tag:blogger.com,1999:blog-2098432983500045934.post590803918134169630..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Dancing with SteveThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-2098432983500045934.post-38724199764875227192012-03-01T06:52:08.517-05:002012-03-01T06:52:08.517-05:00JzB:"First off, you are dealing in decimal du...JzB:"First off, you are dealing in decimal dust."<br /><br />My point exactly. To find a time when income rises faster than debt, you have to chop up the timeline into very small pieces.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-83614936638426228752012-02-12T22:09:36.389-05:002012-02-12T22:09:36.389-05:00RE: the update, which I just discovered.
First of...RE: the update, which I just discovered.<br /><br />First off, you are dealing in decimal dust. But, even at that level, you find the YoY change in GDP moving pretty much in lock-step with Debt/GDP.<br /><br />http://research.stlouisfed.org/fred2/graph/?g=4Z2<br /><br /><i>THOSE were the years when debt was "productive"??? </i><br /><br />Yep!!!<br /><br />Cheers!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-19440330412141183222012-02-12T21:52:01.724-05:002012-02-12T21:52:01.724-05:00I'm arguing against excessiveness, actually.
...<i>I'm arguing against excessiveness, actually.</i><br /><br />I can agree with that. It's tough to draw that line, though.<br /><br />I really think you should give some more consideration to the causes of indebtedness and the various uses of productive and non-productive debt.<br /><br />Cheers!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-11475136047794315552012-02-12T19:35:54.027-05:002012-02-12T19:35:54.027-05:00I'm arguing against excessiveness, actually.
...I'm arguing against excessiveness, actually.<br /><br />I have a good argument too, I think, about why as the level of debt increases it tends to favor speculation and non-productive uses more and more. But maybe I have not made that argument yet. I can't keep track :)The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-42158000240779990602012-02-12T17:07:05.051-05:002012-02-12T17:07:05.051-05:00i'm not arguing in FAVOR of speculation.
I re...<i>i'm not arguing in FAVOR of speculation.</i><br /><br />I realize that. But you seem to be arguing AGAINST any and all debt, all the time.<br /><br />That is my point of disagreement.<br /><br />Cheers!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-60347971864864073272012-02-12T14:39:44.013-05:002012-02-12T14:39:44.013-05:00jfc i'm not arguing in FAVOR of speculation.jfc i'm not arguing in FAVOR of speculation.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-7577497522926059182012-02-12T14:05:39.867-05:002012-02-12T14:05:39.867-05:00Art -
I come down squarely on Keen's side, an...Art -<br /><br />I come down squarely on Keen's side, and after this post, I'm quite surprised you don't, as well.<br /><br />http://newarthurianeconomics.blogspot.com/2012/02/private-debt-2012-6-evaluating-public.html<br /><br />Jim as it quite right, and your statement, "Debt is NEVER productive," is quite divorced from reality. <br /><br /><i>What I see is that debt ALWAYS "rises faster than income"</i><br /><br />Have another look at Fig. 1 of the current post; no growth from 1960 through the mid 70's. Very little growth over the first three decades shown. <br /><br />And where is the break point? right after 1980. Hmmmmm.<br /><br />http://www.angrybearblog.com/2012/01/where-has-all-money-gone-part-ii.html<br /><br />Debt that is used for investment to create wealth is clearly good. Keen is right.<br /><br />Debt that is used for unmitigated rent-seeking is clearly bad. I again cite the unregulated market in derivatives - which contributes 0.000 to real investment - notionally valued at 10 to 25 x aggregate global GDP.<br /><br />I'm ambiguous about consumer debt. It's a burden on the borrower, but enables demand, which enables businesses, and the economy in general. Here is where ability to service personal debt comes most obviously into play.<br /><br />And once again, I'll emphasize that debt is a symptom, not the core problem. The problems of rent-seeking, speculation, and low wages leading to debt are the direct results of neoliberal policies.<br /><br />http://jazzbumpa.blogspot.com/2012/02/quotes-of-day-markets.html<br /><br />WASF!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-77287043728304518882012-02-12T13:23:59.316-05:002012-02-12T13:23:59.316-05:00There is always some productive and some unproduct...There is always some productive and some unproductive debt. Right now it looks to be mostly productive. The evidence of that is that GDP is growing faster than debt. Nobody is signing a mortgage today because they believe the price will shoot up. Today borrowers are now making the same calculation they used to make in the 50's that the monthly cost of ownership will be less than their monthly cost of renting. The calculation has no inclusion of any expectation that the asset will increase in price and may even include some expectation of a fall in price.<br /><br />It seems obvious that<br />1940-1980 did not have an over-abundance of speculative debt.<br /><br />http://www.comstockfunds.com/files/NLPP00000%5C530.pdf<br /><br />My take on that is that there was still a memory of deflation of the 30's and therefore very much less of the willingness to gamble on rising prices. The point Keen makes is that it is the gambling on rising prices that creates these rising prices.<br /><br />I agree that you can state without reservation that at some point the volume of credit can be bad in the same sense that at some point eating can be excessive.jimnoreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-7842345932589116842012-02-12T10:35:33.186-05:002012-02-12T10:35:33.186-05:00Jim
So what are you defending? When was debt ever...Jim<br /><br />So what are you defending? When was debt ever "productive"? How many decades back do we have to look? <br /><br />In my view the increasing reliance on credit increases the factor cost of money which makes finance more profitable, and makes labor and non-financial business relatively less profitable (which drives more money into finance)...<br /><br />CREDIT USE is ALWAYS productive TO THE BORROWER. But this is a micro-economic evaluation that has no bearing on macro-economic conditions.<br /><br />Debt is NEVER productive. It is always the burden that remains after the ejaculation of credit use is finished.<br /><br />Anyway, who watches the watchers? Who decides what is "speculative"? <a href="http://newarthurianeconomics.blogspot.com/2012/02/debt-good-bad-and-ugly.html" rel="nofollow">Moritz</a><br />suggests that borrowing to buy a home is a non-productive use of debt. Maybe we should all live in tents?The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-68042260642860715222012-02-12T09:29:02.802-05:002012-02-12T09:29:02.802-05:00Hi Art,
you wrote:
Keen's explanation is wro...Hi Art,<br /><br />you wrote:<br /><br />Keen's explanation is wrong. It suggests that if all the debt was productive debt, there would have been no problem. That's blindly optimistic. Accumulating debt would have created the crisis eventually, no matter how you label that debt.<br /><br />_______________________<br /><br />On its face this comment makes no logical sense.<br /><br />Productive debt means, by definition, that income (production) grows faster than debt.<br /><br />If you have people borrowing where the economy always grows faster than the debt how can the debt create a crisis eventually?<br /><br />Keen's point is that speculative debt by definition will cause real growth to be lower (slower) than the debt. And that eventually means the debt grows to the point that the economy cannot support it.<br /><br /><br />If you see that debt always rises faster than income, that is because you are only looking at unproductive debt. <br /><br />The evidence indicates that in the US speculative debt crowded out most productive debt decades ago.<br /><br />_______________________jimnoreply@blogger.com