Tuesday, January 25, 2011

I Don't Want to Read Too Much Into This Gallup Poll, But...

It is highly suggestive of an excess money demand problem. This poll finds that concerns about a "lack of money/low wages" is the most important financial problem American face.  This concern trumps healthcare costs and too much debt.  Now, the respondents may be thinking more in terms of not having enough income rather than not having enough medium of exchange, but still given all the talk about balance sheet recessions it is interesting that this "lack of money/low wage" concern is more important than too much debt. Here is a summary figure of these concerns since March, 2009: (Click on figure to enlarge.)

Between the findings from this Gallup poll and the data shown in this post, you can forgive me for thinking that maybe, just maybe there still is an excess money demand problem.


  1. OMG, DB, you are starting to remind me of Solow on Friedman: "Everything reminds Milton of the Money supply. Well everything reminds me of sex but I keep it out of my papers"

  2. Duh. People want more income now--business and labor want more work.
    No one is turning away work, no one is breezily raising prices.

    We could pour money out of wheelbarrows in low-moderate income neighborhoods to good effect (save for some moral hazard--people get money for nothing).

    I suggest we run national lotteries that pay $2 for every $1 taken in, but in $100 winning tix.

    This would eliminate moral hazard, as you had to risk capital to win. That sounds almost like virtue, doesn't it?

    Yes, demand is weak, demand is weak, demand is weak.

  3. I think you're pushing it with this example.

    One could also say that low wage concerns are an indication that prices in the labour market have already fallen, and the money-for-labour market is now clearing. No excess demand for money.

    Whatever the case, trying to show that there is an excess demand for x is pure speculation, unless - I suppose - you can see actual lines forming.

  4. It's very easy to confound variables here. Whether somebody thinks about "low wages" or "too much debt" is going to depend a lot on atmospheric conditions. Higher wages would make the debt less of a problem.

    OTOH, health care costs are only a problem if you're sick now, or paying off medical bills - which could be too much debt.

    However you slice it, those three things collectively are problems effecting 41% of respondents.

    This could account for some of the high money demand. Money is one of those things you don't think much about, unless you have a lack.


  5. Okay, okay,...I will exorcise this monetary disequilibrium spirit from me now!