidity traps (which of course assumed no supply side interaction and a necessary demand management strategy).

“New-Keynesian economics, like this paper, does not address decision-making under uncertainly, nor does it address financial market instability. ”

Neither does Keynes! He just mentions it is a problem.

“Modelling non-financial sector related shocks to a system in equilibrium tells us nothing about Keynes’ theory. Got it? Probably not.”

Keynes, like Minsky is just descriptive. Estimates of how price rigidities should impact fiscal or monetary policy to alter inflation and interest rates, or expectations of prices and inflation don’t say anything about financial markets? What did Keynes say was the motivation to hold cash?

Keynesian policy as in demand management is virtually impossible to conduct. Any attempt to manipulate interest rates has demand AND supply side effects. Keynes thought there would be no supply side effect. This was found through empirical research through the 1970s to 1990s.

With this level of uncertainty, you want to lecture the rest of us about “addressing uncertainty”?

The US financial crisis was precipiated by a longer fall in labour productivity, and was a correction among other things. This pattern was repeated elsewhere. The crdit crunch etc were knock on effects. Hardly “instability”.

The global financial markets were extremely stable say in the Clinton years when mostly good policy was followed. The Asian financial crisis happened because of bad policy. The dot com bubble was self correcting but precipitated at the end of several years of low interest rates.

Markets can collapse in a heap but they are not consistently teetering on collapse. They are simply too unpredictable or uncontrollable to say so. They’re not a Zen like perfection of character nor are they easily manipulated with predictable or desirable results.

You dishonest dude. I never said you suggested devaluation is deflationary. As incompetent as you are I would expect you to know that. What you said was (in reference to the 30′s) they raised the gold price from 20 bucks an ounce to 35 bucks, which you strongly suggested was deflationary when it’s the opposite.

One minute you’re telling me to fuck off and now you’re back. You are all over the place.

At the real risk of upsetting you again, the term New-Keynesian should provide a hint as to why this model says little about the GT. Price stickiness is a central tenant of new-Keynesian theory which after all is just an attempt to reconcile Keynes with classical economics. New-Keynesian economics, like this paper, does not address decision-making under uncertainly, nor does it address financial market instability. For the umpteenth time Keynes is not Keynes without these variables. The model attempts to reconcile the New-Keynesian Phillips curve with estimates of price stickiness from survey data. Did you read the paper?

Modelling non-financial sector related shocks to a system in equilibrium tells us nothing about Keynes’ theory. Got it? Probably not.

Your firstly pushing Keynes but denying that Keynesian economics is based on price stickiness, and secondly asserting that the RBA analysis is too “simplistic” compared to Keynes’ original “work” which was no more than an overly long op-ed piece.

e.g

“By the way the paper says nothing about Keynesian economics. Unless of course you have some bizarre simplified version of Keynes in your head. Oh yeah you do.”

The paper’s abstract:

*This paper attempts to reconcile the high estimates of price stickiness from macroeconomic estimates of a New-Keynesian Phillips Curve (NKPC) with the lower values obtained from surveys of firms’ pricing behaviour. This microeconomic evidence also suggests that the frequency with which firms adjust their prices varies across sectors. The paper shows that in the presence of this heterogeneity, estimates of aggregate price stickiness from microeconomic and macroeconomic data should differ. Heterogeneity in firms’ pricing decisions, as well as a more realistic production structure, is introduced into an otherwise standard New-Keynesian model. Using a model calibrated with microeconomic pricing survey data for Australia, the paper shows that estimates of the NKPC considerably overstate the true degree of price stickiness and may falsely suggest that some prices are indexed to past inflation. These problems arise because of a type of misspecification and a lack of suitable instruments.*

I refuse to be insulted via diminution by a diminutive.

Anyone with a whiff of an education in this example can either adjudge that you are being wilfully dishonest or unfortunately ignorant beyond your stated level of profession.

This is getting a little unwieldy. Let’s keep it simple. Pick a topic, any topic and we can discuss it.

If you want to go long you might have to wait until Friday for a reply.