Asymptosis: Always Approaching

Asymptosis: always approaching

  • Sectoral Balances: (Mis?)understanding NAFA and Net Lending/Borrowing

    I’ll start with the short version here: if you’re having trouble understanding sectoral “Net Lending/Borrowing” (the stuff of sectoral balances), try renaming it: Net net accumulation of financial assets. Net accumulation of financial assets (accumulation net of disaccumulation, broken out by types of assets)– Net incurrence of liabilities (new borrowing net of loan payoffs [and…

  • Your Personal Covid Risk

    I’ve spent like eighteen months trying to figure out how to think about and understand this question, in a way that lets me make what seem like sensible, everyday decisions. I think I’ve gotten there, or close. I’m sharing here in case it’s helpful to my gentle readers. I’m fully vaxxed. Here’s a typical, day-to-day…

  • Microfoundations: The Long Con

    I wrote this as a comment response to Ryan Avent’s great post on his Substack blog. (You should subscribe. I did.) I thought I’d share it with my gentle readers here. Lightly edited, including one additional paragraph at the end. ================= Hi Ryan. Great piece, thanks. A few responses: 1. “authors of published papers are…

  • Economic Origin Stories and the State of the World

    Origin stories and creation myths pack a pretty hefty weight of import in human understandings of the world. Examples are too numerous to mention. What I’ve noticed in the field of economics is that such origin stories are often taken (mistakenly) to fully explain the current state of affairs. I’m going to discuss two examples…

  • Savings Glut? “Households are Just Saving all that New Money!

    The big coronavirus stimulus programs are helicopter-dropping trillions of dollars in assets into households’ (and firms’) accounts, onto their balance sheets — all those assets created ab nihilo by government deficit spending. But as many are pointing out, households aren’t turning over many of those assets in spending, buying things — transferring the assets to firms in…

  • Household Wealth by Wealth Percentile (be prepared to scroll)

    The bottom (visible) blue line is the top 10% of households. Source: gabriel-zucman.eu/files/PSZ2017AppendixTablesII(Distrib).xlsx Table TE3 Related posts: The Poor Get Poorer Fake News from the CBO? Some Very Dicey Numbers in the New Income Inequality Report Meritocratic Opportunity: On the Decline The Global “Capital” Glut Can Rich People Provide all the Necessary Demand?

  • Buybacks Are Bad. But not for the Reasons You Think.

    The megabillion-dollar corporate bailouts raining down in the coronavirus response are giving new urgency to voices on the left excoriating corporate stock buybacks. How can we pour money into these firms, even as they pump gushers of money out the other end that could be spent on hiring and investment? Much of the pushback against…

  • Is U.S. Productivity Actually Skyrocketing?

      Our standard measure of production, GDP, doesn’t even come close to explaining the accumulated wealth of nations.   How productive are we? How much stuff do we produce for every hour we work? It’s one of the central questions of economics, and per many economists, productivity growth is the ultimate determinant of our world’s…

  • The Eighth Way to Think Like a 21st-Century Economist

    The teams at Rethinking Economics and Doughnut Economics have launched a contest for entries, asking “What’s the 8th Way to Think Like a 21st Century Economist?” It builds on Kate Raworth’s seven ways, here. Here’s my entry: 8. Widespread prosperity both causes and is greater prosperity: From false tradeoffs to collective well-being. “Okun’s Tradeoff” —…

  • Safe Assets, Collateral, and Portfolio Preferences

    Matthew Klein and Mayank Seksaria had an interesting Twitter conversation yesterday in response to a Stephanie Kelton tweet. Read it here. Here’s my understanding of the financial mechanisms they’re talking about. Government deficit spending deposits fixed-price securities (“money,” checking and money-market holdings) ab nihilo onto private sector balance sheets. These are perfectly “safe assets” in the…

