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The title may be alarmist but the post is worth reading. David Graeber points out that the sectoral balances don't actually balance and asks why, since it is an accounting identity. When I first saw this diagram I was startled and confused. Was I missing something? Was there something about the math I didn’t understand? I passed the image on to two different economists and asked just that: isn’t there something wrong with the numbers here? You’ll notice that towards the end of the graph, after 2014, the figures above and below the line are no longer equal. It’s easy to miss, but this glaring error has significant consequences for the global economy. Both instantly got back to me, rather surprised they had not noticed it themselves, and confirmed that yes, indeed, there was something
Topics:
Mike Norman considers the following as important: private debt, sectoral balances, UK Economy
This could be interesting, too:
The title may be alarmist but the post is worth reading. David Graeber points out that the sectoral balances don't actually balance and asks why, since it is an accounting identity. When I first saw this diagram I was startled and confused. Was I missing something? Was there something about the math I didn’t understand? I passed the image on to two different economists and asked just that: isn’t there something wrong with the numbers here? You’ll notice that towards the end of the graph, after 2014, the figures above and below the line are no longer equal. It’s easy to miss, but this glaring error has significant consequences for the global economy. Both instantly got back to me, rather surprised they had not noticed it themselves, and confirmed that yes, indeed, there was something
Topics:
Mike Norman considers the following as important: private debt, sectoral balances, UK Economy
This could be interesting, too:
Matias Vernengo writes Public vs private debt
Ahmet Öncü & T.Sabri Öncü writes Climate crisis, global debt, and the Fermi paradox – a proposal to the IMF
Ahmet Öncü & T.Sabri Öncü writes Climate crisis, global debt, and the Fermi paradox – a proposal to the IMF
Ahmet Öncü & T.Sabri Öncü writes Climate crisis, global debt, and the Fermi paradox – a proposal to the IMF
The title may be alarmist but the post is worth reading. David Graeber points out that the sectoral balances don't actually balance and asks why, since it is an accounting identity.
When I first saw this diagram I was startled and confused. Was I missing something? Was there something about the math I didn’t understand? I passed the image on to two different economists and asked just that: isn’t there something wrong with the numbers here?
You’ll notice that towards the end of the graph, after 2014, the figures above and below the line are no longer equal. It’s easy to miss, but this glaring error has significant consequences for the global economy.
Both instantly got back to me, rather surprised they had not noticed it themselves, and confirmed that yes, indeed, there was something very funny going on here. One even wrote to the OBR himself, asking why the two sides didn’t match up, only to be informed it was a standard “residual error” that always occurs at first but is duly patched up later. (This clearly isn’t true: no previous OBR report contains such an imbalance; when this was pointed out to them they simply dodged the question). Here’s the link to the latest report.RenegadeInc
This is what led to my piece in the New Statesman, calling for a public inquiry. I also asked my friend who made up the original diagram to adjust it to what it might look like corrected. This has to involve a certain amount of guess-work as we don’t actually know which part of the numbers are inaccurate. He provided me two possibilities; both extremely sobering.…
Accounting error spells chaos for global economy
David Graeber