The economy is nearing the natural level of real GDP and economists are saying that the natural rate of interest is negative. Now the natural rate of interest is the equilibrium interest rate when real GDP reaches its natural level. It is absolutely crazy to think that the natural rate would be negative… absolutely crazy. […]
I saw this graph tweeted on twitter by Jesse Livermore, but I do not see who actually made the graph and how. It is a graph showing Kalecki’s profit equation. The thing that struck me is how similar it is to my own graph of aggregate profit rates based on an analysis of the NIPA […]
How much spare capacity remains in the economy in terms of labor and capital? This question is an incredibly important one… and economists such as Krugman, Bernstein and Baker are deluded by past grandeur… You will hear Paul Krugman say that the Fed rate must stay at the zero lower bound in spite of the […]
Secular stagnation involves the idea that Central bank interest rates will be at the zero lower bound (ZLB) for a long… long… time. And they will be because of falling labor share around the world. Yet, other economists are not even including labor share as a factor. Paul Krugman and Simon Wren-Lewis for examples. Labor […]
I have written lately about the how the cultural economics of China will fail to raise wages of labor and thus fail to re-balance their domestic demand. A video interview with Minqi Li by The Real News Network notes that recent decisions by the Chinese government are meant to raise income for the owners of […]
The one thing I love about Frances Coppola, who is an economist from the United Kingdom, is that she is a perfect blend of someone inside the box and yet outside the box. I truly appreciate how she balances the two with an open and creative, yet grounded mind. She wrote a terrific article, The […]
Just a quick update to the productivity chart. (quarterly data, link to data) What does this graph show? When the economy is approaching the effective demand limit (red line), productivity stalls. Then a move toward an economic contraction will release a productivity increase. Note: The red line is the effective demand limit, where real GDP […]
Mr. Krugman wrote about a possible permanent slump and declining demand. He sort of offers two possible causes of it. Slowing population growth. Persistent trade deficits He does not even mention the big drop in labor share since the crisis. Yet, we see profound economists like Michael Pettis using labor share to describe the trade […]
I had a friend who worked as a teacher in China. She made about $600 per month there 10 years ago. She said there was one question that the Chinese would ask her, even Chinese that she met for the first time. People would ask her name, where she was from, what her job was… […]
When I was studying Chinese medicine, I had a teacher who had worked to develop blood banks from India to China. He said China was the only country where the people did not want to give their blood to other people. Think about that for a second. Are they being selfish? Are they seeing blood […]