  • Why the “Money Supply” Is Conceptually Incoherent

    Economists’/monetarists’ use of the term Money “Supply” reveals multiple levels of deep confusion. 1. Supply implies a flow. But they’re clearly referring to a “stock” of money: what’s tallied in monetary aggregates. 2. Even if you’re think of a stock of money: Supply is not a quantity, an amount, a numeric measure. It’s a psychological/behavioral…

  • Actually, Only Banks Print Money

    I’m thinking this headline will raise some eyebrows in the MMT community. But it’s not really so radical. It’s just using the word money very carefully, as defined here. Starting with the big picture:  You can compare the magnitude of these asset-creation mechanisms here. (Hint: cap gains rule.) The key concept: “money” here just means a…

  • Fake News from the CBO? Some Very Dicey Numbers in the New Income Inequality Report

    It didn’t take long to realize that something was very wrong. The Congressional Budget Office just released its new report on The Distribution of Household Income, updated to cover 1979–2015. One thing in particular looked very dicey right off (source xlsx): Household Capital Gains (per household, average) 2007: $8,800 2008: $4,400 2009: $2,200 Wait a…

  • The Real (Real) Wealth Effect: Do Wealth Changes Change Spending and Cause Recessions?

    My gentle readers who have followed me over time will have seen this graph and statement far too many times by now: Since 1970 in the U.S., (almost) every time you saw a year-over-year decline in real household assets or net worth, you were either just into or about to be into a recession.* It’s…

  • What Causes Recessions? A Physicists’ Complex Systems Model

    I received some very interesting comments from Yaneer Bar-Yam to my recent Evonomics post — “Capital’s Share of Income is Far Higher than You Think.” He pointed me to his very interesting paper, “Preliminary steps toward a universal economic dynamics for monetary and fiscal policy.” I’m using this space to reply with with some stuff that can’t…

  • Are Holding Gains “Pseudo” Income? A Response to Martin Sandbu

    I just noticed with pleasure that Martin Sandbu, whose work I much admire, has posted a response to a thread of posts between me and Matthew Klein. Here in chronological order: Me: Why Economists Don’t Know How to Think about Wealth (or Profits) Matthew: The virtues and pitfalls of putting capital gains into the national accounts Me:…

  • Wonky: More on Martin Sandbu’s “Pseudo” Income and Saving

    In my previous post, I replied to Martin Sandbu’s interesting response to my (and Matthew Klein’s) previous posts on holding gains, income, saving, and wealth. Here some more (accounting-dweeby) thinking on the subject, which I post here to avoid clogging the previous and making it even more overlong. Another way to explain this issue: I…

  • MMT and the Wealth of Nations, Revisited

    I just had occasion, in replying to a correspondent, to reiterate much of the thinking in my recent MMT Conference presentation. I thought it might be a useful and apprehensible form for some readers, so I’m reproducing it here. I’ve also explained this at somewhat painful length here. Correct me if I am wrong but…

  • Wealth and the National Accounts: Response to Matthew Klein

    I’m both abashed and delighted that the truly stand-out econ writer Matthew Klein has offered wonderfully fulsome praise of one of my pieces, Why Economists Don’t Know How to Think about Wealth, and some very interesting discussion as well. Some responses here. Please excuse me if I repeat some of the points from the first article. >His…

  • “In the Beginning…Was the Unit of Account” — Twelve Myths About Money

    Jan Kregel presented a great dinner speech at the recent Modern Monetary Theory Conference, touching on some of the fundamental ways we think about money and economics. (Sorry, no recording or transcript available.) I had a brief conversation with him afterwards, and we followed up with a few emails. The quotation in the title of…

  • The Mysterious Stock of “Loanable Funds”

    This Twitter thread between Ryan Cooper and Joe Wiesenthal prompts me to do full-spectrum explanation of some thinking that I’ve been meaning to get to for a while. (Thanks for the inspiration.) This is good from @ryanlcooper on why taxes are too low. https://t.co/opACPlEX5e — Joe Weisenthal (@TheStalwart) October 25, 2017 Though I'm not sure…