Paradox of thrift goes way back.It’s always an unspent income story…;)The Center of the UniverseThere is that scattereth, and yet increaseth; and there is that withholdeth more than is meet, but it tendeth to poverty.
The liberal soul shall be made fat: and he that watereth shall be watered also himself.—Proverbs 11:24–25
Proverb, Expected Household Spending, my RT interview
Warren Mosler
Warren Mosler: "Total consumer spending has not gone up. The growth rate is slipping."
ReplyDeleteFirst of all, those are two entirely different statements.
Second of all, Personal Consumption Expenditures since the third quarter last year, when oil started to tank, are up nearly $300 billion and Gross Private Domestic Investment is up $35 billion (non-residential up $22 billion).
So, what the hell is he talking about?
Bottom line: if you've invested based on Mosler's outlook over the last three years you lost your ass. "Euro gets harder to get."
Mosler: "The spending just isn't there."
ReplyDeleteYeah, okay, I guess $4.3 trillion in Federal spending is not something to pay attention to according to him. The highest spending in five years.
Talking his book. That's it.
Warren Mosler does have a language all to himself, and on the whole I can't make head or tail of his insider finance speak, but as far as I can make out in this case he's quite right. There isn't enough consumer spending. Government has to make up the shortfall. It isn't, and the US economy is suffering unnecessarily.
ReplyDeleteAnyway, GDP figures and all the headline grabbing figures mean little. What matters is how average working Americans measure their lives. Many of these figures are starting to look increasingly ominous, especially the ones regarding the quality of jobs being created.
Not only is the average working American getting royally fucked, the rest of America is being increasingly left on the breadline. As Stiglitz says, your only solution is to find a way of joining the 1%, or the 1% of the 1%.
Another solution might be to stop listening to unqualified people like Stiglitz ...
ReplyDeleteMike,
"Personal Consumption Expenditures since the third quarter last year, when oil started to tank, are up nearly $300 billion "
This is pretty significant and perhaps evidence of a pick up in "velocity" due to the collapse in previous monopoly rent in the oil price ...
GDP means little, I agree, at least in terms of how the wealth is spread around, but it's still a measure and he's been saying recession for, forever, and he's been wrong.
ReplyDeleteOn the other hand, who cares who spends as long as some entity spends more than their income.
Now he's saying it HAS to be consumers or businesses?
This guy will never admit when he's wrong...EVER.
Mosler, have some humility, please.
Mike I was looking at it this AM....
ReplyDeleteWhen Bush II took over his first year 2001, net spending was $2.175T and his last year 2008 it was $3.435T so a 58% increase in the 8 years...
Obama took over in 2009 and that year we had an adjusted spending of $4.236T... a similar 58% increase over those 8 years would result in spending of $6.693T in Obama's last year next year in 2016....
We are short of this measure by over $2T annual....
"There is that scattereth, and yet increaseth; "
ReplyDeleteThere is that issue-eth, and yet alloweth agents to leverage-eth...
or alternatively:
There is that borroweth, and yet default-eth....
"Another solution might be to stop listening to unqualified people like Stiglitz ..."
ReplyDeleteIt's not that he is the solution. It's simply that if a once neoliberal cheerleader like Stiglitz is essentially ditching everything he's ever advocated, and is telling everyone to essentially abandon all hope because the system as it is currently set up is set up to rip you off, he's worth listening to.
He's not Bill Mitchell, and he may be in many respects unqualified, but for once he's on the side of the angels. And he reaches a gigantic audience. That's all good. As they say, Why make the good the enemy of the best?
In any case, I think that his reply to "join the 1%" is in fact right. Bill Mitchell's latest blog informs us that the global 1% owns more than the 99%. This dynamic is not about to stop. How long before the 1% of the 1% own pretty much everything?
Stiglitz's moral is either join it (impossible), overthrow it (currently unthinkable), or get royally fucked over (the most likely outcome).
" but for once he's on the side of the angels."
ReplyDeleteThat's not good enough I'm sorry...
John just because HE doesnt know what to do doesnt mean we have to listen to him...
ReplyDeleteThe guy is lost.... he should be challenged...
Matt, challenged on what? A lot of what he says makes perfect sense.
