Asymptosis: Always Approaching

Month: February 2012

  • Public vs. Private Debt: The Long View

    Poking around in FRED while thinking about money created by banks and by government, I came up with the following graph, which I found to be pretty eye-popping: Federal Debt Held by the Public as a Percentage of Total Credit Market Debt Owed That’s a pretty profound secular shift. But far from delivering any obvious…

  • Republicans: More Education, Less Reality

    Via Chris Mooney to Digby to Krugman then me — this remarkable item from a Pew report: College-educated Republicans are more likely to deny scientific reality. They don’t spend their time in college (or life) trying to learn how the world works; they spend it learning how to mine, harvest, cherry-pick, and twist any “facts”…

  • 14 Ways an Economist Says I Love You.

    I’ll just share two of these. HT Yoram Bauman.   via 14 Ways an Economist Says I Love You. Cross-posted at Angry Bear.       Related posts: Economics is the Study of Human Reaction Functions Keynes: Pragmatist. Hayek: Utopian. Who Sez? Now (Also) Blogging at Angry Bear It’s a Spending Problem, Right? Labor Power…

  • Why the Government Must Keep Running Deficits. Forever.

    Imagine an economy that consists of two households, one firm, one bank, and one government. The government issues $50 to each household (maybe they do some work for it), crediting their bank accounts and running a $100 deficit. Voila! There’s money! Now one household works for the firm, creating $50 in value, goods. The firm…

  • Matthew Yglesias: Do Low Taxes Cause Inflation?

    It’s nice to see Matthew Yglesias embracing Modern Monetary Theory, but I wonder if he totally gets it: The point of collecting taxes isn’t that the government needs money (it can print money) it’s that if the quantity of taxes is too low relative to the stock of money, then the money loses its value and…

  • Length of Unemployment is Worst Since World War II

    Middle Class Political Economist: Basics: Length of Unemployment is Worst Since World War II.. (HT Brad DeLong.) The key graph: Assuming the economy is “trying” to reach equilibrium, this suggests that it “wants” less workers. If that is a secular trend, as suggested by the steadily lengthening jobless recessions since the 80s, …we’re faced with…

  • Another Comprehensive Approach: The Fair Share Tax Reform Proposal

    I just came across a fellow internet econocrank’s tax proposal, and find it quite interesting — especially its proposed progressive tax on net worth, which echoes the flat tax on financial assets that I’ve bruited. It also reflects many of the notions I suggested I’d implement if I was the Dictator of America. The basic…

  • Innovation and Market Constraints: The Case for Artificial Selection

    Bruce Wilder had an excellent comment recently in the Crooked Timber thread on markets, economic rents, and the constraints on economic actors, excerpted by Dan here, and more with comments by Jazzbumpah here. (If you like the thinking there, run don’t walk to read this windyanabasis post and comments.) The emphasis on constraints prompts me…

  • GDP and American (Non-)Exceptionalism: Again Some More

    Any knowledgeable economist will tell you that GDP (or GDP/capita) is a profoundly imperfect and non-inclusive measure of national well-being. In particular, GDP doesn’t count any work isn’t paid for with money — painting your mom’s house, volunteering for the Rotary Club or your church (David Brooks, are you listening?), caring for your kids and…

  • No: Saving Does Not Increase the Supply of Loanable Funds

    Or: It’s The Velocity, Stupid. I got quite a bit of blowback on my recent post suggesting that economists don’t understand accounting. In response I give you Exhibit A: the almost-ubiquitous notion that more saving increases the supply of “loanable funds” — hence that more saving causes or at least allows more investment. (The absolute classic…

  • David Frum Savages Charles Murray — And Rightly So

    David Frum was excommunicated from the Righties Club a few years back because he insisted on occasionally saying sane and accurate things. He continues that aberrational behavior today in his review of AEI uber-zealot Charles Murray’s new book, Coming Apart: The State of White America, 1960-2010 (which I will not link to here — no Google love from…

  • David Beckworth Scott Sumner talks very good sense sometimes

    Don’t tell me that the Dems favor fiscal stimulus because they like big government. The payroll tax cut will make it a bit more difficult to expand the size of government in future years.  (As Clinton found in 1993, when he was told the “bond markets” (i.e. the Reagan tax cuts) wouldn’t allow him to enact…

  • A Surfeit of Dearth Revisited: The Global Shortage of Safe Assets

    David Beckworth: global economic growth over the past few decades has outpaced the capacity of the world economy to produce truly safe assets Really? The U.S. could have just deficit-spent more, crediting people’s/businesses’ checking accounts and thereby increasing the global stock of the world’s safest asset: U.S. dollars. It could (by U.S. law is required…

  • What Will Be the New Economic Paradigm?

    Matt Yglesias has a great post over at Moneybox (paragraph breaks added): The need for regime change. … The Depression discredited the gold standard and a whole set of related notions. The Great Inflation discredited ideas about the Phillips Curve … We had, until recently, the Great Moderation Consensus that … the Federal Reserve has…

  • Why Economists Don’t Understand Accounting, or Business

    I just searched Harvard, U Chicago, and a few other top econ departments’ course offerings and major requirements. The string “account” barely appears. Chicago says quite explicitly: Courses such as accounting, investments, and entrepreneurship will not be considered for economics elective credit. Much less requirements! No wonder so many economists: • Have such profound misunderstandings…

  • How Accounting “Constrains” Economics

    There’s been a running discussion of this on various blogs (sorry if I missed linking some!), inflated simultaneously by Krugman and by magisterial and mysterious commenter JKH’s “paradigm riff,” here. That discussion has brought me to the following conclusions. Assuming you have a coherent and accurately representative System of National Accounts*: • Accounting, and accounting identities,…