Asymptosis: Always Approaching

Month: December 2011

  • The Great Ricardian Equivalence Debate of 2011: Do Mainstream Economists Agree on Anything?

    Krugman started it, in response to Lucas. Everyone piles on. Plutocracy Files has the list of links. (Plus don’t miss Nick Rowe’s, which includes a long comment thread.) Here’s what wows me: all these world-classical economists are accusing each other of contradicting “textbook economics,” and circling through extraordinary contortions in their efforts to reconcile that school…

  • New Year’s Tax Wishes: If I Was Dictator of America

    Based on the notions of economic efficiency that I laid out here, if I could do whatever I wanted I would make the following changes over a ten-year period. (Some faster, some slower, some phased in, some implemented instantly on a given date.) The appropriate amounts in each case require a better calculator than I…

  • Casey Mulligan Wonders Why People Use Unemployment Insurance

    Casey Mulligan is curious: what could have caused the big uptick in the uptake on unemployment insurance in recent years? It’s a mystery. Or, maybe not: Sorry, the JOLTS data only goes back to 2001. Which directly addresses Mulligan’s basic assertion: People are lazy. They don’t like to work. Well yeah. (People especially don’t like…

  • This Time Is Different: Federal Debt Didn’t Dive Before the Depression

    Randall Wray made a fascinating observation a while back: Since 1776 there have been six periods of substantial budget surpluses and significant reduction of the debt. … The United States has also experienced six periods of depression. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929. And I confirmed it (graphs): Every depression in U.S. history was…

  • A Surfeit of Dearth? Tight “Money” and the Decline of AAAs

    This Credit Suisse graph posted by Cardiff Garcia on December 5 has been getting some serious attention in wonkier sections of the econoblogosphere: And Angry Bear‘s own Rebecca Wilder gave us this on December 21: 2007-2011 in charts: moving down in quality 2007… …Vs. 2011 Brad DeLong discussed this on December 21, riffing off David…

  • It’s Beginning to Look a Lot More Riskless (To the tune of…)

    There’s such fun in disastering. When you’ve won the mastering. Of the u-ni-verse! Hat tip to RJ Sigmund: Lyrics by Marcy Shaffer It’s beginning to look a lot more riskless. At least for guys like me. It’s neat being this elite. The government makes it sweet. Complete with robber baron guarantee! It’s beginning to look…

  • “Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity Is Not Expensive”

    Real Reasons Bankers Don’t Like Basel’s Rules: Clive Crook – Bloomberg. Why bankers’ whining about higher equity requirements is just that: A much-cited paper by Stanford’s Anat Admati and colleagues — “Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity Is Not Expensive” — should have ended this debate once…

  • It’s the Private Debt, Stupid

    I’ve gone on about this elsewhere, but thought I should bring it up front and center here. While everyone hyperventilates about government debt, they don’t seem to be aware of the massively greater load of private debt, and its spectacular runup compared to government debt: This from Steve Keen’s latest. (It’s not very long. There…

  • The Meme that Refuses to Die: Government Debt Must Be Paid Back

    I’m stealing this headline directly from Sandwichman. He sez: No it doesn’t. It almost never is. To pay back government debt, you have to run a budget surplus, and while there may be modest surpluses from time to time, they don’t add up to more than a minuscule fraction of all the accumulated debt. But…

  • 250 Billion Reasons Why the Fed Hates Inflation (and Doesn’t Care About Employment)

    Let’s start with the basics: Increased inflation results in (in a sense, is) a wealth transfer from creditors to debtors. Debtors get to pay off their loans in less-valuable dollars — dollars that can’t buy as much real-world stuff, stuff that humans can consume, that they value. If you’re holding a hundred million dollars in bonds —…

  • Is Big Government Inevitable? Desirable? Necessary?

    Let’s start with two basic facts: • Governments in all thriving, prosperous countries tax/spend 25–50% of those countries’ GDP (averaging around 40%). • Governments in non-prosperous countries — those that haven’t suffered a recent crash in the numerator/GDP — are all below that range. There is not a single thriving, prosperous country that does not…

  • Now (Also) Blogging at Angry Bear

    Just a note to my gentle readers to let you know that in future I’ll also be blogging at Angry Bear, where I’ve done a couple of guest posts over the years. It’s a great blog that I’ve been following for a long time, and I’m honored to have been invited to join the Clan…

  • Financialization and the Stripping of the Middle Class, in Twelve Graphs

    Below are three that I haven’t seen before. Check out the rest. Takeaway: The Darwinian struggle to strip the flesh from insolvent consumers before one’s competitors do so is not a thriving economy nor a growing economy; it is a hollowed out economy at a dead-end of financialization and substitution of Federal debt for actual…

  • 15 Fatal Fallacies of Financial Fundamentalism

    File under: “Every brilliant, original thought or formulation that you think you’ve come up with has probably been thought of before, and probably by a Nobel laureate.” Nanute points us to: 15 Fatal Fallacies of Financial Fundamentalism. William Vickrey, 1996. Here are the first three paragraphs. As they say in the trade, read the whole…

  • The Fed Always Thinks That Unemployment’s Not a Problem

    A little behind here, but I wanted to post this eye-opener from Mike Konczal: Their model is obviously telling them that whatever (non-)actions they’re taking at the moment will solve the problem. And their model is obviously, consistently, and wildly wrong — and always wrong in the same direction. Altering that model to accurately predict unemployment,…

  • “Freed of the southern incubus…”

    I’ve been re-reading parts of James McPherson’s Battle Cry of Freedom (thanks Sis!), often billed as the best one-volume history of the Civil War era. While it goes into quite a bit more detail about orders of battle and such than I feel the need for — there’s too much about the war and less than…

  • Capital in the American Economy Since 1930: Kuznets Revisited

    James Livingston, author of Origins of the Federal Reserve System plus several other books, has been getting play lately from Megan McArdle and Karl Smith (again among others) for his new book, Against Thrift: Why Consumer Culture is Good for the Economy, the Environment, and Your Soul. (McArdle is typically daft and schmarmy.) My longer-time readers might…

  • Does Big Gubmint Cause Budget Problems? Doesn’t Look Like It…

    Tax-to-GDP ratio and bond yields in OECD countries Tax-to-GDP ratio and bond yields in OECD countries (excluding Greece) In fact, governments that tax sufficiently to pay their bills have lower borrowing costs. Go figger. More here: The welfare state is not to blame for the Euro crisis « We are all dead.. Related posts: Is the…

  • Trends in Intergenerational Mobility: Declining Opportunity Since 1980

    Ask and ye shall receive. Roger Chittum sent me this: Estimated correlations between sons’ and parents’ incomes, 1950-2000 Higher correlations, of course, mean lower mobility. Why do all these inflection points land at 1980 (or just before)? While you’re there, don’t miss this incredible interactive graphic: Mobility decreasing in recent decades | State of Working America.…

  • Why Visiting U Chicago is Cool

    Just arrived, walking to The Pub, two students walking by the other way. …fading in… “the argument you’re making makes no sense. It’s like saying ‘if all Serbian men were made of cheese…’  …fading out… Nice to be here. Related posts: It Could Have Been My Kids. Or Yours. Women Rule! So Why Do They…

  • Meritocratic Opportunity: On the Decline

    By every measure I’ve been able to find, income mobility in America is much lower than in other prosperous (especially northern European) countries. (Follow Related Posts links below for details.) But I’ve had trouble tracking down changes in those measures. Here’s one: I’m finding it difficult to parse the date axis at the bottom (and I…