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ata 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 2011 what s the difference financial graph 1 financial debt looks to run about ten percent below trend until 1967 or so then it trends upward peaking around 1988 after that it falls to the crisis then falls faster government graph 2 government debt declines markedly relative to trend until 1974 then rises to about 1993 then it falls during the macroeconomic miracle then trends flat until the crisis household graph 3 household debt is all over the place it rises to trend by 1955 then stays on trend until 1966 then it falls until 1971 then it trends upward until 1989 or 1990 then it falls to the end of the millennium then it rises until just before the crisis and to repeat a graph and summary from yesterday business graph 4 business debt grew more slowly than i would expect until about 1964 then it grew faster than i would expect until about 1989 then it grew slower again the exponential trends are all different of course so these four graphs cannot be compared directly but the trends and turning points are significant and the timing of the turning points though i have only eyeballed them here could be important to an analysis of debt and the economy if we have too much debt today as i always say then the graphs show actual debt growth compared to too much debt growth increasingly as we move to the right on the graphs and perhaps they show actual debt growth relative to too little debt growth toward the left that said it appears that business and financial debt both began increasing relative to trend in the mid 1960s and continued to do so until the late 1980s after that both started falling behind their debt growth paths household debt follows a similar history but slightly delayed and with substantially more variation government debt goes its own way sometimes similar to sometimes different from the paths of other debt as you would expect to be true if the nature of government debt is wholly different from that of private sector debt which i think it is finally all of these graphs show a general downtrend from the late 1980s or early 1990s to the onset of crisis but remember this is a downtrend relative to the exponential growth curve the graphs do not show that debt growth was slowing what they show is that debt growth had already become unsustainable by 1990 convergence set the dates aside set the explanations aside look at the point of agreement in remarks yesterday one finds the following from jazzbumpa what is unmistakable is that growth has slowed dramatically since the 1982 ish peak this is the inevitable failure of exponential growth from clonal in the graph you show on the business debt the trend is definitely not exponential it is growing but not exponentially the divergence is too great since 2000 from liminal hack the exponential prior to 2000 is still remarkable though the post 2000 behavior is much more about mature economies reaching peak debt and then hunting for some kind of equilibrium and from my conclusion above this is a downtrend relative to the exponential growth curve the graphs do not show that debt growth was slowing what they show is that debt growth had already become unsustainable by 1990 maybe since 1982 maybe since 1990 maybe since 2000 but without doubt the exponential growth of debt could not continue it had to fail economic policy built on the growth of debt was doomed from the start posted by the arthurian at 8 00 am 4 comments f g h yesterday we looked at nonfarm corporate business debt graph 1 nonfarm corporate business debt today we look at other debt financial debt blue government debt red and household debt green graph 2 financial government and household debt to be clear government debt here refers to federal government debt and excludes internally held government debt because tcmdo excludes it first none of these three debt series has flat spots at recessions since 1990 on the other hand all three of them show a major change at the time of the 2008 recession in fact the three debt trends since the wilt began look as though they are converging to a common point that s just bizarre but it might be interesting to look at every six months or so in the meanwhile a look at these three components of debt along with their exponential trend curves financial debt is the fastest growing with the steepest exponential but the actual numbers fall behind the calculated curve some years before the peak in yellow household debt shows the second fastest growth on this graph and until the wilt began the actual debt numbers kept up with the exponential trend in last place debt of the federal government government debt growth was significantly ahead of its exponential trend there for a while but curved back down below the trend during the macroeconomic miracle then ran below trend until the crisis posted by the arthurian at 4 00 am 0 comments thursday september 29 2011 and it took a while i did the exponential trend see previous post so i could compare the actual path of debt to the exponential path but it took me a while to figure out how to use the trend formula generated by openoffice the problem was what to use for the x values it s not date formatted numbers it s not year values four digit nor two it s simple the first x value is number one the next is number two and like that here is the result graph 1 variance from the exponential trend the path varies as much as 40 from the perfect trend but that s not what interests me interesting i think is that there are three general trends within the variance first off this graph shows actual debt varying from the exponential curve so below the zero level means debt is growing more slowly than we might have predicted above the zero level means debt is growing faster than we might have predicted a downtrend means debt growth is slowing relative to the prediction and an uptrend means debt growth is increasing relative to the prediction second the debt we re evaluating here is domestic nonfinancial corporate nonfarm business debt outstanding now the trends business debt tended to slow until about 1964 then it changed direction from 1974 to 1992 give or take debt growth was