Sunday, August 7, 2016

About the vigor created by our next President


"The underlying reality of low growth", Neil Irwin says, "will haunt whoever wins the White House in November". I don't think so. I expect vigor, no matter who wins the White House in November.

I think it would be pretty ironic if Hillary Clinton gets elected. Because what I'm looking at amounts to vigor starting about a year into the first term of the next U.S. President. If Hillary is elected, we will be hearing stories that it takes a Clinton to create economic vigor. But Bill Clinton had no more to do with the good economy of the 1990s than Hillary does with the good economy of 2018-2024.

It would be more accurate to say that the changes which created the good years of the latter 1990s happened mostly during the Reagan and H.W. Bush years; and that the changes which will create the good years to come happened mostly during the Obama years.

For the record, the vigor of the 1990s was made possible by a big drop in debt growth (1985-1991) combined with a big increase in spending money (1990-1994). The debt-per-dollar ratio shows this as a decline (1990-1994). That decline was followed by unusually rapid increase (1995-2000). This increase was the source of the funds that made vigorous growth possible in the latter 1990s.

The changes are indicated in red on the graphs below:

Graph #1: The Growth of Total Debt
Graph #2: The Growth of Spending Money
Graph #3: The Debt-per-Dollar Ratio

You can see the same effects in the graph of household debt service.

Graph #4: Household Debt Service

The stage has already been set for the vigor that will be attributed to our next President.

4 comments:

The Arthurian said...

Arthurian monetarism.

Michael Leddy said...

I read and understood everything in this post. (There’s usually a lot I don’t quite get — which reflects on me, not on you.) I hope what you think will happen does happen.

The Arthurian said...

Thank you, Michael!

The Arthurian said...


At FiveThirtyEight, The Economy Is Keeping ‘Reluctant’ Trump Voters With Him:

"More than one year in, reluctant Trump voters are generally still happy that they voted for Trump. In the most recent survey, 57 percent of reluctant Trump voters said they had no regrets about their vote, though 28 percent said the jury was still out. For a comparison, 83 percent of all Trump voters said they had no regrets, while 11 percent said the jury was still out.

Most importantly, our latest survey shows that the president is making some inroads with these reluctant Trump voters, however gradual, and that the economy is a big reason why.

In April of last year,2 our survey found that only 14 percent of reluctant Trump voters strongly approved of the job the president was doing. In the latest iteration of the survey, that number had ticked up to 22 percent. This could be due in part to reluctant Trump voters’ views of the economy...
"