Posts Tagged ‘economy’

Milton Friedman and the inflation during Eighties

2 January 2011

This letter was for the Italian newspaper Corriere della Sera, I post it here translated.

“Dear dr. Romano,

I would make an observation about the mention of Milton Friedman by Marco Sabelli in pg. 26 of “Corriereconomia” of 10/25/10. If the money supply is 1,000 but the percentage in possession of people is 50%, in terms of inflation that is the same of a supply of 2,000, the double, but with money quantity in possession of people the half percentage, 25%. This observation is like the ones made by Joseph Stiglitz‘s theories and Quantity theory of money by the Cambridge school of economics.

What grows actually in that case is the quantity of money available for financial operations (rather than for investments during the period taken in consideration by Sabelli), i.e. practically buying shares for example, with “the inflations of things like the shares prices” i.e. stock market bubbles.

The fifteen years period ’80-’95 was characterised by big transfers of money from States by their Welfare sector to people, by the way at expenses of the government debt, not balanced by revenues.

I would finally point that 45% of Italian resources is in possession of 10% of the populace.”

Sabelli observed that with a high inflation during the period ’80-’95 there was not an equivalent growth of money supply, in contrast with Friedman’s theories.

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7 tools to underpin the economy

12 April 2009

A strong people is the base for any nation, and popular wellfare rises the acquisition of awareness and so strength for its citizens by the access to cultural tools (education, books, press, the internet) and so to cultural creation.

Here there are 7 yet existing tools to underpin the economy and keep it from huge accentrated capital stocks collapse, so subject to huge collapse even more where there is the will of few to makes trick with their huge numbers. Not at random, sectors based on these methodologies are among the less hit by the crisis:

antitrust
public company
– “public” bank (Italian “banca popolare”, if you can read Italian there is an entry about it on the Italian Wikipedia)
coops
microfinance
social business
ethical banking

I remark that this post don’t want to be resolved in a between the lines assault against derivatives, which represent an effective way of coverage from market fluctuations, but for firms dealing DIRECTLY (enough) the goods which their counter-fluctuations are subject for.
The free and also liberal market is an unvaluable conquer, giving chance of developing effective productive and allocation systems, products and services especially as much as it is like Adam Smith conceived it, i.e. based on perfect competition. The problem is how much laborers get profit from it and don’t just undertake risks.