« When the Fed rate is far from the natural rate of interest | Main | IS-LM curves for Capital & Labor »

06/10/2013

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

How about:

Fed reserve balances are Capital currency.

Bank deposits are Consumer currency.

The fed raises the discount rate (for reserves) to 6%, while lending directly to households (bank deposits) at 1%?

Not sure if this makes sense, but...

Very interesting.

Per graph #3 , it appears that capital's "terms of trade" vs. labor were improving even before the Reagan supply-side revolution , and that the "sweet spot" was maintained only during the elder Bush admin.

Since then , labor has become Greece and capital has become Germany , and , like Germany now , capital has the whip hand and is not inclined to seek any sort of rebalance.

Off-thread topic:
(You don't need to post this, more of a private message)

Ed, terrific job in the comments on sumner's moneyillusion blog in the "aggregate wages are sticky" thread.

They expected you would go away after they presented one cherry-picked FRED graph.

They're very sharp academics, problem is they're also ideologues.

Like most idealogues, I'm afraid no amount of valid academic counter-points are likely to sway them. But, you've done an exceptional job so far.

Really, they're just sticking fingers in their ears and hummm "la la la la" b/c they don't want to hear it.

I really agree with your central idea that households/labor will have to capture more of the productivity gains in order to have a robust economy.

Also, I think this idea may start gaining traction in both fiscal and monetary policy circles soon.

In the coming months, I would not be surprised if some heavy-hitters start favoring the idea in public media.

Meanwhile, keep up the good work!


Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)

Data as of 3rdQ-2017
Effective Demand = $17.424 trillion
Real GDP = $17.157 trillion
Productive Capacity is rising to next business cycle = $23.558 trillion
UT index is falling= +1.1%
Effective demand limit = 73.9%
TFUR = 72.8%
ED Fed rate rule (down from a peak of 3.8% in 2014) = 2.2%
Estimated Natural Real Interest rate = 2.2%
Short-term real interest rate (fallen from 2.8% peak in 2014) = -1.7%

There is no recession for 3rdQ-2017. Chance of recession is growing as economy heads toward 2nd effective demand limit in this business cycle. I am forecasting economic contraction in 2018.




Click on Graphs below to see updated data at FRED.

UT Index (measure of slack):

The UT Index

z-vertical:

z-vertical

z derivatives in terms of labor & capital:

z derivatives in terms of labor & capital

Effective Demand, real GDP & Potential GDP:

ED, real GDP & pot rGDP

ED Output Gap:

ED Output gap

Corporate profit rate over real cost of money:

Corp profit rate over real cost of money

Exponential decay of Inflation:

Corporate profits impact Inflation

Measures of Inflation:

Measures of Inflation

YoY Employment change:

YoY employment change

Speed of consuming slack: yoy monthly:

Speed of consuming slack

Speed of consuming slack: quarterly:

Speed of consuming slack quarterly

Real consumption per Employee:

real consumption per employee 2

Will real wages ever rise faster than productivity?:

Productivity & Real Wages

Real Wage Index:

real wage index

Productivity:

Productivity

Productivity against Effective Demand limit:

Prod & ED limit

Bottom of Initial Claims?:

Initial claims

Tracking inflation expectations:

Fisher effect?

M2 velocity still falling:

Measures of Inflation

All in one:

All in one

Double checking labor share with unit labor costs & inflation:

ULC LS CPI
My Photo
Edward Lambert: Independent Researcher on Effective Demand.
Some links for economic analysis
Fed Views - San Francisco Fed, around 10th of each month.
Well's Fargo monthly - around 10th of each month
Well's Fargo weekly
Well's Fargo Interest rate report
Well's Fargo Economic indicators
T. Rowe Price weekly market wrap-up
Blog powered by Typepad
Member since 03/2013