tag:blogger.com,1999:blog-5676200792504814374.post5081805979501895707..comments2020-07-15T01:48:17.542-07:00Comments on Mickanomics: Mick's law of savings - a thought experimentUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5676200792504814374.post-45885203929759647582009-03-10T14:40:00.000-07:002009-03-10T14:40:00.000-07:00I'd like to take issue with point 2. You say "The ...I'd like to take issue with point 2. You say "The fact that net financial claims should be zero is not new", but presumably you're talking about financial claims in the entire economy. But my claim is specifically about savings, which is only a subset of economic activity. I should also point out that Micks law *can* be broken in purely monetary terms. Everyone *can* put some money under the mattress simultaneously - its just that in terms of real goods we will later find out that their "savings" have failed to achieve their desired effect.Mickanomicshttps://www.blogger.com/profile/15474474764908992770noreply@blogger.comtag:blogger.com,1999:blog-5676200792504814374.post-29180226536347854992009-03-10T05:21:00.000-07:002009-03-10T05:21:00.000-07:00Just two comments: 1)Regarding your worries about ...Just two comments: 1)Regarding your worries about real asests, we can also have real savings that are productive (like accumilating physical capital stock to be used as input). 2)The fact that net financial claims should be zero is not new. It is one of general equilibrium conditions that we impose for markets to clear.Abdulazizhttps://www.blogger.com/profile/11476991468213274968noreply@blogger.comtag:blogger.com,1999:blog-5676200792504814374.post-91141380172892276062009-03-09T09:33:00.000-07:002009-03-09T09:33:00.000-07:00Yes you are absolutely right. I had thought of tha...Yes you are absolutely right. I had thought of that before - but forgot to mention it. Maybe I need to add a proviso to micks law about it not applying *real* savings - i.e. real stuff, not money, that gets put aside. However it should be noted that *real* savings are very inefficient because you have to A) pay for storage B) worry about theft C) worry about decay, e.g. rust etc and finally D) redundancy - if you'd saved that old 1980's IBM PC would you be delighted to get it out of storage and be using it now?Mickanomicshttps://www.blogger.com/profile/15474474764908992770noreply@blogger.comtag:blogger.com,1999:blog-5676200792504814374.post-64742843522268895292009-03-09T06:08:00.000-07:002009-03-09T06:08:00.000-07:00Your thought experment is interesting. But it rule...Your thought experment is interesting. But it rules out the possibility that savings could take real form (real assests) in stead of financial. Suppose everyone (along with Tom) saves his clothes (in stead of wearing and tearing them) under his mattress. At the age of 80, everyone should have more clothes. Mick's law is broken:)Abdulazizhttps://www.blogger.com/profile/11476991468213274968noreply@blogger.com