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ings i found a few links to estimates of total accumulated savings most of em unfortunately are like this gross savings plural figured as the part of gross domestic income that we don t spend that s a flow dammit stf might call it gross saving singular we were looking at gross savings in yesterday s post trying to trust that it is a stock without success maybe now we know why here s a world bank link on gross savings shows the same definition as the indexmundi clip their gross savings numbers for the u s are 2 38 trillion 2010 2 45 trillion 2011 2 7 trillion 2012 and 2 91 trillion 2013 the useful total assets links i found are shown next in date order rutledge capital may 24 2009 total assets 188 trillion as of 2008q4 yahoo finance october 22 2013 total assets 225 trillion as of 2012q3 wikipedia april 17 2015 total assets 269 6 trillion as of 2014q1 that s about it really maybe you can find more hey since we can now draw lines on fred graphs i m gonna show gdp and add this total asset data to the graph graph 1 gdp blue and total us assets red hey friggin wikipedia at the financial position of the united states page that i linked above among the graphs on the right side is a green one assets of the united states as a fraction of gdp 1960 2008 clicking that brings up a bigger image along with related data the graph is by equilibrium007 who would get the arthurian prize of the day if there was one i clicked more details below the graph is a summary section where the description includes a link to the source data clicking that brings up a page of the fed s data download program somewhere i ve never been before there is a package of 16 data series there for download or review see how easy it was to find all that data but you know i m not so sure now that i want to take total assets or even total financial assets and say that it s a good proxy for vast accumulated savings a lot of financial assets most of em maybe were not created by saving they were created by borrowers and lenders reaching agreements that create money from nothing it doesn t worry me that they create money from nothing but we surely cannot then turn around and say the assets were created by acts of saving if i go to the bank and borrow 1000 and the bank creates the money by depositing it in my account there was certainly no saving that accumulated to 1000 so that i could borrow it maybe it s true i think it is quite definitely true that after i borrow the money and spend it it soon finds its way into savings so there is going to be a relation between savings and assets like loans anyway and that might be a useful relation to look at but i don t think it s correct to look at assets and say there was that much accumulated savings nor even that there is going to be that much accumulated savings it just doesn t sit right my attempt to use total assets as a measure of accumulated savings was wrong headed posted by the arthurian at 4 00 am 0 comments friday april 17 2015 looking for something definite stf left a concise statement a while back at winterspeak i thought that was great saving is a verb it is something we can do savings is a noun it is something we might have saving singular is the act of putting money away for later savings plural is the accumulation of money you have put away saving singular is the flow of money into a stockpile of savings this all works i adopted stf s terminology right away and now four and one half years later i m still trying to figure out if fred adheres to the clear and simple standard that stf laid out in that brief comment here is fred s savings plural deposits total graph 1 savings plural the noun something we might have this graph shows the accumulated stock of savings maybe so then if i were to show change billions of dollars or if i make it annual and show change from year ago billions of dollars that would be the flow variable or saving in the singular form if i m looking at what i think i m looking at how can i tell if i m looking at what i think i am for this dataset at fred the notes say in part the savings deposits component of m2 consists of passbook type savings deposits as well as mmdas at banks and thrifts so the graph shows a portion of m2 money and m2 is a stock of money not a flow of money if the graph shows a portion of a stock the portion it shows is a stock also not a flow i m confident of that so that corresponds to savings plural and now i think i m on the right track if i show the blue line as change from year ago and compare it to some measure of saving singular ah i found gross saving singular as a percentage of gross national income and i found gross national income for united states in current dollars this will work i can figure gross saving from it if gross saving is gs and gross national income is gni then fred s gross saving as a percent of gross national income looks like this to get the gross saving number from what fred gives me i only have to multiply by gni and divide by 100 working backward from fred s number i get gs gross saving singular i want to compare these gs numbers to the change from year ago billions of dollars version of graph 1 if they are the same or similar even then i will be confident that the series shown in graph 1 is the stock variable and is correctly plural i will also be confident that the gs numbers i calculated from the gross saving singular series is correctly singular i will have learned something i looked into this a few times before at least twice on the blog as i recall without ever making this much progress so i m doing good today here s the result graph 2 not even close we have not learned that graph 1 s blue savings plural shows a stock and graph 2 s red saving singular shows a flow we have not learned that fred follows stf s singular plural rule have we learned anything nothing definite but now i want to think that graph 1 since it doesn t show a stock shows a flow of deposits into savings but i don t see how that can be given fred s note that we looked at above maybe we learned that the singular plural rule does not apply to the words deposit and deposits and maybe we learned that gross and total don t mean the same thing oh well here is something dividing by 1000000000 on graph 2 converts the red line from current dollars to billions now you can t say you ve never seen anybody do that posted by the arthurian at 4 00 am 2 comments thursday april 16 2015 he thinks he s grumpy in a recent post cochrane says all money should be interest bearing his view is a concession to the world as it is today when most but not quite all money is interest bearing the cost of interest is the central underlying problem in the world today but not because interest rates are so low no that was a solution remember the cost of interest the accumulated cost of interest is a problem because there are so many dollars already that are interest bearing the problem in other words is that there is too much debt there is so much debt that even at the zero bound the cost of finance holds the economy down cochrane s opening talks up government debt i propose a new structure for u s federal debt all debt should be perpetual paying coupons forever with no principal payment then he gets into it quoting himself economists have long dreamed of interest paying money it fulfills milton friedman s 1969 optimal quantity of money without deflation paper money is free to produce so the economy should be satiated in