11 ms·

Yields are plunging because the crisis of 2008 was never solved and the bandaids that were supposed to tide us over to the recovery are wearing off. Economists

Yields are plunging because the crisis of 2008 was never solved and the bandaids that were supposed to tide us over to the recovery are wearing off. Economists don't take debt (private debt, in particular) seriously, so they don't know why we aren't recovering like their models say we should be. Steve Keen just put up a fantastic talk on this: https://www.youtube.com/watch?v=iY5rto-ivoA https://www.youtube.com/watch?v=iY5rto-ivoA Until we get the private debt issue resolved (Keen's suggestion is a modern debt jubilee) we can expect to follow japan into the abyss.

oxide 10y ago
what would a debt jubilee consist of? apologies in advance if this is a dumb question.
- carsongross 10y ago
  It isn't at all. Here is an overview of Keen's position: http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-1000-words-or-less/ http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-... And here is a video on what a modern debt jubilee would look like: https://www.youtube.com/watch?v=rtSs9RIoLHQ https://www.youtube.com/watch?v=rtSs9RIoLHQ
jldugger 10y ago
Household private debt, to the extent that it is a problem, appears to be a diminishing factor: https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP & https://fred.stlouisfed.org/series/HDTGPDUSQ163N https://fred.stlouisfed.org/series/HDTGPDUSQ163N It seems far more likely that yields are plunging because 1) Brexit is threatening to tank itself, the EU and their trading partners 2) US treasuries are unlikely to be affected by this ("flight to quality") 3) institutional investors are willing to lock in a 10 year rate now by buying treasuries because rates are unlikely to go higher until #1 is resolved, and might even go lower instead
- carsongross 10y ago
  You are cherry-picking your graph durations. Private debt to GDP is still tremendously high by historical measures: http://www.debtdeflation.com/blogs/wp-content/uploads/2012/01/010212_2140_TheDebtwatc1.png http://www.debtdeflation.com/blogs/wp-content/uploads/2012/0... Really, read (or at least watch) Keen. He's the only economist whose models make any sense of the Japanese experience and he's correctly predicted economic crises using only private debt to GDP ratios quite successfully. The most interesting thing about his models are that they predict a moderation before the crisis, which is exactly what we've seen. It's revolutionary work. But I do agree that the Brexit (and the upcoming earnings shoah) are the proximate causes of this rate dip. The private debt issue is the underlying problem keeping them so low in the first place.
  - jldugger 10y ago
    I chose literally the longest period FRED had available. Never heard of Keen until you brought him up, but I'm not really prepared to study one random heterodox economist to the exclusion of others. Especially one that seems unable to publish in peer reviewed journals.
    - carsongross 10y ago
      I'm sorry: I shouldn't have said you were cherry picking in that case. You were misinformed by the limitations of the datasource you were looking at. Given the performance of academic economics over the last fifty years and the scandals in peer-reviewed academic journals, studying hetrodox economists is well worth your while if you are interested in truth rather than tenure. But I can save you the trouble, having looked into many of them: Keen is the one to read. https://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926 https://www.amazon.com/Debunking-Economics-Revised-Expanded-... He's genius-tier, maybe our era's Keynes.

oxide 10y ago

what would a debt jubilee consist of? apologies in advance if this is a dumb question.

carsongross 10y ago
It isn't at all. Here is an overview of Keen's position: http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-1000-words-or-less/ http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-... And here is a video on what a modern debt jubilee would look like: https://www.youtube.com/watch?v=rtSs9RIoLHQ https://www.youtube.com/watch?v=rtSs9RIoLHQ

jldugger 10y ago

Household private debt, to the extent that it is a problem, appears to be a diminishing factor: https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP & https://fred.stlouisfed.org/series/HDTGPDUSQ163N https://fred.stlouisfed.org/series/HDTGPDUSQ163N It seems far more likely that yields are plunging because 1) Brexit is threatening to tank itself, the EU and their trading partners 2) US treasuries are unlikely to be affected by this ("flight to quality") 3) institutional investors are willing to lock in a 10 year rate now by buying treasuries because rates are unlikely to go higher until #1 is resolved, and might even go lower instead

carsongross 10y ago
You are cherry-picking your graph durations. Private debt to GDP is still tremendously high by historical measures: http://www.debtdeflation.com/blogs/wp-content/uploads/2012/01/010212_2140_TheDebtwatc1.png http://www.debtdeflation.com/blogs/wp-content/uploads/2012/0... Really, read (or at least watch) Keen. He's the only economist whose models make any sense of the Japanese experience and he's correctly predicted economic crises using only private debt to GDP ratios quite successfully. The most interesting thing about his models are that they predict a moderation before the crisis, which is exactly what we've seen. It's revolutionary work. But I do agree that the Brexit (and the upcoming earnings shoah) are the proximate causes of this rate dip. The private debt issue is the underlying problem keeping them so low in the first place.
- jldugger 10y ago
  I chose literally the longest period FRED had available. Never heard of Keen until you brought him up, but I'm not really prepared to study one random heterodox economist to the exclusion of others. Especially one that seems unable to publish in peer reviewed journals.
  - carsongross 10y ago
    I'm sorry: I shouldn't have said you were cherry picking in that case. You were misinformed by the limitations of the datasource you were looking at. Given the performance of academic economics over the last fifty years and the scandals in peer-reviewed academic journals, studying hetrodox economists is well worth your while if you are interested in truth rather than tenure. But I can save you the trouble, having looked into many of them: Keen is the one to read. https://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926 https://www.amazon.com/Debunking-Economics-Revised-Expanded-... He's genius-tier, maybe our era's Keynes.