Month: July 2013
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Not Spending is Not Investment
I see this logical error so constantly, almost every day, that I feel the need to reiterate. Personal saving, virtuous and useful as it is for individuals, does not increase investment. This is what I call the “lump of money” fallacy (a.k.a. the loanable funds model). Ask yourself: If you transfer $10K from your bank…
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Understanding Effective Demand with Edward Lambert
A few people have asked me to provide a quick introduction to Edward Lambert’s recent work on Effective Demand, which work I’ve mentioned a few times. That’s ironic, because I made those mentions in hopes that more-accomplished others would do the same for me. That help hasn’t been forthcoming, because quite a bit of work…
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An Important New Book on Income and Wealth Inequality
I just got an email from LIS (the group that runs the Luxembourg Income Study and Luxembourg Wealth Study) giving notice of a new book: Income Inequality: Economic Disparities and the Middle Class in Affluent Countries Contrary to the title, there’s a whole section on wealth inequality. The book’s 17 chapters by 17 established researchers/research…
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The Appalachia Map, Yet Again
Lots of desperation talk these days by Republicans hoping to win future national elections by increasing their share of the “missing” white vote, while ignoring all those brown people. (Sean Trende’s piece seem to be the epicenter at this moment.) Nate Cone drives a very effective stake through the heart of that zombie ambition here, with…
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Humans’ Comparative Advantage: Wanting Things
Frances Coppola sums up and expresses a great deal of great thinking in her recent Pieria piece, The wastefulness of automation. I’d like to highlight one point, one that I’ve been pondering for a long time. There’s one area where machines — until they get sentient — can’t replace people (here from her response in comments): only…
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The So-Called Credit Crunch, Again Some More
It’s really hard to kill this meme. Note the label on this graph from today’s Free Exchange post: Now change that heading to read “Business borrowing.” Sort of gives a different impression, right? The idea that the problem’s on the supply side is pervasive, and false or at least wildly overblown. Lending rates are at…
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Asset Reflux Disease: Explaining Koo to Krugman
Or: Why Banks Aren’t Like People Steve Keen does a good job of addressing Paul Krugman’s befuddlement with Richard Koo’s balance-sheet-based thinking, here, with detailed models showing how funds flow and stocks change over time. I’d like to address it more succinctly and I hope intuitively, by pointing out a simple misunderstanding that Paul shares…