A little something I've been working on

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Re: A little something I've been working on

Postby Siggon Kristov » Fri Jun 08, 2012 4:54 am

Did you take accumulating debt into account?
The budget only shows added debt per year.

For example, Indrala's deficit isn't 132,015,503,848 INS...
It's 132,015,503,848 INS per year.
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Re: A little something I've been working on

Postby RPC » Fri Jun 08, 2012 9:42 am

Siggon Kristov wrote:By the way, did you use my Currency Converter spreadhseet? :geek:

No, Siggon. Believe or not, some of us having been doing this for a long time.

And I realize the rankings are based only on GDP, but there needs to be some form of index which represents the health, instead of only the size, of an economy.

I agree, which is why I've been working on ways to calculate other data.

I would love to see GDP per capita, and I would love debt to play a role.

I'll add GDP per capita for next time. However "debt" is an irrelevance.
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Re: A little something I've been working on

Postby RPC » Fri Jun 08, 2012 10:03 am

YankeeHater wrote:I created my own adjusted GDP rankings. GDP (in LOD) = Consumption + Investment + Total Revenue - Deficit (if any). Figures are in billions of LOD.

That calculation makes no sense whatsoever. The only "revenues" that should add to GDP are exports (export income - import expenditure). Tax revenue - for the monopoly issuer of a non-convertible, fiat monetary system, which all particracy nations are - represents money that is simply extinguished upon receipt, and plays no part in government financing. In such a system, government spending = government income, as in order to tax such money, the government has to spend that money into existence first. Such a government is not operationally constrained by revenues - it can spend as much or as little as it likes, subject to real goods and services being available for purchase. A deficit is simply an accounting detail and has zero intrinsic analytical value. A deficit can be both too big and too small, but the only way we can judge that is to look at other macroeconomic figures such as the output gap and unemployment. Debt issuance itself is a voluntary mechanism that has carried over from the Bretton Woods/gold standard eras. It can have useful functions, such as allowing the government to sell bonds to meet interest rate targets, but it is nonetheless a voluntary mechanism for the monopoly issuer of a non-convertible fiat currency. I think such things are a little complicated for particracy however.

Do you understand what taxes actually do? They first of all give value to the governments currency. If no taxes were imposed there would be little reason for the population to use the governments money - especially when its a non-convertible fiat currency. By imposing a tax liability on its people, the government assures that there will be a demand for its currency, as people will strive to obtain the necessary amount of currency to meet their tax obligations. Secondly, it helps to prevent inflation. If the government simply spent billions without increasing taxes, it would incur inflationary pressures, due to an excess of "currency hoarding". In order to prevent this, it needs to adopt adequate tax levels to drain excess holdings.

Now, can we please base our discussion on how to rank GDP, on actual macroeconomics?
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Re: A little something I've been working on

Postby YankeeHater » Fri Jun 08, 2012 5:56 pm

Actual macroeconomics don't exist here because currencies aren't allowed to float. I simply noted I have my own method to account for people gaming the system. GDP here works the same as everywhere else of course by simply adding government spending, consumption, investment, and net exports. In replacement of government spending I use total revenue because in theory they should be balanced. Any surplus would be added to the investment category, but deficits used to artificially pump up GDP count as a negative. Huge deficits would cause inflation, but the current system doesn't factor that in when converting to LOD. If we used ACTUAL macroeconomics, these currencies would collapse and I subtract deficits from GDP to account for this.
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Re: A little something I've been working on

Postby RPC » Fri Jun 08, 2012 7:59 pm

I think you've missed the point. Deficits are not indicative of anything in of themselves, and therefore subtracting GDP by the deficit serves no real evaluative purpose. Simliaraly, there is no reason why tax receipts should add to GDP. Going by your method, nations which tax their citizens to death - and likely in the midst of a deflationary spiral - are rewarded, in spite of the fact that they are impoverishing the private sector and squeezing aggregate demand. On the other hand, those nations which leave their private sector in a surplus, by running a deficit - no matter how benign - are punished in your method.

I posted the following graph in the off-topic section, asking if anyone could see a pattern:

Image

You'll note that: public deficit = private surplus and vice versa. Alternatively, this can be written as: government balance + private balance = 0

Your method therefore gives no real indication of the health of an economy.

