Saturday, February 28, 2015

Long story

A month ago, back at the end of January, my Blogger Preview display suddenly picked up a huge delay. Like, fifty little alligators. It's no longer useable. I griped about it, briefly, figuring it would go away. But it hasn't. I just no longer use it.

Last night I was pretty sad about the passing of Leonard Nimoy. I spent a couple hours reading news articles and looking for an image or two to put up on the blog. Around 8PM I settled on two images, uploaded them to the blog, and posted the thing.

Felt a little better then. (Not much, but a little. It was like mourning-time. I swear, I think Nimoy's passing affected me more than the assassination of JFK.)

Thankfully, Spock lives on.

Anyway, this morning between three and four AM -- the puppy has to go out at all hours, so I'm awake -- I came up with an interesting FRED graph. I tried to prepare a new post to display the graph. But I couldn't get the image to load.

Basically, what happened was this: Everything worked, right up until the end when I had to click OK to complete the last step and load the image.

The OK button just wouldn't work. The button depressed and popped back up, but nothing happened.

Of course, the CANCEL button worked fine.

That was four o'clock this morning.

I googled the problem. Somebody had a similar problem a year ago. And, you know, the responses were typical. They want to know what browser you're using, and what operating system, like you're some kind of idiot.

The thing worked at 8PM, and then it didn't work at 4AM. Don't ask me stupid questions. Check to see if somebody was working on the image-upload code, and check to see if they screwed it up. Don't bullshit me.

So I read a bunch of the follow-up comments. And it seemed that maybe if I switched from Firefox to Chrome the problem would go away. Okay.

First I tried "refreshing" Firefox. That was quick and easy and it didn't work. So then I downloaded Chrome. You know: the Google product. You trust Google, right? I did. That was my mistake.

I was just ever so slightly careless playing 20 questions, no I don't want to download this, no I don't want to download that, I just want Chrome. But then there was a message about fixing errors in Windows, and I said yeah, okay. That was my mistake.

I installed Reimage Repair
That was my mistake

The damned thing wasn't even done loading yet, and I got three flashing windows with warnings about other problems and offers to download other wonderful things.

I shut it down. Pressed the power button and kept it pressed till the thing shut down.

Turned it back on after a minute and started the browser, and those three flashing windows came back again.

I shut it down and started up in Safe Mode. Somehow I remembered pressing F8 gives me safe mode. In safe mode the help came up. It said I could try System Restore. So I clicked it.

After a few moments I clicked it again. Then a window came up that said System Restore is already running. But there was no evidence that System Restore was running. So I didn't know if it was true or if it was Reimage Repair messing with my head. I tried a few more times and got the same message. Then I took the puppy out again.

When I came back, the System Restore window was open. It recommended I guess the most recent restore point, 5 AM this morning, which was from just before a Windows Update. I said Okay. I gave it a few minutes.

When I came back, that friggin Reimage Repair was out of my system. And everything was working -- except, of course, Blogger's image upload thing. So I figured I'd write this story.

Turns out, before I was done writing, the image upload started working again. So that's how you got to see the "Choose a Layout" form above... and that's how you get to see the puppy again:

Lexi naps on the couch

Oh, and Jesus! Don't trust Chrome and don't trust Google any more. It's a sad day.

Thankfully, Spock lives on.

Friday, February 27, 2015

Live long and prosper

I think cyclical

There are two ways of looking at the economy.

One way is to see it as a barrel full of loose ends and disconnected acts. The other is to see the economy's behavior as cyclical. When I read Ferdinand Lot --
In the seventh century, the right of coinage, the royal prerogative par excellence, passed over to the episcopal or monastic churches or to private persons; the treasury perhaps still collected part of the profits of coining. Mints multiplied in the cities, "chateau" (castra), vici, and even mere villas. The history of the coinage shows in a striking fashion the disintegration of the royal power.
I think Fall of Rome. Decentralization of power. Dark Age. I think those who don't learn from history are doomed to repeat it. I think cyclical.

When I read JP Koning --
Let's gradually privatize the issuance of paper currency. If anyone can make cash relevant again, it's innovators in the private sector.
Koning sees the world as loose ends and disconnected acts. I think Fall of Rome...

Thursday, February 26, 2015

Burping it up again

This is an old one, from 7 September 2014. I think it's good, and worth repeating.

Let's draw a conclusion

At FRED Blog: How much money is the Fed printing?

To answer that question they look at currency in circulation. Two graphs.

First graph:

Graph #1: Quantity of Money, in Natural Log Values
Before 1960, flat. After 1960, straight-line increase.

The graph uses natural log values to show growth rates. As the FRED post says, "if the slope is the same for two years, the growth rate is the same." A more upward slope is faster growth. A less upward slope is slower growth.

The FRED post says the values are "indeed increasing, but there is no indication that it is accelerating". In other words: The line goes up, yes, but after the early 1960s it doesn't curve up.

Second graph:

Graph #2: Quantity of Money Relative to GDP
Graph #2 shows the same money as Graph #1 but shows it a different way. No "log" numbers. Instead, the graph compares the quantity of money to GDP. On Graph #2 we have downtrend to about 1985, and then uptrend: The currency component of M1 grew more slowly than GDP in the early years, and more quickly than GDP in the late years. I want to say the change occured around 1985.

Leave out the years before 1960 where Graph #1 has the flat trend. Look at the years since 1960, where #1 shows a straight-line uptrend.

From 1960 to 1985 the trend is down on Graph #2. After 1985 the trend is up. And yet, as the FRED Blog says, Graph #1 shows no acceleration.

