tag:blogger.com,1999:blog-5713178645208582139.post4802301576727095816..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: It Is Never Too Late: Global Economic Collapse EditionDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-5713178645208582139.post-18295159868795710172012-05-17T05:05:31.827-05:002012-05-17T05:05:31.827-05:00It seems to me that the accounts here are not inco...It seems to me that the accounts here are not incompable. The bust in 2008 invalidated a range of economic activity - not just construction employment (which Krugman likes to focus on) but housing investment, financial intermediation and boom retail. Because of a lack of recognition and liquidation, some of the zombie investments associated with these activities (non-performing mortgages, RebelEconomisthttps://www.blogger.com/profile/13241098878248190971noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-22754189529660382022012-05-16T18:55:25.616-05:002012-05-16T18:55:25.616-05:00On "Moreover, if your structural story were t...On "Moreover, if your structural story were true one would expect to see the other series (regulation, labor quality, etc) soar too."<br /><br />I don't necessarily think this is true. Here is an example.<br /><br />Industry A employs a large % of the workforce at a wage above the norm for the economy.<br /><br />Something happens that causes the demand for A to fall dramatically.<The Liquidationisthttp://liquidationist.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-18992595416868824152012-05-16T18:51:48.131-05:002012-05-16T18:51:48.131-05:00Liquidationist:
if you look at (for example) the N...Liquidationist:<br />if you look at (for example) the NFIB survey, it is not true that at all times companies say lack of demand is the #1 problem. During more normal times it can be things like lack of qualified labor, regulations, etc.<br /><br /><i> MMist not have expected that in this 3 1/2 years of reasonable NGDP growth that some of the price rigidities </i><br /><br />I think that's a dwbhttps://www.blogger.com/profile/02799793864068767226noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-71882104769469134322012-05-16T18:41:01.044-05:002012-05-16T18:41:01.044-05:00I will need to spend some time studying up on Divi...I will need to spend some time studying up on Divisia to understand how that is relevant to the discussion.<br /><br />I do have a question. <br /><br />MMist appear to believe that the fall in NGDP in 2008 is still having a significant effect on RGDP in 2012, despite increases in NGDP since then that (more or less) have been in line with the previous trend (and not far below what MMist The Liquidationisthttp://liquidationist.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-76687356046424607872012-05-16T17:20:05.157-05:002012-05-16T17:20:05.157-05:00Liquidationist:
Scenario 1. An increase in the de...Liquidationist:<br /><br /><i>Scenario 1. An increase in the demand for money causes the volume of transactions in the economy to decline and a recession.<br /><br />This should cause downward pressure on prices and be relieved by either prices actually falling or by the money supply increasing in response to the increased demand.<br /><br />However prices have not really fallen much since 2008, David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-62770914389539563542012-05-16T17:02:07.872-05:002012-05-16T17:02:07.872-05:00Anonymous,
Show me that NGDP is back on line. Th...Anonymous,<br /><br />Show me that NGDP is back on line. There are very few observers, including those who are not fans of NGDP, who will make that argument. For example, take a look at the CBO's estimate of where NGDP could be relative to where it is. http://research.stlouisfed.org/fred2/graph/?g=7h4<br /><br />I agree that deleveraging is a drag, but only because the Fed has failed to David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-82505639873147337312012-05-16T16:17:20.027-05:002012-05-16T16:17:20.027-05:00I can envisage 2 scenarios.
Scenario 1. An incre...I can envisage 2 scenarios.<br /><br />Scenario 1. An increase in the demand for money causes the volume of transactions in the economy to decline and a recession.<br /><br />This should cause downward pressure on prices and be relieved by either prices actually falling or by the money supply increasing in response to the increased demand.<br /><br />However prices have not really fallen much The Liquidationisthttp://liquidationist.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-20283453918572706092012-05-16T15:02:41.079-05:002012-05-16T15:02:41.079-05:00Dave, you cannot tell me that the current nominal ...Dave, you cannot tell me that the current nominal spending rate is out of line. It clearly is back toward its trend after the boom. <br /><br />Nominal spending is not the problem. There is plenty of income to tap into. The problem is that deleveraging isn't over and debt is still clogging the system. Your NGDP targetting would just fill financial coffers while leaving the real economy to rotAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-59345006381873330832012-05-16T11:22:26.434-05:002012-05-16T11:22:26.434-05:00Alas, David, it appears Draghi says that the ECB w...Alas, David, it appears Draghi says that the ECB will not keep Greece in the Eurozone "at any cost". What I would give for them to hit their absurd 2% target, much less go for something like NGDP!Ravinoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-22838625593966236982012-05-16T05:28:26.613-05:002012-05-16T05:28:26.613-05:00"There is no means of avoiding the final coll..."There is no means of avoiding the final collapse<br />of a boom brought about by credit expansion. The<br />alternative is only whether the crisis should<br />come sooner as a result of a voluntary<br />abandonment of further credit expansion or later<br />as a final and total catastrophe of the currency<br />system involved." --Ludwig von Mises, Human Action<br />(pg 572)<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-55683299991860069872012-05-15T23:15:25.737-05:002012-05-15T23:15:25.737-05:00Anonymous, a better argument is not that NGDP has ...Anonymous, a better argument is not that NGDP has returned to trend (it has not) but that potential GDP has fallen thus nullifying the previous pre-boom trend. Here too I think the evidence is scant.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-70904622481780495152012-05-15T23:13:48.118-05:002012-05-15T23:13:48.118-05:00Anonymous,
NGDP back on trend? On what basis do y...Anonymous,<br /><br />NGDP back on trend? On what basis do you make that claim? This is not a question of reaching the previous peak, but of returning to the path of NGDP expected by the public prior to the crash. Even if one accounts for the housing boom period NGDP is still well bellow any reasonable trend. <br /><br />See here:http://macromarketmusings.blogspot.com/2011/01/David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-31370795426099639262012-05-15T23:09:42.375-05:002012-05-15T23:09:42.375-05:00The Liquidationist,
"[It] seems odd that RGD...The Liquidationist,<br /><br /><i>"[It] seems odd that RGDP has increased as slowly as it has since if the reason for the original fall in RGDP was purely deficient demand.</i><br /><br />It isn't odd at all if aggregate demand has been depressed since 2008, which is very point that many observers are making. I am interested to hear your evidence for why most of the slump can be David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-11865598421577075582012-05-15T22:16:04.576-05:002012-05-15T22:16:04.576-05:00Yes, it looks like to me NGDP is back on track aft...Yes, it looks like to me NGDP is back on track after its surge during the boom's burst. <br /><br />You would be better off increasing government purchases into some real fixed investment that could actually create some jobs. <br /><br />Looks like to me, NGDP targetting would blow another bubble sky high in finance without improving the real economy one iota.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-19749661449878668542012-05-15T13:21:06.801-05:002012-05-15T13:21:06.801-05:00The chart you display shows NGDP on a fairly consi...The chart you display shows NGDP on a fairly consistent upwards trend of around 5% a year apart from a sharp drop in 2008.<br /><br />The Market Monetarist story appears to depend up the fact that this NGDP drop from 4 years ago is still driving low AD in 20012 despite the fact that that NGDP has increased steadily since that time.<br /><br />MMist propose a NGDP target of 5% based on the idea The Liquidationisthttp://liquidationist.blogspot.com/noreply@blogger.com