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Text of the page (random words):
vioral 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 thursday june 30 2011 yes if you don t call it interest really in a series of comments on a mosler post one finds this from tom hickey june 24th 2011 at 2 28 pm the likely scenario is that consumers would try to maintain lifestyle to the degree they could be supporting it with increasing debt that cannot go on forever and so either the middle class would fall behind and the economy would contract or there would be an enormous implosion of debt deflation and depression given the appetite of the financial sector for rent and the moral hazard that exists i would be betting on the later there is no path to prosperity here other than through exports i e us workers working to supply the rest of the world with real resources of the us while they also work for the financial sector indirectly by paying rent insidious game emphasis added then there is a comment by tom a different tom i think tom june 24th 2011 at 4 01 pm who quotes the following in order to have it evaluated our dollars are still backed but now by debt and thus by the treasuries and not by physical gold when we print money the govt must also issue an equal amount of treasuries to back those dollars or it will create inflation just like if we issued dollars in excess of our gold the rules of economics haven t changed just the backing item of the currency the problem with having debt as a backing is that it is required to issue more debt each year in order to cover the interest on the debts also since we re the reserve currency of the world it is required that we have more dollars going out of the us than in this leads to trade deficits and thus more debts we can t effectively go bankrupt because we issue our own currency but the value of that currency will continuously decline as long as we spend more than we take in which is required by being the reserve currency of the world we will never really go bankrupt as a nation but the longer we continue with this sort of debt backed money the more likely we are to have serious economic issues following an analysis of that quote by art a different art i m sure jim baird writes one more thing about the original comment it seems to be afflicted with the old exponential interest canard that neglects the circular nature of interest payments and sees an inevitable crash since there isn t enough money to pay back both the principal and interest i m always surprised at how many people believe this in response to jim baird there is a comment by clonal antibody who must be the same as clonal here it does not matter that the interests are recirculated when you borrow 1 you have to pay back the dollar plus interest where will the interest come from that drew forth this from warren mosler the bank shareholders spend their interest income clonal antibody responds yes you are quite correct but the point i was trying to make was that the amount of interest that can be serviced this way is limited by the nominal growth rate of the economy and the proviso that all the interest be spent and none saved mosler any unspent income has that same effect as unspent interest income later comments move to other topics i just want to point out that it seems to me that for many of the people commenting at mosler s rent is one of the world s biggest problems but interest is no problem at all yet rent and interest are the same thing given the way they use the word rent michael hudson defines rent the 19th century elaborated the concept of economic rent as that element of price which found no counterpart in actual cost of production and hence was unearned unearned income undeserved income it is not a far stretch from saying the income to capital money is undeserved to saying the income to capital equipment is undeserved and that is as marxist a thought as i have ever seen hudson and hickey both see rent as a problematic cost mosler sees interest as income the distinction is false for every cost is someone s income and every income is someone s cost actually that may be mosler s point still the issue is not the cost of interest in comparison to the income from interest the issue is interest in comparison to wages and to profits the issue is the balance among factor costs from the wealth of nations the interest of money is always a derivative revenue which if it is not paid from the profit which is made by the use of the money must be paid from some other source of revenue posted by the arthurian at 12 23 pm 7 comments fewer by half from fred the number of banks in each size class by date includes all banks with total assets call report item rcfd2170 greater than zero posted by the arthurian at 4 00 am 0 comments wednesday june 29 2011 breakout following up on yesterday s post at fred i select banking and then loans there is a list of eight data sets the first three are not totals but breakouts for commercial and industrial loans real estate loans and consumer loans all for 1947 to 2011 for the heck of it a close up of 1980 2000 not really much of a slowing visible in the 1986 1990 period but business and consumer loans were both flat or even decreasing for a few years after 1990 posted by the arthurian at 4 00 am 2 comments tuesday june 28 2011 the evidence in the evidence i look a lot at total credit market debt owed tcmdo graph 1 also at the year to year change in that debt graph 2 in it i see a variety of trends i took graph 2 and eyeballed in the trends i see to make graph 3 graph 3 reading from left to right on the graph i see a period of relative stability green trend line a period of relative instability yellow trend lines a surprising out of place decline red trend line another period of relative stability green again and another surprising decline red again the colors indicate similarity of the trend shape not the significance of the trends for example there is a big difference between the red 1989 1992 surprise and the red 2008 2009 surprise the first occurred during relatively good years in the economy relatively good the second occurred during the recent crisis and recession the recent surprising decline caught everyone by surprise the first one passed unnoticed but i m just eyeballing trends here maybe i am misreading things it would be easy to see the last leg of that yellow relative instability trend as part of the