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the (610), and (161), debt (135), graph (113), that (101), line (82), for (78), #recession (69), trend (60), data (58), years (53), bulge (47), from (46), productivity (44), but (43), with (43), red (43), are (38), this (38), not (36), what (35), gdp (34), blue (33), numbers (30), service (30), you (29), one (28), start (28), household (27), september (26), was (26), 2016 (25), two (25), lines (24), look (24), growth (24), like (24), when (24), projections (23), good (23), three (22), vigor (22), get (22), will (22), about (21), just (21), excel (21), before (21), arthurian (20), than (20), right (20), all (19), out (19), now (19), have (19), see (19), next (19), between (19), can (18), because (18), how (18), only (18), comments (17), those (17), five (17), bulges (17), posted (16), bowl (16), after (16), projection (16), high (16), values (16), date (16), gray (16), private (16), fred (15), year (15), know (15), there (15), should (15), off (14), prediction (14), recessions (14), 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t 29 july 17 june 30 may 24 april 30 march 30 february 30 january 25 2015 283 december 7 november 11 october 21 september 23 august 26 july 27 june 26 may 30 april 25 march 28 february 27 january 32 2014 374 december 25 november 25 october 26 september 30 august 34 july 35 june 32 may 34 april 33 march 35 february 28 january 37 2013 412 december 33 november 31 october 35 september 32 august 33 july 36 june 31 may 36 april 39 march 40 february 31 january 35 2012 476 december 38 november 35 october 51 september 41 august 35 july 39 june 37 may 31 april 38 march 36 february 44 january 51 2011 571 december 44 november 38 october 41 september 53 august 54 july 52 june 50 may 45 april 54 march 46 february 37 january 57 2010 361 december 51 november 43 october 47 september 43 august 35 july 39 june 31 may 9 april 8 march 12 february 23 january 20 2009 79 december 17 november 10 october 14 september 20 august 3 july 7 june 4 april 1 march 1 february 1 january 1 links the 12 pages pdf html scribd money as credit paul krugman john mason gavin kennedy crisis timeline 1 crisis timeline 2 statistical abstracts measuringworth bea economic accounts bls inflation jobs flow of funds debt st louis fed fred money stock 1947 58 economagic usgovernmentspending top tax rates recession dates corp taxes 2006 irs tax data pk sources historicalstatistics org historical charts perot charts mark wieczorek the secret economist econompic john williams sgs crystal bull aquinum s razor flavianopolis william f hummell ecometry the l curve businomics blog on banking crises cybereconomics tim duy like a father to me worthwhile canadian the skeptical optimist nextblog better of thought action the troublesome economist the candid blogger blended purple frozen arctic tundra truth addicts anon jbpeebles mayday books dredd blog dolor s rants the 40 year old freshman thinking on the margin redonomics broad oak unsettling economics irrational expectations theory2life prac spoiler tips vin s read more faq s image host a very nice menu www w3 schools bloogger help image test and t2 blogger sentral html color codes google translate link within a page supreme court jester dave ross 1 dave ross 2 organize your stuff interesting jim kardi teknomo numerical ignorance mental workout g scaled data g normalized data tufte data analysis arthurian website about me contact labels real is a calculation 1 2 3 4 5 6 7 1966 1970s growth 1986 2000 2013 revision 400k smoothing a call for better argument a little r n r accelerated repayment of debt accidental discoveries adjusting debt for inflation artish b is greater than a b h finte behavioral ec best put downs bullard s earthquake c d of wealth calculating labor share civ civilization coinage coping cost and productivity cost push cost push inflation credit efficiency crisis chronicles cycle of civilization debasement debt debt and context debt and inflation debt and recovery debt bulge debt good and bad debt is not credit debt productivity debt to gdp debt to gdp in comments def credit def debt def economic activity def financial cost def gdp def general equilibrium def inflation def inside money def investment def issue and reissue def laffer limit def outside money deflation demand pull inflation disarray dpd echoes economic forces economics v the economy eroc erosion of debt evolution of the excuse expectations factors failure s embrace fallacy of composition fcm fed policy federal spending feedback loops final spending financial cost financialization five words five digit years forget about debt fpi fred free banking era full disclosure fun with the mpc gang8 gds gold shortage gresham s law gross domestic spending growth rate calc growth phase growth historical revisionism hoarding hodrick prescott household debt hover craft how to pay for it humor because you might not know if i didn t say i couldn t sleep iceberg inflation introduction is it ego captain jerry says krugman laffer curve limits long and variable loops malaise matched set fekete math problems medium of account military spending milton friedman mmt money multiplier more debt than money is policy motives moving average new tools of policy non linear not only household debt oil parameters for debt pfi policy predicting recession price controls