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from Dean Baker Paul Krugman actually did not make any predictions on the stock market, so those looking to get investment advice from everyone’s favorite Nobel Prize winning economist will be disappointed. But he did make some interesting comments on the market’s new high. Some of these are on the mark, but some could use some further elaboration. I’ll start with what is right. First, Krugman points out that the market is horrible as a predictor of the future of the economy. The market...

from Michael Hudson Review of William Goetzmann, Money Changes Everything:How Finance Made Civilization Possible (Princeton University Press, 2016) Debt mounts up faster than the means to pay. Yet there is widespread lack of awareness regarding what this debt dynamic implies. From Mesopotamia in the third millennium BC to the modern world, the way in which society has dealt with the buildup of debt has been the main force transforming political relations. Financial textbook writers tell...

from David Ruccio This is my own chart—showing the dramatic changes in the average incomes of the bottom 90 percent, the top 10 percent, and the top 1 percent—from the World Wealth and Income Database. Incomes are in thousands of real 2015 dollars. Thus, for example, the average income of the bottom 90 percent fell between 1979 and 2015 (from $34.6 thousand to $33.2 thousand), while the average income of the top 10 percent rose (from $149.1 thousand to $273.8 thousand) and that of the...

It was previously noted that Treasury revenue was down, which now is confirmed in this report. This is the beginning of the automatic fiscal stabilizers at work, where weakness translates intoa larger federal deficit, and persists until deficit spending is sufficient to more than offset unspent income, as is necessary for growth. Private sector deficit spending would also restore growth. However I see only private sector credit growth deceleration, which is generally the...

Exhibit 1. Economic growth became norm only after industrial revolution Looking further back in history, however, we can see that economic stagnation due to a lack of borrowers was much closer to the norm for thousands of years before the industrial revolution in the 1760s. As shown in Exhibit 1, economic growth had been negligible for centuries before that. There were probably many who tried to save during this period of essentially zero growth, because human beings have always been...

A few weeks ago I posted the announcement of Saudi price cuts, suggesting this could be meant to bring down prices, which now seems to be happening: Again, with no loan demand, they are calling for higher rates, presumably to slow down lending: Six Fed banks called for discount rate hike: minutes By Lindsay Dunsmuir July 12 (Reuters) — The number of regional Federal Reserve banks pushing the central bank to raise the rate it charges commercial banks for emergency loans rose...

July 13th, 2016 On the 1st July Ann Pettifor spoke at the FT’s Festival of Finance. Ann gave a presentation on ‘The New Nationalism: the money story’ and discussed nationalism, and Polanyi’s Double Movement. She was joined by a panel made up of Frances Coppola, Tyler Cowen, and Srinivas Thiruvadanthai. The discussion was moderated by John Authers. The full podcast is available on FT Alphaville. 

Unchanged from last week as modest growth from very low levels continues: The seasonally adjusted Purchase Index was unchanged from one week earlier. The unadjusted Purchase Index decreased 20 percent compared with the previous week and was 5 percent lower than the same week one year ago. Last year, the Fourth of July fell on the prior week.Read more at http://www.calculatedriskblog.com/#sQ3JkrmqGOvif9t3.99 So now that they know larger deficits are better for an economy, why...

from David Ruccio The problem of the growing gap between the small group of haves and all other Americans is (as I noted a week ago) so bad even the International Monetary Fund is sounding the alarm.  Despite the ongoing expansion, the U.S. faces a confluence of forces that will weigh on the prospects for continued gains in economic well being. A rising share of the U.S. labor force is shifting into retirement, basic infrastructure is crumbling, productivity gains are scanty, and labor...

Up a bit, but still weak and in a downtrend, and employment declining: HighlightsThe small business optimism index rose 0.7 points in June to 94.5, the third monthly increase since falling to a 2-year low in March. The improvement in small business optimism slightly exceeded expectations, though the index remains in the downtrend in place since the 100.4 recovery peak set in December 2013 and below the 42-year average of 98. Four of the 10 components of the index posted...