first surprising downtrend graph 4 which is it hard to say a little of both maybe when i first started looking into reasons for the decline in debt growth i looked toward tax policy as an obvious factor i found a little tax advice from the los angeles times of 27 december 1990 including this personal interest deductions have also fallen to 10 on federal tax returns that means that the interest you pay on credit card debt and car and boat loans among other things is only 10 deductible for 1990 taxes the deductions will be phased out completely next year so okay i thought phasing out the interest deduction made debt less attractive and if you look at the growth of debt graph there seems to be a repeating up and down pattern shown in yellow on the second graph which changes between 1989 and 1990 but then i came upon additional tax policy facts wikipedia of all places on the tax reform act of 1986 moreover interest on consumer loans such as credit card debt were no longer deductible so 1986 that would mean the graph 4 trend markup is more appropriate than my graph 3 markup huh but what of the la times remarks perhaps the tax deduction for interest expense was eliminated gradually reaching 10 in 1990 and zero in 1991 possible but wikipedia gives no hint of it nor does my memory having looked even longer now at the debt growth trends i notice that the first yellow downtrend corresponds to the 1974 recession and the second yellow downtrend corresponds to the double dip recession of the early 1980s on the other hand no recession induced the third yellow downtrend no recession occurs until 1990 91 near the end of that long downtrend so perhaps it was tax policy plain and simple that caused debt growth to slow i like that the notion fits with what i know to be true policy works posted by the arthurian at 4 00 am 4 comments monday june 27 2011 bearwatch gedankenexperiment consider an economy with 3 classes of people 50 x 0k 0k 49 x 5k 245k 1 x 700k 700k total 945k increase in wealth the first year 700 945 74 check posted by the arthurian at 7 38 pm 0 comments couldn t interrupt a video this way given the choice i much prefer reading to watching video oh not for entertainment no but when it is something i have to think about like the economy i want to read it otherwise i just get bludgeoned by ideas that there is no time to evaluate i think that s how things go wrong but even in print people try to present ideas faster than they can be evaluated that s my first impression of this forked tongue piece from cato liberty don t blame obama for bush s 2009 deficit posted by daniel j mitchell some critics are lambasting president obama for record deficits this is not a productive line of attack largely because it puts the focus on the wrong variable america s fiscal problem is excessive government spending and deficits are merely a symptom of that underlying disease time to interrupt third sentence in daniel j mitchell is using a conclusion as if it were an observation the problem is excessive government spending sounds like a conclusion to me and how would you know that america s fiscal problem is excessive government spending if not for the deficits but perhaps this is mr mitchell s point so then let us suppose that deficits are evidence of excessive government spending oh well there you go this is how we arrive at mitchell s conclusion by supposing it in addition to being theoretically misguided critics sometimes blame obama for things that are not his fault listening to a talk radio program yesterday the host asserted that obama tripled the budget deficit in his first year this assertion is understandable since the deficit jumped from about 450 billion in 2008 to 1 4 trillion in 2009 as this chart illustrates with the bush years in green it appears as if obama s policies have led to an explosion of debt but there is one rather important detail that makes a big difference the chart is based on the assumption that the current administration should be blamed for the 2009 fiscal year while this makes sense to a casual observer it is largely untrue the 2009 fiscal year began october 1 2008 nearly four months before obama took office the budget for the entire fiscal year was largely set in place while bush was in the white house as for myself i much prefer to leave out the politics altogether and deal directly with the economics of the economic problem posted by the arthurian at 4 00 am 1 comments sunday june 26 2011 ball of twine made in china for a u s company with a canadian parent this is not free trade posted by the arthurian at 10 28 am 1 comments why is krugman saying this that said widespread credit constraints presumably reduce the number of players who can take advantage of lower rates we can t boost the economy with more debt liquidity preference has changed posted by the arthurian at 10 21 am 1 comments twenty cent trends second look at some numbers from twenty cent paradigms fairness is in the eye of the beholder but the us economy actually grew faster when top marginal tax rates were higher here is the annual average growth in real gdp and the average annual top marginal tax rates for the us by decade 1951 60 3 42 91 2 1961 70 4 11 78 4 1971 80 3 14 70 0 1981 90 3 21 44 5 1991 2000 3 22 37 9 2001 2006 2 51 36 2 so i put those numbers into a graph and let excel add trend lines for them everything trends downhill at least since the 60s but then so do my spirits come to think of it maybe the economy s long decline is all my fault maybe if i cheer up the economy will get better oh wait i thought i was making a joke but that s not a joke it s the actual view of all those economists who say the problem is expectations posted by the arthurian at 4 00 am 17 comments saturday june 25 2011 must read one brief comment at macro and other market musings posted by the arthurian at 4 37 pm 2 comments pce and cpi long term from beckworth via retirement blues this graph showing similarity for five years or so from fred a longer view showing what looks to me like lots of similarity posted by the arthurian at 12 25 pm 4 comments don t screw it up the penguin classics abridgement of adam smith s the wealth of nations includes an introduction by andrew skinner in skinner s introduction there is a quote from smith about systems systems in many respects resemble machines a machine is a little system created to perform...
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