ReplyDeleteHe's saying the 1% are a problem, and the increasing concentration of wealth has to be stopped and reversed. Private debt is a problem. The quality of jobs created is a problem. The pitiful social programs on offer are a problem. The lack of government spending is a problem. The so-called trade agreements are a problem. Financial capital in general is a problem and needs to be put back into a tiny box. The system of so-called globalisation we currently have is a problem. What's to disagree with?
How many economists are saying any of this? On the contrary, many are saying that there's been too much government intervention on behalf of working people! Social security, medicare and medicaid need to be privatised! More "free trade" is needed! WTF?
He's late to the party, but his diagnosis is near spot on. Given the staggering scale of the socioeconomic problems, I agree that his solutions are a long way off what we need, but they're a helluva lot better than almost everything out there.
What Stiglitz is saying is considered so radical that he's become almost persona non grata in the economics profession. I don't expect him to become Bill Mitchell, but some kudos for his willingness to say the unsayable and in the process become something of an untouchable. Do you think he could win the Nobel Prize, become chief economist at the world bank, become chairman of the council of economic advisers, or become an Ivy League professor if he had said then what he's saying now?
I'll carry on the quoting of scripture: "I say unto you, that likewise joy shall be in heaven over one sinner that repenteth, more than over ninety and nine just persons, which need no repentance."
Anyway, what is it about his joke about joining the 1% do you find so objectionable? It's a half-decent joke and it happens to be true!
I say, join the 1%. Take my Forex course!
ReplyDelete"Makes the euro harder to get" is ridiculous. From the guy who constantly says, "it's about price, not quantity."
ReplyDelete"A lot of what he says makes perfect sense."
ReplyDeleteIncluding keeping 5% of the population unemployed in perpetuity?
The 'borrow a bit more to spend on infrastructure but not too much' is a sop to the corporate masters they represent.
There is nothing radical in anything these guys are saying. There never say put the public purpose front and centre - then let the private sector use what is left.
And in particular there is never a solution to deal with the people that the private sector choose not to use. They are just ignored, or at best thrown a few crumbs.
The left should just ignore him imo Neil ....
ReplyDeleteJohn none of those institutional concepts are a problem if they are administered correctly...
"Private debt is a problem." ????? This is not a problem if borrowers have sustained income to service the debt... who would even say something like that? Loans are successfully paid off ALL THE TIME... Unless they dont understand it...
Here's another scripture: "Stupid and blind!" and another: "expose, rebuke and entreat"
The guy (Stiglitz) is not qualified.... I wouldnt trust him to change the oil in my car much less listen to him try to comment on policy effecting an entire economy....
Neil: "There is nothing radical in anything these guys are saying."
ReplyDeleteSure, for people like *us* his proposals aren't radical at all. They're pretty much the centrist post-war consensus economic views. As I've said, he's no Bill Mitchell, but then again who is?
He wants to take the world back to the Clinton years or, if he's really radical, possibly something like the late sixties and early seventies, whose problems were markedly different. That tells you something about how far right the political and economic spectrum has shifted that Stiglitz's policies are considered a Maoist outrage.
But let's be fair to Stiglitz, he's come a long way and does advocate some decent policies. Unlike most of his colleagues, he's been pretty good on TPP, and he does bang on about inequality. And you're quite right about his attitude to unemployment. Economists like him are stuck in the fantasy world of the Phillips curve and the NAIRU.
It is also true that if you want good public policy economics, Stiglitz isn't the ideal candidate. And neither is Robert Reich or other centrist Clintonistas. If you want good public policy, James Galbraith is probably your man.
Matt, private debt is a problem! By definition, debt is a problem when it isn't serviceable. At the moment it is just about serviceable for a very large number of people. The western economies are set up in a way that the one predictable outcome is unserviceable debts or debt peonage, to use Michael Hudson's terminology, followed by the swift collapse of the financial sector. Even centrists like Stiglitz, Krugman and Reich see that. The financial sector's power and scope has to be cut down to size, average wages have to rise dramatically, the scope of the public sector has to be increased and cheap homes built by the million every year. Again, even renegade centrists like Stiglitz advocate that!
Crikey, all I said was Stiglitz has advocated *some* good policies and made a pretty good joke about joining the 1%. I didn't say he was an economist with the solutions to our problems! It may well be the case that MMT and other PK schools of thought will be found wanting. It is a possibility that humanity's problems are too great to salvage any aspect of the system at all!