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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…

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…

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…

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…

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…

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?

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…

  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 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” —…

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…

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…

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…

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…

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…

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…

The American Legislative Exchange Council — which authors ultra-conservative legislation and promulgates it to state legislatures nationwide — has a little index measure of states’ “competitiveness,” which supposedly results in greater prosperity for those states that rank highly. Does it? Let’s let the numbers speak for themselves: Source (PDF). Cross-posted at Angry Bear. Related posts:…

Ryan Avent’s excellent post at The Economist finally provides me the impetus to respond to Josh Mason’s comments on my recent post. I suggested:  What we have instead of a Global Savings Glut is: 1. A Global Labor Glut: more human effort and ability available than is needed to provide goods that provide high aggregate…