liquidity mmm economists have long dreamed of interest paying money well we have that every dollar of debt public and private is a dollar that somebody put into circulation and is paying interest on to keep in circulation the problem is not that there s not enough interest bearing money around the problem is that most of the money we borrowed and spent into circulation and are still paying interest on most of that money is now sitting in somebody s savings account collecting interest we are paying interest on money we spent into circulation but that money has already settled out of circulation and somebody is collecting interest on it oh and the banks are making money at both ends of that arrangement meanwhile that arrangement does nothing to help the real economy cochrane quoting cochrane our economy invented inside interest paying electronic money in the form of money market funds overnight repurchase agreements and short term commercial paper and found it useful but that money failed suffering a run in the 2008 financial crisis yeah that money failed it gave us the 2008 financial crisis posted by the arthurian at 4 00 am 0 comments wednesday april 15 2015 it ain t sociology 101 i found a chart recently a table comparing the ideas of different economists can t find it now dammit one column in the chart was for adam smith one item under adam smith said his thinking was class based well i didn t like that much and i went on to other things so now when i want to link to that table i can t find it so it goes maybe adam smith s thought is considered class based because he focused on the differences among three groups the owners of natural resources the workers and the owners of man made resources land labor and capital maybe smith s thought is considered class based for other reasons i don t know anything about that so i want to evaluate just the one notion that smith s focus on land labor and capital is class based i begin with schumpeter s thought that if we do not make distinctions we shall never be able to say any more than that everything depends upon everything adam smith looked at the world around him and he saw the aristocracy and he saw the commoners and he saw a rising new class or category those people who make money by doing business it didn t start out as business you know it started out as busyness but it grew in importance and adam smith caught it on the up swing does that make his work class based maybe if you don t look into what he says smith made distinctions because if you don t make distinctions you can t say anything interesting but the distinctions he made were realistic they were based on the world of his day and he didn t focus on classes of people he focused on types of income i don t like looking at things in terms of us and them the 99 and the 1 and like that i prefer to think in terms of categories of income not classes of people so adam smith makes sense to me as smith put it writing of wages profit and rent when those three different sorts of revenue belong to different persons they are readily distinguished but when they belong to the same they are sometimes confounded with one another at least in common language classes separate people but smith pointed out that any one person can receive income of various types so for him income was not distinguished by class of person it was distinguished by type of income he also identified different regulating factors for each type of income these regulating factors were what made one type of income different from another smith s thinking was not class based it was income based that s why we remember him as an economist not a sociologist posted by the arthurian at 4 00 am 1 comments tuesday april 14 2015 alternate ending i hope the ending of yesterday s post wasn t confusing i don t like the inequality argument oh i think it s an easy argument to make sure but i don t know how to deal with the class warfare rebuttal yes you can deny you re engaging in class warfare but denial is a weak argument that s what the other guys want you know they want you to keep making weak arguments i prefer to avoid that approach altogether this preference for the future of which hendrickson writes how could it have developed not suddenly it started with the first dollar of savings it grew gradually and for a very long time along with savings eventually it began to have economic effects in the early days of capitalism accumulated savings was large enough to effectively drive capitalism forward and because of that it seemed to be true that supply creates its own demand i think it likely was true for a time but savings continued to grow savings grew beyond the point where it only contributed to economic growth grew to the point where it started undermining economic growth as well at that point there would have been some measure of slowdown in economic growth policymakers would have wanted to fix that problem policymakers experience had taught them that the increase of savings is good for growth so they did their best to create policies to enhance the growth of savings but the economy had already changed savings had already grown beyond the point where it only contributed to economic growth and further increase in savings could only enhance the ineffectiveness of savings as a device for obtaining growth savings of course is provision for the future a vast accumulation of savings is a vast provision for the future once the accumulation of savings becomes great enough the focus on the future overrides the focus on the present and becomes the dominant focus at that point hendrickson s conclusion applies all of this happens by the natural process of saving money something that everyone wants to do let that process continue until it begins to harm the economy then enhance that process in the mistaken belief that this will reverse the damage done and eventually hendrickson s conclusion is the inevitable conclusion inequality sure apply inequality to the process i describe and you speed up the process posted by the arthurian at 4 00 am 0 comments monday april 13 2015 josh hendrickson asks a good question at the everyday economist josh hendrickson asks what does it mean for the natural rate of interest to be negative it s a good question it s a how can this be question i like his post already hendrickson points out that talk of the zero lower bound has permeated the debate he brings it into focus specifically the argument holds that if the market rate of interest is higher than the natural rate of interest then monetary policy is too tight he has a few questions and soon gets to the important one why is the natural rate of interest negative he says it s not easy to imagine such a thing he defines it i will define the natural rate of interest as the real rate of interest that would result with perfect markets perfect information and perfectly flexible prices and he sets up a model i m just gonna skip right over the model and look at the conclusion hendrickson pulls out of it and where it takes him since the supply curve is horizontal the real interest rate is always equal to the rate of time preference so this brings me back to my question how can we explain why the natural rate of interest would be negative you might look at the equilibrium conditions and think sure the natural rate of interest can be negative we just have to assume that the rate of time preference is negative while this might mathematically be true it would seem to imply that pe...