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06/10/2013

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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!


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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
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