Friday, August 19, 2011


Yesterday's "Stan Graphs" compared the growth of real output to the growth of prices. This graph shows the same values expressed as percent change from year ago:

Graph #1

Graph #1 shows inflation rates (red) high in the middle of the picture, with real growth (blue) rates higher early and late. But less high, late. Also, the lows of inflation were higher late than early.

There are two areas where growth rates were above inflation rates for a significant time. I have highlighted them here:

Graph #2

The early 1960s, and the late 1990s. The Golden Age of Post-War Capitalism, and the Macroeconomic Miracle.

I thought more highlighting might increase the readability of this graph. Highlighting is yellow where real growth exceeds price growth. Pink where inflation rates exceed real growth rates:

Graph #3


Clonal said...

Art you should see the Steve Keen interview

He cites some interesting debt statistics that are right up your alley

The Arthurian said...

Yeah, great interview! I just finished watching it. Gotta go watch it again. Thanks, Clonal.

Clonal said...

Also from Lord Keynes - Miscellaneous Links

Steve Keen in the first post makes some important points:

“... one reason why deflation hasn’t been as sharp this time as it was in the Great Depression—even though the private debt level is higher—is that non-financial businesses are actually in less debt now than they were then. Non-financial businesses entered the Great Depression with a debt to GDP ratio of 100 per cent—well above the 75 per cent level that applied at the start of our crisis. So they don’t face the same direct pressure to service debts that led to the “distress selling” Fisher focused upon. But households are in far worse shape now than in the 1930s, with a peak debt level that is two and a half times as high as it was in 1930. That’s why the crisis now is manifesting itself in stagnant consumer demand. It doesn’t involve the same plunge into deflation as the Great Depression, but it does imply a more drawn out deleveraging, because it’s much harder for households to reduce debt than it is for businesses. Businesses can get out of debt by going bankrupt, sacking workers, and stopping investment. Households have to live with the shame of bankruptcy and the limitations it imposes on behaviour in future, they can’t sack the kids, and it’s impossible to stop consuming completely. So we may face a far more drawn out process of deleveraging than the Great Depression.”