A sinkhole, but not in a bad way

One of the oddities of the Keynesian model is that although it predicts that saving will fall during recessions, many people assume the model predicts that saving will rise during recessions.  If you don’t see this, start with the easiest version, a closed economy Keynesian cross model.  The famous Keynesian “paradox of thrift” predicts that an attempt by the public to save more will not cause the equilibrium quantity of saving to rise.  Rather income will fall, and then at the lower income level saving will again equal investment.  But it doesn’t stop there.  More sophisticated Keynesian models show that falling income will tend to reduce investment.  Indeed all business cycle models predict investment (and hence saving) will fall during recessions, even as a share of GDP.  So when you are in recession both saving and investment tend to be a relatively low share of national income.

The preceding implies that merely looking at saving as a share of GDP is not very useful.  Yes, it is lower during recessions, but not because reduced saving causes recessions—indeed the Keynesians would claim something closer to the opposite.

The next question is whether saving by sector is a useful variable to look at.  In particular, if one sector has a high saving rate could that sector be causing a recession?  That’s not at all clear.  If aggregate saving tells us very little, it’s not clear why the components of saving (household, business, government, etc.) would be particularly informative.  They might be, but you’d need a model.

Paul Krugman has a suggestive new post:

And another notes to myself post. Below are corporate profits (after tax and inventory valuation adjustment) and nonresidential fixed investment (roughly speaking, business investment), both measured as shares of GDP. These aren’t exactly matched figures, because not all business investment comes from corporations. Still, I think they illustrate an important point. Business investment isn’t actually all that low; you expect it to be relatively weak in a weak economy with excess capacity, but in fact it’s about as high a share of GDP as in the middle Bush years. What’s really out of line with previous experience is the level of corporate profits, which is arguably serving as a kind of sinkhole for purchasing power.

Just when you think Krugman is going to draw some policy implications, he steps back, and lets the facts speak for themselves.  And I think that’s a wise move, as it’s not at all clear what the high level of corporate saving actually means. Krugman points out that investment is about normal for this stage of the business cycle, which suggests that “animal spirits” are not the big problem here.

Are there policy implications for corporate saving rates?  Maybe, but I doubt there are stabilization policy implications.  I doubt that the corporate “sinkhole” is making the recession worse.  It seems to me that to draw policy implications you’d have to construct a bizarre Rube Goldberg-like model of stabilization policy:

1.  Monetary policy should target NGDP or inflation.  There’s your model of AD.

2.  If monetary policy fails to target NGDP or inflation, then fiscal policy should try to cause either M or V to move in such a way as to stabilize the economy. For instance, fiscal stimulus might raise interest rates and thus raise V.  Or if the Fed is targeting interest rates, it might cause the Fed to raise M.

3.  If monetary policymakers fail to do their job, and fiscal policymakers fail to do their job, perhaps some sort of policy directed at corporate saving might affect V or M.

What might that policy be?  An excess profits tax?  No, that’s contractionary.  Relaxing intellectual property laws?  That might redistribute wealth from capitalists to workers, and perhaps might decrease the private sector marginal propensity to save.  However it might also cause a stock market crash, reducing the Tobin q, and hence corporate investment.  More propensity to save, but less animal spirits.

I’d like to see intellectual property rights weakened (although it would reduce stock prices and thus hurt my personal finances.)  But not as a stabilization policy.

To conclude, never reason from a sector of GDP, at least if you are trying to explain changes in GDP.  First analyze monetary policy.  If that policy is dysfunctional, then try to figure out how changes in fiscal policy might change the precise way in which monetary policy is dysfunctional.

And then?  There is no “and then.” Even the second part of the preceding suggestion is probably too difficult for economists to model in the real world; trying to go even further (into various types of private saving) would be completely pointless.

Tyler Cowen responds to Krugman’s “sinkhole” claim:

That seems to be Krugman’s argument here, and here, excerpt:

“So corporations are taking a much bigger slice of total income — and are showing little inclination either to redistribute that slice back to investors or to invest it in new equipment, software, etc.. Instead, they’re accumulating piles of cash.”