YankeeHater wrote:I simply noted I have my own method to account for people gaming the system.

I'm developing my own. One that actually makes a lick of sense.

In replacement of government spending I use total revenue because in theory they should be balanced.

Que? In theory? There is no objective reason why government budgets should be balanced. Spending should be at an adequate level to sustain appropriate levels of aggregate demand without incurring inflation. Most of the time the government will run a deficit (as most governments have done throughout their history) and occasionally they will run a temporary surplus. It makes no sense whatsoever to attempt to balance the budget, when the government can't actually control budget outcomes - at least in the real world. When the economy slumps, tax revenues will fall, leading to a higher deficit regardless of attempts to balance the budget. In a boom, tax revenues will rise, leading to a lower deficit, and sometimes a surplus, regardless of attempts to balance the budget. Attempting to continually run a surplus would lead to deflation and falling tax revenues.

Huge deficits would cause inflation, but the current system doesn't factor that in when converting to LOD. If we used ACTUAL macroeconomics, these currencies would collapse and I subtract deficits from GDP to account for this.

I already calculate Cobura's rate of inflation. It is susceptible to acceleration due to the massive gap between revenues and expenditures. You'll also note on the rankings page that I mentioned the likely hyperinflation that exists in Malivia.

Sorry, but I think your method is nonsensical. A better solution can be found.
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Re: A little something I've been working on

Postby YankeeHater » Fri Jun 08, 2012 8:31 pm

Yippee you have a chart. According to your method of calculating GDP, nations with long term deficit spending are rewarded. Can a government which borrows 50% of its GDP every year be the most powerful economy forever? I'd like to see you try to convince nations with surpluses to finance your debt. I doubt you could. You'd have to print more money and devalue your currency. I never said the way I did it was an actual indication of GDP; I said it was adjusted GDP. No, it's not perfect, but your method is far more flawed. Neutral observers would conclude that long-term debtor nations with debts likely hundreds of times the size of their GDPs are the poorest nations - not the wealthiest.
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Re: A little something I've been working on

Postby RPC » Fri Jun 08, 2012 11:15 pm

YankeeHater wrote:Yippee you have a chart.

Nothing constructive to add then?

According to your method of calculating GDP, nations with long term deficit spending are rewarded.

Most nations engage in long-term deficit spending. My method - when I finalise it - will therefore reflect reality.

Can a government which borrows 50% of its GDP every year be the most powerful economy forever?

Borrowing? The monopoly issuer of a non-convertible, fiat currency does not need to borrow. I thought we already covered this.

I'd like to see you try to convince nations with surpluses to finance your debt. I doubt you could.

My "debt" is financed by spending. Again, we covered this. For a monetary sovereign: spending = income. Furthermore, Cobura issues no debt.

You'd have to print more money and devalue your currency.

No. I'd have to change some numbers in a bank account. No "printing" necessary.

I never said the way I did it was an actual indication of GDP; I said it was adjusted GDP.

Its not adjusted GDP. Its a calculation which bears no resemblance to economic reality.

No, it's not perfect, but your method is far more flawed.

My method hasn't been developed yet. Not sure how you can reach such a conclusion.

Neutral observers would conclude that long-term debtor nations with debts likely hundreds of times the size of their GDPs are the poorest nations - not the wealthiest.

Is Japan a poor nation then? Get real.
My parties:
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Nationalis Revolutionae Frontis Selucia - Inactive


Anarchism ftw.
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Re: A little something I've been working on

Postby Siggon Kristov » Sat Jun 09, 2012 5:11 am

RPC is still developing everything...

Chill, dude (to YankeeHater)
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Re: A little something I've been working on

Postby RPC » Sat Jun 09, 2012 9:24 am

I'm beginning to think the economic side of things is pointless anyway, due to the population cap.
My parties:
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Nationalis Revolutionae Frontis Selucia - Inactive


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Re: A little something I've been working on

Postby Siggon Kristov » Sat Jun 09, 2012 1:06 pm

Yeah...
But Keymon and Vorona have crazily low populations.
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