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Text of the page (random words):
he phrase does not mean money is the same as debt it means money comes into existence through the creation of debt or something like that whether that is always true is not up for consideration here certainly it is true sometimes i want a job so that i can receive money oh sorry that s too direct i want a job so that i can receive income because the stuff i receive as income is money and i want the money so far so good but now someone cries out all money is debt and that is supposed to bring the discussion to a grinding halt i want a job because i need the money but all money is debt what is that supposed to mean at best i have this i want a job because i need the money all money comes into existence through the creation of debt or maybe not all money but a lot of it or some of it anyhow the phrase all money is debt is irrelevant stop using it posted by the arthurian at 4 00 am 7 comments friday november 25 2011 all money is debt you say all red is color i say we should be using green you say green is still a color so there is no difference posted by the arthurian at 4 00 am 4 comments thursday november 24 2011 thanks i may not be an economist but i certainly am a blogger i probably spend as much time checking my blog stats as i spend checking my email i thought today might be a good day to say thanks thank you for all the visits and all the conversations and all the challenges and all the kind words from google analytics a peek at visitors per week since 1 july 2009 you guys give me confidence the other day i looked at the blogger stats and noticed something odd in the traffic sources most of the visitors were coming from mosler s and from mike norman s that meant there were links there to my blog that interested me what links a timely look turned up links in comments posted by clonal at mike norman s and matt franko at mosler s the blogger stats also showed which posts were getting the traffic my most visited current post showed up third on the list after two that were targets of matt and clonal s links by the way clonal the greatest scam of the 20th century is high on my list of best and most important posts so i m real glad you linked to that one and you did a great job of presenting it at mike norman s the blogger stats also showed a change in activity related to those links here s daily activity for 16 october to 15 november showing a major spike it s always graphs with me isn t it so thanks again to everyone to friends i can identify by name and point of view to people who stop by regularly but have not left their imprint in the comments and to first time and one time visitors who help to keep my stat trends going up and special thanks to clonal for thinkin and linkin my stuff and to matt for picking up that ball and running with it happy thanksgiving all posted by the arthurian at 4 00 am 1 comments wednesday november 23 2011 debttlusa188a a little something from our friend fred central government debt total of gdp for the united states notes debt is the entire stock of direct government fixed term contractual obligations to others outstanding on a particular date it includes domestic and foreign liabilities such as currency and money deposits securities other than shares and loans it is the gross amount of government liabilities reduced by the amount of equity and financial derivatives held by the government because debt is a stock rather than a flow it is measured as of a given date usually the last day of the fiscal year not sure why it only goes to 2009 i had a book that i used a lot when i was doing a lot of c programming programmer s problem solver for the ibm pc xt at by robert jourdain in his introduction jourdain warned that the book might not be easy reading the prose in this book is dense to say the least that paragraph from fred there that s dense prose good stuff if something goes up during recessions and kinda goes flat in a listless economy then maybe it would go down in a vigorous economy hey if that something is something you don t like so much like central government debt then maybe you would think restoring vigor to the economy is a high priority posted by the arthurian at 4 00 am 1 comments tuesday november 22 2011 averages of averages this is how i thought of it at first the double 3 take a zero phase 3 year moving average of a zero phase 3 year moving average of some economic data i think this would be like assigning weights to the numbers heaviest at the current value lightest two years ahead or behind when i looked at it in excel a double 5 gave a result more like what i had in mind looking at any point on a trend line the actual value at that point should have more significance than neighboring points and more distant neighbors should have even less i think this is a decent way to generate a trend line for an economic dataset to compare these images use bloggers lightbox click a graph to activate the lightbox and use the selector at the bottom of the screen to switch between graphs posted by the arthurian at 4 00 am 6 comments monday november 21 2011 the suppression of money i got numbers for m1 money from the historical statistics 1915 1970 and from fred 1959 2011 the hs numbers are annual so i decided to use annual values for this whole project i got gdp numbers from my google docs files they came from measuringworth again annual values i divided the m1 numbers by the gdp numbers to see how much spending money there is in the economy relative to the stuff we buy each year to see the history of that relation graph 1 money in circulation relative to output at actual prices the blue part comes from the historical statistics the red part comes from fred the m1 numbers from the two sources match up well i got percent change from year ago numbers for the consumer price index from fred i used their cpiaucns which goes back to 1913 the change from year ago numbers go back to 1914 i start the graph at 1915 because that s how far back the m1 money numbers go the blue line on graph 2 shows inflation as percent change from year ago of the cpi the abbreviation pcya is awkward shorthand for percent change from year ago graph 2 inflation annual change in prices plus trend lines i put a 5 year moving average line on the graph in red and in yellow a 5 year moving average of the 5 year moving average values something i ve been looking at a bit lately for the next graph i got rid of the moving averages i took the change in cpi line since 1921 from graph 2 and fitted it to graph 1 to look for similarity i scaled and shifted the cpi numbers multiplied by a number that made the height difference of the cpi about the same as the height difference of the m1 gdp and added a constant to slide the whole set of cpi numbers up and get them close to the m1 gdp numbers my goal was to make the two lines close i got them pretty close on the left half of the graph not so close on the right half graph 3 combining inflation from graph 2 with mrto from graph 1 look at the left half and look at the peaks of the yellow change in cpi line those peaks pretty well fall within the limits set by the blue m1 gdp line as the blue line rises the yellow inflation peaks also rise to a high point just at the end of world war ii after the war the blue line falls and so do the inflation peaks but then on the right half of the graph the lines don t match up inflation spikes up three times in the 1970s while the quantity of money relative