NBER: rapidly rising household debt predicts recessions. See America’s future.

Summary: Perhaps the most important frontier in microeconomics is the effect of debt on growth, especially private sector debt (government debt has different dynamics). Many economists have attempted to integrate debt levels into mainstream theory (e.g., Hyman Minsky). While so far unsuccessful, research has produced many useful insights. Here is a new study with a … Continue reading NBER: rapidly rising household debt predicts recessions. See America’s future.

Fact & myth about the debt supercycle, a story of modern America

Summary: The effects of debt are among the most widely misunderstood factors of macroeconomics. The almost delusional writings of perma-bears and conservatives have demonized debt, while economists often regard high debt levels with complacency. Yet economists have learned much about dynamics of debt. This post looks at this cutting edge of economic theory, very relevant … Continue reading Fact & myth about the debt supercycle, a story of modern America

Mechanics and consequences of America hitting the debt ceiling

Summary: The debt crisis deserves attention not just as a potentially serious event, but also because it illuminates many aspects of America: the flaws in our political structure, weaknesses in the GOP, and our excessively credulity. This post, the sixth in this series, looks at the crisis, and why we have difficulty seeing it clearly. Contents … Continue reading Mechanics and consequences of America hitting the debt ceiling

Minting a trillion dollar platinum coin: the easy fake solution, so we can avoid fixing our problems

Summary:  The current crisis is one of governance: how our leaders work together combine with structural flaws to produce bad outcomes. Today we look at this from a legal perspective, which describes both the problem and an easy solution. Such situations show a society its problems, and provide the pressure for successful societies to fix them. … Continue reading Minting a trillion dollar platinum coin: the easy fake solution, so we can avoid fixing our problems

Let’s learn from this inevitable crisis, which results from flaws in our system

Summary: While the shutdown and debt ceiling crisis probably ends in days or a few weeks, the lessons we learn from it can help us better manage the similar crises that lie ahead. Failure to learn and respond to these might have ugly consequences during the next decade. Today we look at one of the two vital lessons. … Continue reading Let’s learn from this inevitable crisis, which results from flaws in our system