We consider the relationship between economic activity and intervention, including monetary and fiscal policy, using a universal monetary and response dynamics framework. Central bank policies are designed for economic growth without excess inflation. However, unemployment, investment, consumption, and inflation are interlinked. Understanding dynamics is crucial to assessing the effects of policy, especially in the aftermath of the recent financial crisis. Here we lay out a program of research into monetary and economic dynamics and preliminary steps toward its execution. We use general principles of response theory to derive specific implications for policy. We find that the current approach, which considers the overall supply of money to the economy, is insufficient to effectively regulate economic growth. While it can achieve some degree of control, optimizing growth also requires a fiscal policy balancing monetary injection between two dominant loop flows, the consumption and wages loop, and investment and returns loop. The balance arises from a composite of government tax, entitlement, subsidy policies, corporate policies, as well as monetary policy. We further show that empirical evidence is consistent with a transition in 1980 between two regimes—from an oversupply to the consumption and wages loop, to an oversupply of the investment and returns loop. The imbalance is manifest in savings and borrowing by consumers and investors, and in inflation. The latter followed an increasing trend until 1980, and a decreasing one since then, resulting in a zero interest rate largely unrelated to the financial crisis. Three recessions and the financial crisis are part of this dynamic. Optimizing growth now requires shifting the balance. Our analysis supports advocates of greater income and / or government support for the poor who use a larger fraction of income for consumption. This promotes investment due to the growth in expenditures. Otherwise, investment has limited opportunities to gain returns above inflation so capital remains uninvested, and does not contribute to the growth of economic activity.

Yaneer Bar-Yam, Jean Langlois-Meurinne, Mari Kawakatsu, Rodolfo Garcia, Preliminary steps toward a universal economic dynamics for monetary and fiscal policy, New England Complex Systems Institute (October 10, 2017).

Source: necsi.edu

In the days after Aug. 17, astronomers made successful observations of the colliding neutron stars with optical, radio, X-ray, gamma-ray, infrared and ultraviolet telescopes. The enormous collaborative effort, detailed today in dozens of papers appearing simultaneously in Physical Review Letters, Nature, Science, Astrophysical Journal Letters and other journals, has not only allowed astrophysicists to piece together a coherent account of the event, but also to answer longstanding questions in astrophysics.

Source: www.quantamagazine.org

Over the past 10,000 years human societies evolved from “simple” – small egalitarian groups, integrated by face-to-face interactions – to “complex” – huge anonymous societies of millions, characterized by great differentials in wealth and power, extensive division of labor, elaborate governance structures, and sophisticated information systems. What were the evolutionary processes that brought about such an enormous increase in social scale and complexity?

We also need to understand why social forces that hold huge human societies together sometimes fail to do so. Complex societies collapsed on numerous occasions in the past, and may be at risk today. There are clear signs that even industrialized, wealthy, and democratic Western societies, that seemed to be immune to collapse until recently, are becoming less stable. Research on social complexity will bring understanding that is of direct value to our societies and human well-being.

Source: peterturchin.com