J. W. Mason — Saving and Borrowing: A Response to Klein

Yes, we are still arguing over terms like "saving" and "borrowing." JW Mason clears some of it up.

J. W. Mason's Blog
Saving and Borrowing: A Response to Klein
JW Mason | Assistant Professor of Economics, John Jay College, City University of New York

JW Mason — "Disgorge the Cash" at the Roosevelt Institute

I have a working paper up at the Roosevelt Institute, as part of their new Financialization Project.

The Slack Wire

"Disgorge the Cash" at the Roosevelt Institute

JW Mason | Assistant Professor of Economics, John Jay College, City University of New York

Dirk Ehnts — M2 developments in the euro area (2003-2011)

The big question in Europe: is the collapse of the economies of Greece, Spain and Ireland caused by a decline in the monetary aggregate M2, or is the economic decline causing M2 to fall? I would argue the latter, as lenders frantically try to pay off existing back and new borrowing is very low. Not everybody agrees with that. Here is Milton Friedman and Anna Schwartz....

econoblog101
M2 developments in the euro area (2003-2011)
Dirk Ehnts | Berlin School of Economics and Law

Matthew Boesler — Richard Koo Answers The Most Critical Question About The Western Economies: Is The Deleveraging Over?

The shift to negative net savings in the household sector is supposed to be bullish for the U.S. economy. The implication is that at the end of 2012, households finally started borrowing again – spending again – as opposed to paying off past debts.

Koo, however, suggests that observers are missing the details, which paint a much bleaker picture 

In fact, according to Koo, the way in which the household sector shifted to net negative savings at the end of 2012 has only been observed twice before in recent memory. The first time was following the collapse of the internet bubble in 2000, and the second time was following the collapse of Lehman Brothers in 2008.

Business Insider
Richard Koo Answers The Most Critical Question About The Western Economies: Is The Deleveraging Over?
Matthew Boesler

Ralph Musgrave — "Government borrowing is pointless"

Read it at Ralphonomics
Government borrowing is pointless

by Ralph Musgrave

Ralph calls attention to one of the elephants in the room.

Lagging income leading to drawing down savings and increased reliance on borrowing

Reuters —

NEW YORK (Jilian Mincer and Jonathan Spicer) - More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.

In an ominous sign for America's economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts.

Some policymakers worry that a recent spike in credit card usage could mean that people, many of whom are struggling on incomes that have lagged inflation, are taking out new debt just to meet the costs of day-to-day living.

Read the rest at The Huffington Post
Americans Raid Savings To Get Through Stop-Start Recovery

When income lags, then effective demand has to either decline to the lower level of income, or else be supported by increasing household debt (drawing  future income forward) or drawing down savings (past income).