printing vs spending problem x productivity questions r reading and writing red and green reduction reviews scott sumner sequence 2 serfdom simulacron simulated evidence slack special report spreadsheeting stagflation standard deviation star trek stimulus sumner symmetry in deception taxes taylor rule the difference between debt and credit the economy is transaction the k r shift the long decline the supply side the tint knob they don t know timeline tongue in cheek tot ulc umic unsustainable urgency verdoorn waste fraud abuse withering shoots zoho the new arthurian economics copyright 2010 2018 arthur shipman friday september 30 2016 richard vague has a great new article on debt in democracy a journal of ideas the private debt crisis by richard vague best thing i ve read in a long time they call it a 28 minute read so you know do i agree with it not with everything no not with his solution and not with parts of his analysis but most of his analysis and all of his observations are just right recommended reading posted by the arthurian at 4 00 am 0 comments wednesday september 28 2016 on the size of those debt bulges looking at the second graph from the 25th i wonder how the bulges got so big graph 1 public red and private blue debt paths with path average dashed black maybe because debt itself got so big let s look at the red and blue as a percent of the black graph 2 red and blue as a percent of their average from the previous graph okay the bulges are not so big now compared to the other areas plus on this graph we can see the bulge between the 1974 and 1980 recessions and even the tiny one between the 1980 and 82 recessions in addition i think i see a bulge now between the 1970 and 74 recessions the blue and red lines didn t come together for the 1970 recession but that doesn t mean there s no bulge after it so apparently the growth of debt in general has something to do with the size of the bulges but that s not the only factor because bulge size still varies what could it be i d like to say vigor it s a measure of vigor but that seems quite obviously wrong hey know what i just noticed look at just the blue line it reminds me of the private to public debt ratio figure 3 non federal debt relative to the federal debt posted by the arthurian at 4 00 am 0 comments labels debt bulge tuesday september 27 2016 firming up my best guess yesterday s conclusion so what does this tell me if i remove even one piece of data from the bulge 3 calculation the predicted date of recession could change substantially or if i do this calculation again after the next release of data the predicted recession date could change substantially i guess nothing can be done about that after i said that i went on to guess what my graph would look like if i changed it i made a guess about how soon the graph would predict recession uh i mean a guess about the soonest a recession could be predicted to occur based on changing the selection of data on which the prediction is based if you get my drift i don t like guessing so again i will start with graph 6 from sunday s post graph 1 predicting the closing of the current bulge i ll start by eliminating the blue line and chopping off everything before 2007 on the red line graph 2 the current bulge now that s a pretty bulge the solid line shows federal debt data from fred the series gfdebtn indexed to 1980 q1 with each year s average of indexed federal and private debt subtracted out it s a simple calculation but i haven t been looking at it long enough yet to describe it easily in words no matter what i want to do today is show a bunch of trend lines for different subsets of the data and see how they compare to the dashed red line if they curl down faster than the dashed line it indicates the recession will occur sooner than the date i predict if they curl down more slowly it suggests the recession will occur later i anticipate that recession will occur where the dashed red line crosses the 100 0 level that s about where the solid red line was the last time a recession started so when we look at the trend lines i ll add we should look at the 100 0 level look straight down from there and get the date from the x axis i m not going to start by showing the trend lines i m going to start by looking at r squared values for different subsets of the solid red line i ll get the value for all the data shown 2007q1 to 2016q1 then drop the first data item and get the value again then drop the next data item and repeat my goal is to get both the highest r squared and the most data but r squared is my higher priority i m writing the r squared values in the spreadsheet linked below r squared reaches a peak of 0 99504834 in 2008 q1 so i will use this as the start date for the data on which the trend lines are based graph 3 finding the start point for trend data selection oh just for the record the title of this graph says finding the best starting point that s my intent but i just do this for a hobby i think i have a good feel for what i m doing but if i have something wrong and you have a suggestion you think i can understand do let me know now that i ve got a starting point i can select a bunch of different end points and use these different subsets of the data to create different polynomial trend lines there should be a lot of them when i m done and it would be too messy to identify