I am confused by this argument.  I would understand it (though not quite accept it) if corporations were stashing currency in the cupboard.  Instead, it seems that large corporations invest the money as quickly as possible.  It can be put in the bank and then lent out.  It can purchase commercial paper, which boosts investment.

Maybe you are less impressed if say Apple buys T-Bills, but still the funds are recirculated quickly to other investors.

I don’t much like either post.  Tyler seems to believe that high levels of corporate saving do not cause depressed levels of AD.  I have no complaints with that broader claim.  But you can’t really make that argument by pointing to the fact that funds saved get recycled into investments.  Yes, increases in realized saving lead to increases in realized investment, at the aggregate level.  But if and when Krugman does draw some policy implications from the “sinkhole” of corporate saving, he’s way too savvy to ignore the saving/investment identity.  He’ll talk about income distribution, propensities to save, and dysfunctional monetary policy.  Or at least imply those assumptions.

BTW, The Krugman quotation provided by Cowen does have one peculiarity.  It actually doesn’t matter very much whether corporations give money back to investors, except second order effects relating to agency problems.  But it was preceded by this paragraph:

So, I’ve had a mild-mannered dispute with Joe Stiglitz over whether individual income inequality is retarding recovery right now; let me say, however, that I think there’s a very good case that the redistribution of income away from labor to corporate profits is very likely a big factor. Here’s corporate profits as a share of GDP:

Krugman shouldn’t use the term “redistribute” in completely different ways in back to back paragraphs.  The argument that higher earnings by capital will lower the MPC is far more powerful than the argument that redistribution within the corporate sector has an effect on the MPC.  After all, capital gains are (effectively) taxed more lightly than dividends, so investors might actually be better off if corporations waited a while before paying out profits to shareholders.

If Krugman wants to make a case that inequality matters for AD (and please God don’t let him become another Stiglitz) then he’d want to make it on the basis of individual income distribution, not redistribution among capitalists.

I’m not happy with my post–but perhaps after getting comments I’ll see where the real issue here is–it’s all too vague for me to grapple with right now.


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35 Responses to “A sinkhole, but not in a bad way”

  1. Gravatar of Andy Harless Andy Harless
    10. February 2013 at 12:58

    [If this comment goes through OK, please ignore/delete the last two.]

    I think Krugman has in mind a Keynesian cross model, with income divided into household and corporate. If we define corporate income net of dividends (and maybe share repurchases) we get Y=Yh+Yc. Let consumption depend on Yh and investment on Yc, so (ignoring the gov’t & foreign sector for simplicity) Yh+Yc=C(Yh)+I(Yc). If I’() is less than C’(), then a distribution shift from households to corporations will result in lower aggregate income, the same as what happens in the standard Keynesian cross model when the marginal propensity to consume falls. (There has to be some autonomous spending, too, obviously, something has to get “multiplied,” but in this case it’s the size of the multiplier that’s changing, not the size of autonomous spending.)

    It’s easy enough to look at this in monetarist terms, too. Suppose money demand depends on both Yh and Yc, and M’(Yh) is less than M’(Yc). Then a shift of income toward corporations results in greater money demand for any given level of aggregate income and thus a decline in the velocity of money. Normally this wouldn’t be a problem because the Fed would just offset the decline, but the Fed behaves strangely at the zero bound. (One can disagree about the extent to which the Fed is constrained to behave strangely, but as an empirical matter, it does.) Or, to take Tyler’s criticism into account, it’s really not about the direct demand for money but about the demand for money substitutes associated with Yh and Yc, but at the zero bound, when there are other assets that are very close substitutes for money on the margin, the impact is the same (e.g., if Apple buys more T-bills, then whoever sold them the T-bills will hold more money, so money demand still goes up.)