to gdp now shown in red continues to fall then in the reagan years inflation is suppressed perhaps surprisingly the m1 gdp line stops declining at the same time it runs horizontal for 10 or 15 years and shows the bumps that i point out all the time inflation moderated when they stopped suppressing the money after the third bump the m1 gdp decline resumes reaching a low ten cents just at the start of the financial crisis and recession 2007 08 anyone who says they re printing too much money has not spent enough time looking at this graph but the point is that in the years after the red and yellow lines cross there really is not much similarity between m1 gdp and inflation u s anti inflation policy quit working in 1960 before 1960 inflation rose and fell within the limits set by the money ratio since 1960 the relation between m1 gdp and inflation has disappeared this failure on the graph this loss of trend similarity has a real world counterpart the inflationary peaks of the 1970s occurred while the quantity of money was being suppressed and then inflation quieted down when they stopped suppressing the money that s evidence of an astonishing loss of policy effectiveness a lot of people feel that inflation is proof that they must have been printing too much money but the graph shows that they were not printing too much money the graph shows that since 1960 m1 money was severely suppressed but the suppression did not restrain inflation there was a loss of trend similarity the thing that used to work to fight inflation stopped working that is what graph 3 shows why did inflation policy stop working what caused the loss of trend similarity what changed we increased our reliance on credit to fight inflation the fed suppressed circulating money to stimulate growth congress encouraged credit use they suppressed the money and encouraged credit use and our reliance on credit increased essentially our economy did not change except that money was suppressed and credit use was encouraged and we found ourselves using less money and more credit the thing that changed was the thing we use for money the difference between money and credit is that credit is more costly to use an economy that shifts from a low reliance on credit to a high reliance on credit will find itself with financial costs rising relative to other costs it will find itself with interest costs rising relative to wages and profits it will find itself with living standards squeezed business growth below par and financial activity as its growth industry an economy that shifts from a low reliance on credit to a high reliance on credit will see rising costs that are associated with the cost of interest i got interest rate numbers from fred i picked their moody s seasoned aaa corporate bond yield aaa because the numbers go all the way back to 1919 graph 4 adding moody s aaa corporate bond yield to graph 3 again i tried to make the lines similar by scaling the green line and shifting it up a bit after 1960 the green and yellow lines are a very good match inflation and interest rates show similar patterns before 1960 there is little similarity before 1960 money was dominant after 1960 credit was dominant graph 4 shows the change from reliance on money to reliance on credit graph 5 shows a close up of the transition graph 5 x marks the spot don t forget the yellow line shows inflation inflation was at its lowest and stable for a few years in the early 1960s just at the balance point between excessive money and excessive credit use posted by the arthurian at 4 00 am 1 comments sunday november 20 2011 on your mark get set decline and if it matters and it matters more than anything the decline in the quantity of circulating money was the cause of the economic problem and the decline of income was a result 18 november 2011 graph 1 showing the decline in the quantity of circulating money since 1946 graph 2 showing a slowdown in real income growth since about 1970 graph 2 from krugman from a post somehow linking the reagan non miracle to the slowdown of inflation adjusted income growth krugman s graph shows a slowdown starting somewhere around 1970 the decline of circulating money began in 1946 a generation before that slowdown the slowdown of income cannot have been the cause of the decline of money posted by the arthurian at 4 00 am 7 comments saturday november 19 2011 phase shift earlier this month jim offered some technical knowledge regarding the use of moving averages in digital signal processing dsp the moving average is classified as a low pass filter tends to attenuate high frequency components in the data the moving average is sometimes called a boxcar filter in dsp the issue of where you reference the input and output time stamp is referred to as causality if you only use the most recent past input data points to create the current output data point the filter is causal if you use data points ahead of the current output it is not causal if the output current sample point is the middle of the input sample points the frequency response of the filter is said to be zero phase so if the moving average is plotted at the last year of the years averaged the result is causal if the moving average is plotted at the middle year of the years averaged the result is zero phase the difference is significant enough that people invented names for the different versions graph 1 shows the federal funds rate monthly numbers in blue and annual numbers in red from the st louis fed graph 1 for graphs 2 and 3 below i m using annual numbers because it s easier the vertical blue bars on the graphs below show the federal funds rate the thin red line shows the moving average you can make the moving average move by sliding your mouse back and forth across the number bar below the graph graph 2 is a causal representation each point on the red line shows the average of the previous n years graph 2 a causal moving average 1 year data 2 year avg 3 year avg 4 year avg 5 year avg 6 year avg 7 year avg 8 year avg 9 year avg 10 year avg you can see the peaks mellow and drift to the right as you move the mouse rightward over the number bar they mellow because they get averaged down blended in with lower numbers they drift to the right because each point on the red line is plotted at the last year of the years averaged you can see the same rightward drift in the start point the left end of the red line as you wave the mouse back and forth it is as if the mouse pulls the red line rightward then allows it to spring back to its original shape graph 3 is a zero phase representation each point on the red line is plotted in the middle of the period averaged the average value plotted at the average year so to speak graph 3 a zero phase moving average 1 year data 3 year avg 5 year avg 7 year avg 9 year avg 11 year avg 13 year avg 15 year avg move your mouse back and forth across the number bar below graph 3 again you can see the peaks mellow as you move to the right but this time the mellowing peaks remain centered on the rigid peaks of the blue bar graph the zero phase version of the moving average makes more sense to me for the things that i look at it puts high points where the high points are rather than dragging them off to the side both versions are useful no doubt but the causal version appears to be more common it s the way excel does moving averages for example and the dragging off to the side thing is an important thing to know if you plan to work with moving averages the red line itse...