Category: Economics

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…

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…

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:…

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…

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…

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…

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…

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?…

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…

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…

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…

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…

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,…

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…