    But I think you’re right that the relevant quantity is not actually “corporate income net of dividends” but capital income overall. I suspect that the marginal propensity to consume out of dividends is much lower than the marginal propensity to consume out of labor income. So we really have three categories of income, Yc (undistributed profits), Yd (dividends) and, Yl (labor income). I suspect that the marginal propensity to spend out of the last of these is considerably higher (and the associated marginal demand for money substitutes lower) than both the other two.

  2. Gravatar of Geoff Geoff
    10. February 2013 at 13:43

    It’s pretty clear that sector specific saving, and saving in general, does not cause recessions.

    For sector specific saving, we know that the entirety of all revenues earned by every non-consumer goods business in existence are financed 100% by saving. The only revenues that are not financed by saving (abstaining from consumption) are of course consumer goods companies.

    Since there is far more business to business selling than there is business to consumer selling, we also know that if there is one thing that can help eliminate a general decline in revenues throughout the economy, would be if there is, for one thing, a substantial rise in saving, so that most businesses (non-consumer goods businesses) that earn revenues financed by saving can again earn more sales revenues and restore their profitability.

    Keynesians of course miss this important requirement, and usually clamor for more consumption spending, since most tend to believe that consumer spending is the most important (for philosophical and epistemological reasons that are not necessary to go into now).

  3. Gravatar of ssumner ssumner
    10. February 2013 at 14:36

    Andy, That may be what he has in mind, but it’s hard to see why the distinction between corporate and household income would be important. Corporations are owned by households. Even if there is a distinction, I can’t imagine it would be of macroeconomic importance. But we’ll see where he goes with that line of analysis.

    The Keynesian model is already flawed for all sorts of reasons, as you know (ignores monetary offset, etc.) If people think it can now support an even larger superstructure than the 1960s Keynesians put on it (i.e. income redistribution, etc), they’re likely to be disappointed.

  4. Gravatar of Jon Jon
    10. February 2013 at 14:38

    Someone needs to be buying treasuries. International capital flows into newly issued treasuries has basically stopped. So if there a vampire here, it isn’t the corporations. It’s the Feds who are vacuuming up investment by issuing debt and putting that money into GDP inefficient purposes.

  5. Gravatar of Brian Donohue Brian Donohue
    10. February 2013 at 14:43

    I’m also confused, so I content myself with a pedantic point for now.

    You say: “I doubt that the corporate “sinkhole” is making the recession worse.”

    Terms like ‘austerity’ get bogged down in annoying semantic arguments nowadays, but I thought ‘recession’ at least was reasonably well-defined.

  6. Gravatar of Negation of Ideology Negation of Ideology
    10. February 2013 at 14:49

    I think the ambiguity of the term “saving” is a major problem in these discussions. If “saving” just mean income minus consumption, then you come to one set of conclusions. If “saving” means increasing holdings of the monetary base, then you come to a different set of conclusions.

    The second form of saving is currently only done through holding paper currency or by banks through reserves at the Fed. I’d suggest that that is the only definition that would make sense for Krugman’s use of the term “sinkhole”. If there is an increase in the demand to hold the monetary base that is not supplied by the monetary authority (the Fed in the US), then you have to get a decline in NGDP. The best way to deal with this is for the Fed to simply issue more monetary base.

    If “saving” is not the proper term for increasing holdings of the monetary base, then I think we need to create a term for that.

  7. Gravatar of Matt Waters Matt Waters
    10. February 2013 at 15:37

    I remember some posts about S=I some time ago, so sorry for asking this dumb question. But how, exactly, are excess reserves not considered savings without investment? Most of the talk of Keynes and IS/LM models just seems loopy to me when the problem can be clearly stated in terms of MV=PY. And if M has been increased significantly but AD has not gone up, doesn’t that mean savings have gone up a good bit without an increase in investment?

  8. Gravatar of Greg Ransom Greg Ransom
    10. February 2013 at 16:18

    “All business cycle models predict investment (and hence saving) will fall during recessions, even as a share of GDP.”

    Production choice based cycle theory predicts that investment will fall in some production sectors and *increase* in other sectors, while real savings & sustainable investment will increase as artificially sustained & encouraged investment & consumption collapses.