Graph #1 shows that currency growth did not change. Graph #2 shows that either currency growth or GDP growth did change. We have to put the two facts together in our head: Either currency growth or GDP growth did change, but currency growth did not change. Therefore, GDP growth changed.


To confirm, I took a quick look at the numbers.

During the 25 years from 1960 to 1985, currency in circulation increased by a factor of 5.6. During the 25 years from 1985 to 2010, currency in circulation increased by a factor of 5.5. Almost exactly the same. So, a straight line increase it is. As FRED said.

During the first 25 years GDP increased by a factor of 8.0. That's faster than currency growth, so the line on Graph #2 goes down between 1960 and 1985.

During the second 25 years GDP increased by a factor of 3.4. That's slower than currency growth, so the line on Graph #2 goes up between 1985 and 2010.

Currency growth was the same for the two periods, even though the "Great Inflation" is entirely contained in the earlier period. Currency growth was the same, but GDP growth was different. GDP growth was much faster in the early period, and much slower in the second.

Tuesday, February 24, 2015

Labor and Nonlabor Costs

The best match I could find is for nonfinancial corporations -- unit labor costs and unit nonlabor costs for nonfinancial corporations. These two series:

Graph #1: Unit Labor Costs (red) and Unit Nonlabor Costs (blue)

BLS points out that

Unit nonlabor costs include consumption of fixed capital, taxes on production and imports less subsidies, net interest and miscellaneous payments, and business current transfer payments.

Both data series are indexed to 2009=100. That's why the two lines meet in 2009 on Graph #1. And that's why their ratio has the value 1.0 in 2009, on Graph #2:

Graph #2: Unit Labor Costs relative to Unit Nonlabor Costs
Graph #2 shows Unit Labor Costs falling relative to Unit Nonlabor Costs. It's all downhill. By the end, labor costs are about half what they were at the start -- as compared to nonlabor costs.

That's pretty outrageous, I think, especially considering that "Economists view increases in unit labor costs as an important indicator of potential inflation."

Monday, February 23, 2015

Excellent! Excellent!

Michael Hudson, “How economic theory came to ignore the role of debt”, real-world economics review, issue no. 57, 6 September 2011, pp. 2-24,

A credit-based theory of pricing would start with the perception that debt service represents a rising share of the cost of producing and distributing goods and services.


No meaningful analysis of demand – or of the degree to which Say’s Law applies – can be drawn up without taking the volume of debt service into account.


Michael Hudson, “How economic theory came to ignore the role of debt”, real-world economics review, issue no. 57, 6 September 2011, pp. 2-24,

Sunday, February 22, 2015

On the decline of international competitiveness

From Michael Hudson's How economic theory came to ignore the role of debt (PDF, 23 pages):
An important predecessor of Adam Smith, the merchant Mathew Decker, emigrated from Holland to settle in London in 1702. In the preface to his influential Essay on the Causes of the Decline of the Foreign Trade, published in 1744, he attributed the deterioration in Britain’s international competitiveness to the taxes levied to carry the interest charges on its public debt. These taxes threatened to price its exports out of world markets by imposing a “prodigious artificial Value . . . upon our Goods to the hindrance of their Sale abroad.” Taxes on food and other essentials pushed up the subsistence wage level that employers were obliged to pay, and hence the prices they had to charge as compared to those of less debt-ridden nations.

The cost of finance, in other words, drove up taxes, which drove up the cost of non-financial goods and services. This pushed up "subsistence wages" at home and reduced competitiveness in foreign markets.

Mathew Decker had in mind the costs associated with public debt. But all debt has costs that similarly affect prices at home and abroad.

Thursday, February 19, 2015

Rousseau & Wachtel, 2008

Rousseau & Wachtel:

Since the 1990s, a burgeoning empirical literature has illustrated the importance of financial sector development for economic growth. Despite the growing consensus, however, we find that the link between finance and growth in cross-country panel data has weakened considerably over time. At the very time that financial sector liberalization spread around the world, the influence of financial sector development on economic growth has diminished.

Wednesday, February 18, 2015

It's not that complicated

The Real Effects of Debt, PDF, 34 pages, by Stephen G Cecchetti, M S Mohanty and Fabrizio Zampolli, 2011. They evaluate government debt and non-financial corporate debt and household debt. The opening sentences of the Abstract:

At moderate levels, debt improves welfare and enhances growth. But high levels can be damaging. When does debt go from good to bad?

Dammit, no. Debt is not a flashing light that sometimes flashes red and other times green. Debt is always bad, period. Debt is the cost that is associated with credit use. Credit use is always good, and debt is always bad.

You may want to finesse that a bit, and say credit use is sometimes good and sometimes bad, and I won't argue with you. But please understand: I'm saying it my way to emphasize a point. Credit-use is demand. Credit-use is spending, and spending is demand. But credit-use doesn't cost anything, while it's still just credit-use. It's like getting stuff for free. That's why it's good. That's why it boosts the economy.

But then, a month or so after you use the credit, you get the bill. Now it's not credit-use anymore. Now it is debt. And now it's like paying for something, without getting anything. That's why debt is always bad.

Don't argue with me, dammit, I'm trying to make an idea simple.

In the PDF they say moderate levels of debt improve growth. But that's wrong. It's the credit-use that improves growth, because credit-use is demand. It's debt that harms growth, because the payment is disconnected from demand, and with debt there is payment but no demand.

Moderate levels of debt improve growth? Not really. Moderate levels of debt harm the economy less than high levels of debt. Moderate debt is easier to bear, because moderate credit-use can balance against it. When you have high levels of debt, it takes high levels of credit-use to offset the drag from the debt.

To understand debt, keep three principles in mind: Debt always hurts the economy. Credit-use always helps the economy. And credit-use always creates debt.