each one so i won t identify them on the graph you can pick thru the spreadsheet if you want my objective is to get an impression from the several trend lines i ll create i ll call this impression my best guess of what the trend line should be that best guess will give me a start date for our next recession that s what i want to see just reading this over it s amazing how many times i say i start i will start with graph 6 i ll start by eliminating the blue line i m going to start by looking at r squared values now i ll start with the last available data 2016 q1 and use the 2008q1 2016q1 period as the base data for my trend line then i ll drop the last data used giving me a different subset and add a trend line for that one and i ll keep repeating the process until i get tired of it or till i discover something interesting okay wrote a little vba to delete and add trend lines for me and make them second order polynomials here s the first bunch of trends i came up with graph 4 trendlines based on 2008q1 start date and 2011q1 to 2016q1 end dates damn i m good there s one trendline gone wild like a hair that won t stay combed the rest are all pretty well clustered around the faint gray line that used to be my dashed red prediction the wild hair is the trendline for the series that ends with 2011 q1 as you can see on graph 2 2011q1 is on the early part of the line labeled public maybe just before the jiggies start continuing this trend line out till it reaches down to the 100 0 level would bring us to our next recession some time around 2050 i know we ll have another recession long before 2050 so i m going to throw the wild hair away working our way down the right edge of the graph from that wild hair the trend lines we come to in order are 2011q2 2012q1 and 2012q2 after that they get pretty dense i m going to delete the six earliest ending data series 2011q1 thru 2012q2 and look at what s left hey it looks better already i also want to start the low value of the vertical axis at 100 0 because when the trend line gets to that level that s when i think the recession starts plus i put some tick marks on the x axis graph 5 trendlines based on 2008q1 start date and 2012q3 to 2016q1 end dates pretty neat assuming that the recession starts when the trend line hits the 100 0 level our next recession should start somewhere between 2022q2 and 2024q2 looks like most of the trend lines fall in the early half of that time period so i d venture the second half of 2022 or the first half of 2023 for the start of recession eh i ll be dead by then the excel file posted by the arthurian at 4 00 am 0 comments labels debt bulge monday september 26 2016 testing a prediction yesterday i made a prediction about our next recession it won t happen until 2022 2024 it s six years out or more the accuracy of that prediction depends on many things no doubt but one of the things it depends on is how well the future paths of public and private debt conform to the paths predicted by excel s trend lines there are things we cannot know like future shocks that divert debt from the predictions such things are beyond the scope of prediction i should say though that on yesterday s graph i see little evidence of shock induced diversion in past data apart from the unknowable the accuracy of the prediction depends on whether the polynomial trend calculation that i used is suited to the behavior of the debt numbers i mean i didn t use the linear trend calculation for example because i don t expect debt to follow a linear path maybe it won t follow the polynomial path either in that case my predicted timing of the next recession would be incorrect i can test for this here s graph 6 from yesterday graph 1 predicting the closing of the current bulge first of all the blue line is the same as the red mirrored about the zero line i will eliminate the blue line to give more space to the red line i ll cut off the years before 1988 because those are pretty boring and i will make the red line gray and make it wider we are left with a graph that shows the three bulges of debt graph 2 a look at three bulges the solid gray line is calculated from data for 1988 to 2016 the dashed gray line is calculated from the polynomial estimate of the future path of debt based on 2008 2016 data below is the same graph from fred modified from yesterday s graph 3 it lacks the estimate of the future path of debt but it shows when recessions occurred graph 3 public debt relative to public private average indexed values recessions restrain the bulges of debt like a tight belt restrains a fat gut returning to the excel graph i show the first half of each bulge in red graph 4 the left half of each bulge is indicated in red i use the word half loosely next i put a trend line on each red section the purpose is to see how each trend line matches the gray half of the bulge obviously the trend line for bulge 3 the rightmost bulge will match perfectly because i used the same trend line yesterday to develop the dashed gray line the other two bulges provide the test if the black trend lines match the gray data for the bulge of the 1990s and the bulge of 2001 2007 then my confidence is increased that the dashed gray line is a good estimate of the future path of debt and if that is the case my confidence is increased tha...
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