    I’m surprises, Scott, that you don’t know this, being the expert on what Hayek & the Austrians think hat you portray yourself to be.

  9. Gravatar of Suvy Suvy
    10. February 2013 at 16:37

    “So corporations are taking a much bigger slice of total income — and are showing little inclination either to redistribute that slice back to investors or to invest it in new equipment, software, etc.. Instead, they’re accumulating piles of cash.”

    I don’t think Krugman doesn’t understand the Keynesian theory. Keynes spends a lot of time talking about how investment does not come from savings, but savings comes from investment. The financing of investment comes from a financial sector that issues debt for financing investment if there is a need to. One of the central points of the Keynesian theory is that the amount of savings has virtually nothing to do with the amount of debt issued along with the amount of investment that takes place; it is the amount of investment that determines those factors, not savings. Keynes actually distances himself considerably from the theory that Krugman uses(in Keynes’ own words, he was “radically opposed” to that model).

    The problem is that the private sector balance sheets are essentially underwater to the point where firms and businesses as a whole are only investing from retained earnings and not using debt to finance the purchasing of new equipment, for additional plants, and for increasing production.

    One essential point that is commonly misunderstood is that the Keynesian theory does not say that savings gets turned into investment; it says that investment gets turned into savings. This is one of the essential issues of the paradox of thrift; because falling AD from falling investment/consumption leads to falling incomes which will then lead to less investment/consumption, etc. It’s a nasty feedback loop where AD just collapses and takes investment down with it. As investment collapses, so do savings, and that is the paradox of thrift.

    A proper understanding of the Keynesian theory would point to the fact that private sector balance sheets are underwater, not some “corporate sinkhole”.

  10. Gravatar of Geoff Geoff
    10. February 2013 at 17:04

    Serious question:

    Why is it that we shouldn’t reason from a whole host of various economic statistics like interest rates, GDP, money supply, price inflation, and on and on and on, but we should reason from the economic statistic called NGDP?

    Seems arbitrary.

  11. Gravatar of Steve Steve
    10. February 2013 at 17:27

    “we’ll see where he goes with that line of analysis”

    I thought Krugman already told us where he was going: higher taxes on dividends and capital gains! All the income is generated by monopolist robots anyway, so tax it! (but only if it’s held outside a pension fund/IRA/endowment)

  12. Gravatar of Greg Ransom Greg Ransom
    10. February 2013 at 17:30

    In the boom what happens is that credit expansion, ballooning substitutes for money & false expectations induce simultaneous malinvestment and unsustainable consumption, retrenchment from that consists in the re-assertion of sustainable patterns of savings/investment/consumption — real saving/reduced consumption may well be necessarily to get sustainable patterns of consumption/invesent/savings back on track.

    ““All business cycle models predict investment (and hence saving) will fall during recessions, even as a share of GDP.”

  13. Gravatar of Becky Hargrove Becky Hargrove
    10. February 2013 at 18:30

    Here’s a way to think about more optimal IP use, without the loss of monetary value. First, consider what one can do with a book or published material, and what one cannot do. One can take notes on material, discuss the material at length with others, even act on the material presented. What a person generally cannot do is store the material in new copied form (except handwriting) or utilize the material in ways that involve money, unless they are hired by an organization which acts as an “umbrella” for the knowledge use.

    What could be done: organize cooperative voluntary systems for people to utilize knowledge that otherwise would not be available legally, when money or certain property environments are involved (such as a hospital for instance). More utilization of knowledge, no loss of monetary value – indeed, over time better integration of voluntary knowledge use into paid knowledge systems. For instance, a town that lost its bookstores decades earlier might find its citizens wanting bookstores again, if its citizens were allowed to create participatory inclusion in knowledge use. Such systems would also be different enough from existing monetary systems that they would not significantly interfere with valuations in that regard.

  14. Gravatar of Benjamin Cole Benjamin Cole
    10. February 2013 at 21:50

    Rube Goldberg-like?

    Love it.

  15. Gravatar of Ritwik Ritwik
    10. February 2013 at 23:21

    This is a fantastic post.

    If instead of looking at it form a investment is where it has historically been perspective, Krugman had gone for it from an angle of increased corporate saving being prime facie evidence of firms holding back on investment, he’d have struck closer.

    The benchmark, as always, is not history but the counterfavctual.

  16. Gravatar of Saturos Saturos
    10. February 2013 at 23:44

    The following is a very interesting piece, which however falls short by failing to consider the demand for money.
    http://www.youtube.com/watch?v=TsdSxk-qxZE
    Obviously NGDPLT would produce a vast improvement in macroeconomic outcomes.

  17. Gravatar of Geoff Geoff
    11. February 2013 at 03:52

    Debates concerning saving, hoarding, investment, and propensities usually go down the sinkhole when people abstract away from time.

    Saving abstracted away from time, investment abstracted away from time, etc, and trying to connect these concepts into a coherent whole. It cannot be done.

    Krugman is complaining that corporations are hoarding cash and not investing it. Notice that there is no definite time period associated with this argument. Hoarding and investing may seem like concepts pertaining to right now at this instant, but nothing is instant or right now in economics. What Krugman is really saying is that the definite time periods between corporations receiving cash and corporations spending cash is “too long” in his subjective judgment.

    Saving (recieving cash) within the context of time and investment (spending cash) within the context of time are never exactly equalof course, because there is always a time period in between receiving and spending. Saving exactly equaling investment can only occur when both are zero. If saving is positive, then saving is always greater than investment within the time period in between receiving and spending, and with a long enough time period after receiving, saving tends to equal spending (but never exactly).

    The question then is, “Is a lengthening of average time periods between corporations receiving and spending money detrimental to economic health (employment, output, etc) in any way, and if so, is using the force of the state, which must be obeyed at the threat of physical punishment, justified against anyone?”

    I’ll leave it to each individual to answer this question. For me personally, I think it is justified to physically threaten other people to coerce them into obeying my rule, but only during times of falling output and employment, and only if those who support my rule outnumber those who do not. Otherwise, my physical threat rule would constitute criminal activity.

  18. Gravatar of Matt Waters Matt Waters
    11. February 2013 at 04:55

    Well, this got me wanting to learn more and I started General Theory after my comment, and I just got to the part in General Theory dealing with S=I. It seems that it’s very easy to accept C+S=C+I, but extremely difficult to accept S=I. Even more difficult to accept is the fact I = “A1″, or the purchases of firms from other firms. It doesn’t help that Keynes’ prose can be absolutely impenetrable.

    But here’s how I understand it. When a corporation receives revenue, it and its employees consume part of it, invest part of it and save part of it, where investment and saving combined make the firm’s total savings. By non-investment savings here, I mean cash truly just collecting dust in the form of excess reserves.

    If a country had only two firms, both firms and their employees could not both have positive saving of their income into excess reserves. Somebody has to purchase each firm’s goods before that income can be saved.

    Everybody could save zero in excess reserves and therefore the only savings are also investments. Or the other firm could somehow have negative savings which balances out the excess reserves savings of the first firm. Somehow the second firm gets a pure cash infusion and then spends that cash. The negative account from excess reserves balances out the other firms positive account. And even the negative savings can be “saved” through spending it on investment instead of consumption.

    With the Keynesian assumption that everybody’s income and is somebody else’s spending, then corporate cash hoarding is not a cause at all of a lack of AD. The cash hoarding is merely a strange byproduct of the corporation’s consumers somehow having negative savings.

    On the other hand, AD would be higher if the firm’s customers had the cash infusion and the firm spent that money instead of putting it in excess reserves. This is why, in normal times without excess reserves, today’s monetary base would be hyperinflationary. As it stands though, having a trebled monetary base without hyperinflation means the money must be sitting somewhere, and that base has ended up on corporate balance sheets for whatever reason.

  19. Gravatar of Master of None Master of None
    11. February 2013 at 06:00

    If a company stores its cash in short-term risk-less securities, I don’t think we should consider that investment.

