As I mentioned yesterday, I spent six hours yesterday with Steve Keen. He came to see me in Ely and we talked about economics, MMT, bothersome aspects of aging, and about his, Minsky, and Ravel’s software programs.

minsky is a economic modeling tool built on the principles of double entry. It is open source and free. There is a manual of a couple hundred pages. Anyone is free to try it, but as we quickly found out, it’s best not to try it on a Mac, where it only “more or less” works.

The process begins with the definition of the key actors in the model that is being built. We looked at the role of central banks, and so we looked at the central bank, private banks, Treasury, and private sector economics (which was a bit of a cheat, everything that could clearly expand).

Then, define the flows that each could generate, for example, public spending, taxes, bond issues, bond redemptions and repurchases, interest paid, etc., in addition to similar flows in the private sector, for example, loans and interest. , etc.

The model has to balance: critically, you’re not allowed to make individual inputs (or rather, yes, but the model will make it clear that it doesn’t work, so you need to fix them). Since most government accounting is single-entry and most macros don’t really recognize the role of money in the economy, this is in itself pretty revolutionary.

Steve then went on to explain how relationships between variables within parameters can be defined so that behavior can be predicted. You start to end up with screens that look like this:

Graphing the results is one of the easiest things to do.

I do not claim that I have learned the program yet. There’s a syntax I’ve been introduced to, but I suspect I haven’t mastered it yet. And methods were used that I will surely forget until I try them for myself and have to rediscover them, although at least I know they are there, somewhere, now. That seems a bit daunting, but so was CAD when I first tried it, and now I’m pretty good with it and have little trouble thinking of ways to solve problems. I suspect that Minsky will be like that.

In fact, I think the comparison between CAD and Minsky might be quite appropriate. Both provide toolboxes and a work space. What you do from then on is up to you. If you don’t have anything you want to design using CAD, there’s no point in learning it. If you don’t have anything in economics you want to model, the effort spent learning Minsky would also be a waste of time.

What could you model? I was excited enough about this model that I lost sleep last night, something I don’t do very often. Thoughts on what to model included:

  1. The problem of accounting for government interest costs in a period of inflation, which does not involve a known double entry in the way that the ONS does.
  2. Accounting for government debt itself, which again relies on rather dubious single-entry accounting in the way that the ONS does it.
  3. Modeling of tax revenues and multiplier effects within them. Linking this to GDP would also be nice. Linking it to wheat constitutes GDP might be even better.
  4. Modeling the central bank digitizes currencies and what that would require the government to understand.

I’m sure there is much more.

Ravel is a digital data visualization program that sits on top of Minsky. It is not open source or free. It seems to be very powerful. For those familiar with it, Tableu seems to be the next big thing. For me, I can see massive uses for it. Steve is giving me a copy.

All of this requires an investment in a decent PC though, because I think it requires i7 processing power and decent graphics cards, plus good storage to read and write what looks like they could become quite large files. That is my question of the day. Do I shell out now and break 12+ years of working solely on the Mac?

I will let you know. But the temptation is very strong. These programs will allow me to see problems in new ways. And that is always exciting. And it is precisely for this type of investment that I accept donations on the blog.

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *