More from @JamesYo43532848
Oct 8
Why the GDP–FX Triangle Shows U.S. Output Is Energy-Constrained: A New Keynesian Restatement
“Energy throughput (Ω = E·η) is the real state variable NK models have been estimating implicitly as “productivity.” The GDP–FX triangle reveals its existence and shows that even the United States cannot be modeled outside that global energy constraint.”
Empirically, “productivity” AtA_tAt is correlated one-for-one with energy throughput and efficiency.
Inflation is now a balance between nominal demand and energy-bounded real supply — not between demand and an abstract productivity trend.
Read 19 tweets
Oct 8
Energy as the Global Unit of Account and the Real Denominator
— what we can actually produce — is limited by the quantity and efficiency …
More from @JamesYo43532848
Oct 8
Why the GDP–FX Triangle Shows U.S. Output Is Energy-Constrained: A New Keynesian Restatement
“Energy throughput (Ω = E·η) is the real state variable NK models have been estimating implicitly as “productivity.” The GDP–FX triangle reveals its existence and shows that even the United States cannot be modeled outside that global energy constraint.”
Empirically, “productivity” AtA_tAt is correlated one-for-one with energy throughput and efficiency.
Inflation is now a balance between nominal demand and energy-bounded real supply — not between demand and an abstract productivity trend.
Read 19 tweets
Oct 8
Energy as the Global Unit of Account and the Real Denominator
— what we can actually produce — is limited by the quantity and efficiency of energy throughput. You cannot “print” more real output without mobilizing more usable energy or improving efficiency
The two triangles — one nominal (FX) and one real (GDP) — close with less than 0.05% error, which means the world’s nominal exchange structure and real output structure are internally consistent. This implies that currencies represent proportional claims on global output, not arbitrary relative prices.
Extending Closure to the Real Economy: World GDP ≈ Energy Throughput
Read 9 tweets
Oct 2
GDP–FX Triangle: Closure Test with Cointegration Evidence
“GDP–FX cointegrates with exchange rates at rank=1, has stable error-correction terms, and remains robust under break/out-of-sample tests. The triangle closure demonstrates system consistency. UIP fails everywhere, GDP–FX fits everywhere.”
👉 All three legs reject UIP simultaneously. UIP not only fails, it inverts.
Adjustment coefficients significant (p < 0.05), showing that FX adjusts back to equity-share fundamentals after deviations.
Read 9 tweets
Sep 29
The GDP-FX Parity Triangle: Evidence That Exchange Rates Track Relative Output Capacity
........“exchange rates track relative output capacity. Far from being “free-floating” expectations around interest-rate differentials, currencies behave as shares of global production”
....currencies reflect shares of global output capacity.
Data and Methodology
Read 17 tweets
Sep 29
Why CPI Is the Wrong Inflation Object
Accounting: CPI mixes domestic and foreign prices
Therefore, “The CPI is not the ‘true inflation’ concept relevant for domestic nominal constraints … these results demand that NK inflation theory move beyond a closed-economy CPI focus.”
Interpretation: CPI inflation is a weighted average of domestic inflation πD\pi^DπD and import price inflation πM\pi^MπM. Any shift in global commodity or import prices mechanically shows up in CPI, regardless of the state of domestic slack.
Thus the deflator tracks domestic production prices, not imported goods.
Read 11 tweets
Sep 24
Why the Two Anchors Together Are More Powerful
“Because serviceability of debt and valuation of equity must both remain internally consistent with the size of the balance sheet, the economy is double-anchored. This twin constraint locks the long rate to the leverage path. Put plainly: rrr must follow ΩΩΩ.”
Two independent necessities.
DSR comes from cash-flow accounting (flows must be payable).
DCF comes from market pricing (equity per dollar of debt must be priced consistently). They arise from different mechanisms; agreement between them cross-validates the conclusion.
A Unified Mapping
Read 13 tweets