tag:blogger.com,1999:blog-2098432983500045934.post2701490437390807563..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Day 16, Page 12The Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2098432983500045934.post-46424371005262681762014-12-06T00:40:08.266-05:002014-12-06T00:40:08.266-05:00Yes: Safety mechanisms postpone the moment of cris...Yes: Safety mechanisms postpone the moment of crisis, while allowing the underlying problem to grow worse. It is like <a href="http://newarthurianeconomics.blogspot.com/2011/02/whaddya-mean-its-not-economics.html" rel="nofollow">preventing small forest fires</a>.<br /><br />Perhaps it is this way:<br /><br />When the rate of interest (or net interest income) is rising, the "F" (financial) and "P" (productive) sectors are both doing well.<br /><br />When the rate of interest is falling, it means that in order for finance to do well, "F" must coddle "P". Finance must provide inducements by lowering the rate of interest. The interest rate then continues to fall while "P" deteriorates. But falling interest income means that "F" is deteriorating as well. Eventually comes the crisis, the debt-per-dollar peak. For a while, then, only few do well.<br /><br />If you can ignore the circus colors, see <a href="http://newarthurianeconomics.blogspot.com/2012/07/untended-this-pattern-will-repeat.html" rel="nofollow">this graph</a>.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-26009826854932304232014-12-04T19:15:17.403-05:002014-12-04T19:15:17.403-05:00It's suggestive, but it would put the "Gr...It's suggestive, but it would put the "Great Recession" into the 80s instead of 2008, wouldn't it? (Maybe the delay is the action of all of the safety mechanisms put in place the first time around. In which case, the mechanisms bought time (20 years!) for policymakers to fix it before the crisis hit. We just had the wrong policymakers.)Jerrynoreply@blogger.com