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ern europe from arnold j toynbee a study of history abridgement by d c somervell pp 255 256 if it becomes patently unremunerative it may be deliberately abandoned technology changes everything but technology does not survive if it becomes patently unremunerative economics trumps technology posted by the arthurian at 4 00 am 1 comments wednesday august 29 2012 funny in a sad way this from fat pita and this from scott adams posted by the arthurian at 4 00 am 0 comments tuesday august 28 2012 celebrate the fed 3036 nber macrohistory series added to fred this is one of them velocity since 1869 the red is what fred had before i am still astounded by the density of recessions up to the 1930s posted by the arthurian at 4 00 am 3 comments monday august 27 2012 why don t they just move the actual projected line to the left enough to make things better now funny how everything always gets better after the actual projected line from cbo more slides available at the link posted by the arthurian at 4 00 am 0 comments sunday august 26 2012 heilbroner and bernstein 3 in pictures following up figure 1 figure 1 the little rectangle with a little d in it is a deficit you know we get them every year after a few years they begin to pile up figure 2 figure 2 you can think of the accumulated deficits as debt that s what the big d means yeah the one on the left shoulda had a small d in it figure 3 figure 3 but remember debt is just an accumulation of annual deficits figure 4 figure 4 sometimes we get inflation and the value of the dollar becomes less the value of the debt we owe becomes less too figure 5 figure 5 but the new deficit from this year doesn t get any smaller because the dollars themselves are already smaller figure 6 figure 6 this year s deficit cannot shrink until we get more inflation like next year maybe it is the old deficits the old debt that is shrinking because of inflation figure 7 figure 7 according to thayer watkins the way heilbroner and bernstein adjust the deficit for inflation is to take the new total debt with the latest deficit added in and adjust that number for one year s inflation and then subtract out everything except the current year s deficit but when you do that you make the deficit look smaller than it is intuitively i just don t think that s right i will come back to this topic after i ruminate a while inflation adjusted debt is sometimes a useful concept as when you want to evaluate the erosion of debt by inflation but it is always important to get the arithmetic right posted by the arthurian at 4 00 am 2 comments labels debt and inflation saturday august 25 2012 heilbroner and bernstein 2 adjusting this year s deficit for last year s inflation woke up the next morning saying that s not right i think heilbroner and bernstein s incremental adjustment is a cheat that reduces debt by bad arithmetic suppose we have an inflation that reduces our 100 debt to 90 but let s do it h b s way adding in this year s new debt before making the adjustment so say our new addition to debt is 10 so our total before inflation is 110 and then after the inflation adjustment ten becomes nine so our 110 debt becomes 99 we start with 100 add 10 adjust for inflation and end up with 99 we end up with less debt than we started with after adding ten that has to be wrong it is wrong because we don t get to inflation adjust this year s addition to debt for last year s inflation what i think it should be take last years accumulation of debt 100 and adjust that for last year s inflation reducing it to 90 and then add this year s deficit bringing accumulated debt up to 100 again the difference isn t much 100 instead of 99 but do it wrong every year and accumulate the differences and it will add up anyway if the math is wrong it s wrong as i noted previously h b s objective in the book as thayer watkins presents it was to minimize debt not to reduce debt but to reduce the significance of debt in people s minds it looks to me like they were willing to use bad arithmetic to do it i still need to check this out more rigorously posted by the arthurian at 4 00 am 0 comments labels debt and inflation friday august 24 2012 heilbroner and bernstein 1 it took about two hours of google search but i finally found somebody who inflation adjusts debt by the incremental method as i do in the on erosion posts and the measuring the erosion of debt pdf the somebody is robert heilbroner and peter bernstein authors of the book the debt and the deficits false alarms real possibilities i found them in an old page by thayer watkins of the san josé state university economics department the deficit of the government watkins reviews the techniques by which heilbroner and bernstein minimize the federal debt first heilbroner and bernstein consider how much of the federal debt is owned by the federal government itself deducting the sale of debt to agencies of the federal government gives a net concept of the deficit as opposed to the gross deficit second there is no reason to limit the concept of government deficit to just the federal government the state and local governments budgets should be taken into account as well usually on balance the state and local governments run a surplus which offsets a major portion of the federal deficit to me these sound like agenda driven arguments but there is something else the above corrections are important but the most important conceptual innovation presented by heilbroner and bernstein is the correction of the debt for inflation watkins presents a formula to figure the deficit from debt numbers deficit in year t debt at time t 1 debt at time t and says heilbron and bernstein correctly note that if one wants the real inflation adjusted deficit the way to get it is from the above equation in which the value of the debt at time t 1 is adjusted for changes in the price level by dividing by the price index real deficit in year t debt at time t 1 1 f debt at time t where f is the rate of inflation during year t i have to look at this the inflation adjustment is not written the way i would write it i went to bed thinking about it and woke up the next morning saying that calculation s not right it looks to me like he is adjusting this year s deficit for last year s inflation but i m not sure i have to look at it in the meanwhile i am happy to see that i am not the only one who thinks that the inflation adjustment of debt must be an incremental adjustment posted by the arthurian at 4 00 am 0 comments labels debt and inflation thursday august 23 2012 echoes of the ancients from al s emporium at the wall street journal ceos tax the people all the major corporations cited in the report paid more to their ceos than they did in federal income taxes actually the world s wealthiest people have now stashed 21 trillion to 32 trillion in offshore tax havens according to a recent estimate by the london based tax justice network in a report written by a former chief economist for mckinsey co the middle of that range is more than the annual gross domestic product of the u s china and japan combined more than the gdp of the us china and japan combined from domesday a search for the roots of england by michael wood archaeology has shown that in the third and fourth centuries villas were built in great numbers in southern britain built by wealthy romans escaping a decadent and declining rome the long term effect of roman government then may well have been to concentrate land in