above trend but after 1988 debt growth tended to slow relative to its exponential trend the google docs spreadsheet posted by the arthurian at 12 00 pm 3 comments but who s counting the third graph from my four o clock repeated here as graph 1 graph 1 corporate debt 1949 2011 quarterly data from fred fed into openoffice plus an exponential trend graph 2 same debt with an exponential trend line with an r squared greater than 0 9899 for the record posted by the arthurian at 8 00 am 3 comments suddenly remembered i suddenly remembered noah writing this the recessions of the early 1980s were very short and v shaped despite the extremely low rate of tfp growth at the time by contrast the early 2000s recession though shallow was much longer and u shaped despite the recovery in tfp growth tfp being total factor productivity which doesn t matter at the moment noah s evidence was this graph graph 1 apparently we can be quite literal here and look at the white space under the blue data line at the peaks the tallest spike on the graph comes at the 1982 recession and that spike is very narrow indeed compared to the two lesser spikes that follow it those lesser spikes occur at the 1990 recession and the 2001 recession thus not only the early 2000s recession but recessions since 1990 have been much longer and u shaped 1990 and 2001 and 2008 dunno where i read that krugman or somebody pointed it out before however graph 2 by the time the civilian unemployment rate gets back down to the natural rate of unemployment all the recessions since 1974 have spikes that widen out quite a bit but let s set this objection aside for now let s assume the noah krugman arts bad memory analysis is correct let s assume it s true that recessions since 1990 have been longer and u shaped and different than recessions before 1990 i suddenly remembered noah writing that because i saw this graph 3 corporate debt 1949 2011 flat spots in business debt following the 1990 recession the 2001 recession and the 2008 recession flat spots like that don t show up after earlier recessions even in close up graph 4 corporate debt 1949 1993 the slightest wiggles appear after the 1974 1980 and 1982 recessions bare hints of what was to come y know i m thinkin graph 3 with the flat spots after the last three recessions this is better evidence than noah s graph for the claim that recovery no longer follows quickly on the heels of recession posted by the arthurian at 4 00 am 2 comments labels debt and inflation wednesday september 28 2011 and i m gonna keep saying it until you start to think there might be something to it this one again graph 1 after interest rates peaked around 1980 see yesterday s graphs 2 and 3 net interest flattened as a percent of gross domestic income after a few years net interest dropped significantly then it flattened again though it would not be right to call it stable i want to look at the drop zoom in once graph 2 and it appears that the drop begins around 1990 and ends around 1996 zoom in again graph 3 and those dates are pretty well confirmed 1989 to 1996 maybe the drop doesn t look so significant stretched out like this but it is the same drop and the same significance as before suppose we look at tcmdo total credit market debt owed for the same period it goes up of course graph 4 shows how much it went up as a percent change from the year before graph 4 the growth of debt was relatively low in the 1989 1996 years the same years that net interest dropped so fast graph 4 looks at growth of accumulating debt increases of debt but what is an increase in debt it is more credit use the record of more credit use when i borrow a dollar my debt increases when i borrow a dollar it s likely because i plan to spend it spending we can only spend money we borrowed or money we didn t borrow two kinds of money how much of each there is in the economy is a big deal graph 5 graph 5 adds money to picture 4 m1 money annual data percent change from previous year shown in red from 1989 to 1996 there is a good big bump in the growth of money we have looked at this before when the quantity of money rises faster than the accumulation of debt the factor cost of money is reduced this is the reason we saw a significant drop in net interest relative to gdi in graph 1 above oh and for the record the two data series shown in graph 5 are the two components of my debt per dollar ratio it looks like this graph 6 for the 1986 2000 period it looks like this graph 7 that big drop in the ratio was created by faster growth of money and slower growth of debt that big drop started around 1990 and ending around 1994 immediately after that big drop we had an economic boom this is no coincidence the reduced factor cost of money was the necessary precondition for growth this is not the first such drop that i know of the first occurred after the onset of the great depression it occurred during the years of the fdr presidency immediately after that big drop we had an economic boom that lasted two decades or more that was no coincidence either posted by the arthurian at 4 00 am 4 comments tuesday september 27 2011 nobody looks at the macro from yesterday this one graph 1 since 1992 the trend is horizontal here are four different interest rates all quite similar graph 2 here from graph 2 is fred s 3 month treasury bill secondary market rate very similar to the federal funds rate but it goes back to the 1930s together with net interest from graph 1 both series use annual numbers graph 3 why does interest cost rise more slowly than interest rate up to the peak dunno maybe the question is irrelevant it s just a graph but what i would like to say what i can t argue yet is net interest income understates interest cost graph 4 with each series on its own vertical axis interest cost does not rise more slowly than the interest rate but it does fall more slowly why does interest cost trend horizontal rather than falling with interest rates this i know the answer to as time goes by more and more of our spending makes use of credit more and more credit use is embedded in the average transaction as time goes by if interest rates fall by half while embedded credit use doubles th...
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