Asymptosis: always approaching

  • The Giant Logical Hole in Monetarist Thinking: So-Called “Spending”

    Ralph Musgrave, who knows a thing or two about modern economic thinking, perfectly articulates the giant logical hole in monetarist thinking in a recent comment (emphasis mine): If the private sector’s stock of saving is what it wants at current rates of interest, then additional public spending will push savings above the latter desired level, which…

  • Liberals Getting It Wrong on the Job Guarantee

    I’ve been quite troubled lately by voices I’ve been hearing from my compatriots on the Left discussing the Job Guarantee — especially in relation to an alternative, Universal Basic Income. A new Jacobin article by Mark Paul, William Darity Jr., and Darrick Hamilton displays several of the aspects that make me uncomfortable. Get the Math Right. Right off the bat,…

  • My Letter to the Fed: Stop Misrepresenting the National Debt

    The Fed data portal, Fred, just posted a blog item that I take exception to, “suggested” by Christian Zimmermann, Assistant Vice President of Research Information Services. Here’s my response. Dear Mr. Zimmerman: I’m pleased to see that this post focuses on the interest burden of the federal debt. It’s an important measure that doesn’t get…

  • When Did Hillary Lose the Election? In 1964.

    The half-century story of Democrats’ abdication and decline By Steve Roth. Publisher, Evonomics On January 1, 1964, John F. Kennedy posthumously initiated the half-century decline of the Democratic Party, beginning its descent into this moment’s dark and backward abysm of slime. His massive tax cuts for the rich, implemented in ’64 and ’65, were the turning point and…

  • What’s All Our Stuff Worth? Tobin’s Q for America

    In recent posts on the Integrated Macroeconomic Accounts, I’ve highlighted that we have two market estimates of what America’s “capital” is worth — the cumulative sum of net investment (roughly, “book value”), and total household wealth (“market value”). I got curious: how to they compare over the decades? What’s America’s market-to-book ratio, or Tobin’s Q?…

  • David Brooks Tries to Eff the Ineffable Again

    A friend and I were discussing Brooks’ recent column about Anthony Kronman’s new book, “Confessions of a Born-Again Pagan.” I thought I’d share my thoughts here. Full disc: I haven’t read Kronman’s book, only Brooks’ column. Some good stuff in there. Love the focus on books and writers. (Though Brooks’ [and Kronman’s?] barely-concealed dog-whistle adulation…

  • No: Money Is Not Debt

    A quick note in response to recent twitter thread, and to a widespread usage that I find to be deeply problematic. You constantly hear very smart thinkers about money saying that money is debt. I strongly disagree. It’s not a useful way to think about money. Quite the contrary. Balance-sheet assets designating the value of claims may…

  • Economists Agree: Democratic Presidents are Better at Making Us Rich. Eight Reasons Why.

    In 2013, economists Alan Blinder and Mark Watson — no wild-eyed liberals, they — asked a very important question: Why has the U.S. economy performed better under Democratic than Republican presidents, “almost regardless of how one measures performance”? Start with their “performed better” assertion: it’s uncontestable. While you can easily cherry-pick brief periods and economic measures that…

  • Noahpinion: What Causes Recessions? Debt Runups or Wealth Declines?

    Noah Smith asks what seems to be an interesting question in a recent post: “what leads to big recessions: wealth or debt”? But I’d like to suggest that it’s actually a confused question. Like: is it the heat or the (relative) humidity that makes you feel so hot? Is it the voltage or the amperage…

  • How Perfect Markets Concentrate Wealth and Strangle Growth and Prosperity

    Capitalism concentrates wealth. Ridicule Marx and his latter-day disciples all you like (I’ll help); he definitely got that right. But capitalism is a big word with lots of meanings, and enough ideological baggage to fill a Lear Jet. Let’s talk about something more precise: perfect markets, with ownership, in which individuals compete with others to produce stuff,…

  • You Don’t Own That! The Evolution of Property

    Get off my lawn. In a recent post on the “evolution of money,” which concentrated heavily on the idea of (balance-sheet) assets, I promised to come back to the fundamental idea behind “assets”: ownership. Herewith, fulfilling that promise. There are a large handful of things that make humans uniquely different from animals. In many other…

  • Note To Economists: Saving Doesn’t Create Savings

    Is Saving a Sin? If you save more, if everybody collectively saves more, there are more savings, right? There’s more money that firms can borrow and invest to make us all more prosperous. Household saving “funds” business investment, so if we all save more, the world will be more productive and prosperous. You hear this all…

  • Why Economists Ignore So Much of Rich People’s Income

    I have a new post up at Evonomics, hoping my gentle readers will find it of interest…   Related posts: Why Prosperity Requires a Welfare State Now (Also) Blogging at Angry Bear Bleg: Fama/French on Market Size and Efficiency Question for Market Monetarists and MMTers: What Happens if IOR Goes to Zero? Bleg: Accounting for…

  • Yes: Concentrated Wealth and Inequality Crushes Economic Growth

    Like it or not, if countries want to join the “rich country-club,” they need to redistribute wealth. What has not been studied much — at least partially because the data is hard to come by — is the distribution of wealth within countries, and how that relates to economic growth. My devoted readers will undoubtedly remember…

  • Did Money Evolve? You Might (Not) Be Surprised

    You probably won’t be surprised to know that exchange, trade, reciprocity, tit for tat, and associated notions of “fairness” and “just deserts” have deep roots in humans’ evolutionary origins. We see expressions of these traits in capuchin monkeys and chimps (researchers created a “cash economy” where chimps were trained to exchange inedible tokens for food,…

  • Why Tyler Cowen Doesn’t Understand the Economy: It’s the Debt, Stupid

    In a recent post Tyler Cowen makes an admirable effort to lay out his overarching approach to thinking about macroeconomics, revealing the assumptions underlying his understanding of how economies work. (Even more salutary, this has prompted others to do likewise: Nick Rowe, Ryan Avent.) Cowen’s first assertion: In world history, 99% of all business cycles are real business…

  • Wait: Maybe Europeans are as Rich as Americans

    I’ve pointed out multiple times that despite Europe’s big, supposedly growth-strangling governments, Europe and the U.S. have grown at the same rate over the last 45 years. Here’s the latest data from the OECD, through 2014 (click for larger): And here’s the spreadsheet. Have your way with it. More discussion and explanation in a previous…

  • Why Prosperity Requires a Welfare State

    I’ve got a new post up at a new site, Evonomics Magazine (“The next evolution of economics”). It’s an impressive offshoot with some great articles, assembled by folks involved with The Evolution Institute, which I’m a big booster for. My readers here will find much familiar in the post, but I’m happy with how it…

  • Thinking About “Assets” and Ownership

    My gentle readers will know that I often struggle with economic terminology, both because I find usages are so vague, various, and poorly defined, and because I’m trying to understand fundamental terms’ fundamental meanings. Today I’d like to home in on one of the most fundamental — “assets” — and something even more fundamental that underpins…

  • Thinking about Value, and the National Accounts

    The remarkable discussion on “national wealth” and the national accounts that is running over at Interfluidity (373 comments and counting…) in response to my last post prompts me to recount an anecdote that I think is germane. I took exactly one accounting class in my life, at the NYU MBA school — essentially Accounting for…

  • Where MMT Gets Its Accounting Wrong — And Right

    Modern Monetary Theory has been revolutionary in economics, and its influence is — beneficially — ever-more pervasive. It has opened the eyes of a generation to a clear-eyed, accounting-based methodology that trumps dimensionless theory, and has brought a deep, nuts-and-bolts understanding of money, debt, and financial institutions to a discipline where that understanding has been inexcusably…