the hands of the governing aristocracy at the expense of the mass of the population at large concrete evidence survives which gives a clear picture of this accretion of power and land by a british landowner at this very time it consists of a latin life of a roman lady from the great family of the valerii she became a christian and the church recorded her disposal of many estates to charity in ad 404 melania freed 8000 slaves out of a total of 24 000 on sixty farms villas or hamlets which she owned in the vicinity of rome her other landholdings included estates elsewhere in italy and sicily africa spain and britain her rentals show her income to have been on a scale comparable to the imperial revenues income comparable to the imperial revenues of rome corporations paid their ceos more than they paid in taxes and the tax haven stash exceeds the gdp of the us china and japan combined links the post at al s emporium ceo cash eating organism al links to this report executive excess 2012 pdf posted by the arthurian at 4 00 am 0 comments wednesday august 22 2012 remember the name edward j demarco and curse it people talk about fixing our economic problem by regulating or deregulating or inflating or deflating or by well the list goes on and on but what is the problem debt and how do we know this because the economy tanked all of a sudden when deleveraging became all the rage so what must the solution be the solution can only be to help with deleverage to help reduce private debt as soon and as fast as possible to get us to the point where we don t have to reduce debt joseph e stiglitz and mark zandi write late last month the top regulator overseeing fannie mae and freddie mac blocked a plan backed by the obama administration to let the companies forgive some of the mortgage debt owed by stressed homeowners while half a million homeowners could be helped with a principal writedown the regulator edward j demarco argued we believe incorrectly that helping some homeowners might cause others who are paying on their loans to stop so that they also could get their mortgages reduced first of all so what if others also want their mortgages reduced that is exactly the thing that must be done we should prevent this thing that needs to be done because it is something people want that probably gets us into the arena of moral hazard that s fine let s look at the problem again the problem is debt excessive private sector debt the solution must be to reduce private sector debt if you have some excuse for not allowing the reduction of private sector debt then you are delaying or preventing economic recovery edward j demarco you are delaying and preventing economic recovery get off your damned high horse edward you holier than thou son of a bitch and for the record the right time to be a moralistic prick would have been the 1990s when you were instead encouraging the excessive use of credit and the excessive accumulation of debt or the 1980s when you were encouraging the excessive use of credit and the excessive accumulation of debt or the 1970s when you were encouraging the excessive use of credit and the excessive accumulation of debt or even in the 1960s then it would have been a heroic stance to take now it is a horrific stance posted by the arthurian at 4 00 am 2 comments tuesday august 21 2012 jackson pollock it ain t but interesting it is fred graph 5do found by random eyes click for fred source page i can t say who it was that created this graph nor what they were trying to see but the graph does show that if you have an inventive mind you can do some clever things with fred posted by the arthurian at 4 00 am 1 comments monday august 20 2012 useless as a fire hose against a tsunami from a guest post by benjamin cole at historinhas the conventional central bank weapon for economic stimulus lower interest rates is as useless as a fire hose against a tsunami yet western economies are badly in need of a boost accepted now the usual boost is to substitute fiscal boost for monetary by increased government spending or perhaps by tax cuts that cause the increased spending to arise in the private sector but why does the chatter move from specifics reducing interest rates to generalities monetary policy to alternatives fiscal policy and then back to specifics changes in taxes and or spending why the diversionary tactic why the loss of focus let s start over the conventional weapon is to lower interest rates when a boost is needed stick with that thought don t let your mind wander now why does it work or more accurately why did it work the cause is that interest rates go down the effect is that the economy picks up spending picks up economic growth picks up how did that work two ways either the lower cost of borrowing induces more borrowing by supply and demand or the lower cost of borrowing induces more refinancing which frees up some income to be spent on other things or both either way the reduction of interest rates lowers financial costs and the effect of the lower financial costs is that economic growth improves or is supposed to improve it used to work now it doesn t don t lose the focus we re looking at monetary policy here we re looking at reducing financial costs and supposedly we cannot reduce financial costs any more because interest rates are already at zero supposedly but we can reduce financial costs we can reduce them a lot interest costs are not the only financial cost there is in our economy there are also principal costs if we need to reduce financial costs and we can no longer reduce interest rates or if interest rate reduction has become ineffective then we can try principal cost reduction we can try debt forgiveness and debt writedowns and policies along those lines posted by the arthurian at 4 00 am 2 comments sunday august 19 2012 flatland tim duy quotes joe gagnon of the peterson institute for international economics for more than two years the fed has dragged its feet and resisted the obvious need for more aggressive action a large majority of the committee projects that inflation will be below target over the next two and a half years if they assign any weight to their employment objective they should be willing to accept inflation at least modestly above target in order to get a better outcome on employment duy s initial reaction considering that more aggressive action has not been taken monetary policymakers appear to disagree my initial reaction the idea of relying on this trade off accepting higher inflation to get lower unemployment is shudderingly simplistic oh i know it s just the phillips curve and yes i embrace the phillips curve but hey don t think of it as a curve think of it this way one of the arrows is more unemployment less inflation the other arrow is less unemployment more inflation and that circle in the middle that s us policy slides us a little more to the left or a little more to the right and policy discussions like joe gagnon s and tim duy s talk about where the circle ought to be if we were flatlanders living in that circle or if we were living somewhere on the actual phillips curve we could not tell the difference that was the point of the book flatland so what i m saying here is that really the phillips curve is two dimensional the phillips trade off is two dimensional and the argument about whether we should favor more inflation or more unemployment is two dimensional one dimensional maybe posted by the arthurian at 10 33 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