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econbrowser.com - 2/8/2009

The paradox of thrift

— econbrowser.com — Or, how come you used to say that if consumers don't save more, it will wreck the... economy, and now you say, if consumers do save more, it will wreck the economy? For the record, I am certainly among those who had been suggesting that America's low ... (more) The paradox of thrift

Commodities

Recession

Comments vote downundo vote up EconLog: Library of Economics and Liberty found this 2/8/2009found this

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marginalrevolution.com - 2/9/2009

The paradox of thrift

— marginalrevolution.com — Matt Yglesias offers a clear, non-technical explanation .  I would add a few points: 1. If wages... are relatively flexible in the downwards direction, it is easier to avoid the downward spiral from falling aggregate demand.  There is an odd ... (more) The paradox of thrift

Comments vote downundo vote up Abnormal Returns found this 2/9/2009found this

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yglesias.thinkprogress.org - 2/8/2009

Matthew Yglesias » Understanding the Paradox of Thrift

— yglesias.thinkprogress.org — Taking a suggestion from DTM , it’s probably worth attempting a layman’s explanation of “the paradox of... thrift” in the current situation. So here goes: I get a paycheck direct deposited into my bank account every two weeks, which is my salary less ... (more) Matthew Yglesias » Understanding the ...

Comments vote downundo vote up Marginal Revolution found this 2/8/2009found this

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"I have no basis for this opinion, but it's the other side that practices faith-based economics"
SCSUScholars — ... too far in debt. The economy is shrinking in large part because consumers are pulling back. And the result, almost surely, is to leave household balance sheets worse than ever. I can’t do this accurately until the Federal Reserve’s flow of funds data have been updated, but almost without question the ratio of household debt to personal income has been rising, not falling, as consumers try to save more.I guess winning a Nobel means never having to wait for data. Or maybe it's the water. (Emphasis mine)

The paradox of debt
Bubble Meter — From Princeton University economist Paul Krugman: Consumers are pulling back because they’ve realized that they’re too far in debt. The economy is shrinking in large part because consumers are pulling back. And the result, almost surely, is to leave household balance sheets worse than ever. I can’t do this accurately until the Federal Reserve’s flow of funds data have been updated, but almost without question the ratio of household debt to personal income has been rising, not falling, as consumers try to save more.

The New Orthodoxy Is Upon Us
A Fistful Of Euros » A Fistful Of Euros — ... expansionary, as private consumption rises based on the view that future tax hikes will be smaller than previously envisaged. IMF - Hungary, Request for Stand-By Arrangement, November 4, 2008 So from Tallinin, to Riga, to Budapest, to Bucharest, the same sonata on a single note is being played, and the message is cut spending and you will expand. Funny how people are not very convinced about this idea in Berlin, London, or Washington. Sounds like they haven’t heard about the paradox of thrift either. Consumers are ...

The New Orthodoxy Is Upon Us
Global Economy Matters — ... as private consumption rises based on the view that future tax hikes will be smaller than previously envisaged. IMF - Hungary, Request for Stand-By Arrangement, November 4, 2008 So from Tallinin, to Riga, to Budapest, to Bucharest, the same sonata on a single note is being played, and the message is cut spending and you will expand. Funny how people are not very convinced about this idea in Berlin, London, or Washington. Sounds like they haven't heard about the paradox of thrift either. Consumers are pulling back ...