    Somebody has to be long duration. If corporations can’t take on risk, who can?

  20. Gravatar of Carney Point Carney Point
    11. February 2013 at 07:21

    Two points, both from a corporate finance perspective. How could no one else complain about the use of the word “taking” in Krugman’s title? Pure progressive vilification of the corporate sector. Corporations don’t really take income, they “make” income as in revenue minus cost. In this cycle they have controlled cost (by not investing as aggressively as past cycles) as revenues have recovered as this is what we mean by cap ex falling below depreciation. I think this is rational in that past experience has suggested that big cap ex in response to a recovery usually results in sub-standard IRRs, in part because many competitors invested simultaneously causing excess capacity when it came on line. Managements have become reluctant to do this, particularly when most investors agitate for buybacks instead. With cap ex below depreciation, you have a very good chance of marginal IRRs well above the cost of capital.

    Second, the whole point about capital gains versus dividends taxation is irrelavent. Buy backs allow companies to turn cash into capital gains through shrinking the share base, without immediate taxation for the individual. So the issue is really about holding cash. From an investor perspective, cash held on a corporations books earns terrible returns because of double taxation in its interest income. In fact, investors should value cash held on the balance sheet (if permanent, for liquidity reasons) at a discount because of this taxation.

  21. Gravatar of Becky Hargrove Becky Hargrove
    11. February 2013 at 08:05

    ….aaaannndd, we need better ways to think about combining knowledge use and product possibilities anyway:

    “Capacity Utilization and Economic Growth: A Broken Relationship” as Garret Jones descibes.
    http://econlog.econlib.org/archives/2013/02/unused-capacity.html

  22. Gravatar of Becky Hargrove Becky Hargrove
    11. February 2013 at 08:07

    Sorry my link is broken and not sure why – this is today’s post.

  23. Gravatar of A sinkhole, but not in a bad way | Fifth Estate A sinkhole, but not in a bad way | Fifth Estate
    11. February 2013 at 08:10

    [...] See full story on themoneyillusion.com [...]

  24. Gravatar of mpowell mpowell
    11. February 2013 at 08:15

    I agree with Negation of Ideology. The term ‘savings’ is one of the more confusing ones in these discussions. As far as I can tell, it’s common for people arguing about savings to have two different definitions in their heads as they do so. Or for one to assume an S=I property when that is exactly the point the other is disputing.

  25. Gravatar of TravisV TravisV
    11. February 2013 at 09:02

    Does anyone know who “M.C.K.” at Free Exchange is? I remember that “R.A.” is Ryan Avent but I forgot who “M.C.K.” is.

  26. Gravatar of TravisV TravisV
    11. February 2013 at 09:09

    Prof. Sumner,

    Karl Smith asks two questions:

    http://www.forbes.com/sites/modeledbehavior/2013/02/11/titles-rarely-given-to-blog-posts

    1) Would balance sheet actions like Operation Twist fall under monetary policy in your rubric? If not then perhaps we can agree to think of them as a sort of specialized regulatory action.

    2) Suppose Congress will not allow the creation of an NGDP futures market. Yet, we have reason to believe that changes in credit markets are an early warning sign for an NGDP heat-up. Is it appropriate to base current monetary policy actions on those changes in credit markets?

  27. Gravatar of Saturos Saturos
    11. February 2013 at 09:30

    Garett Jones on TGS: http://econlog.econlib.org/archives/2013/02/unused_capacity.html

  28. Gravatar of stone stone
    11. February 2013 at 09:31

    Isn’t the big sink hole servicing corporate debt much of which is owned by financial institutions in a reciprocal web of lending? In the UK we have £10T of household wealth but an additional £10T of corporate debt owed between financial firms. The expansion or contraction of that web of debt is what makes the difference between boom and bust. The “saving sinkhole” can simply be corporations paying down debt. If we hadn’t had the bailouts and instead much of that debt was written down (as was the Lehmans debt) then we wouldn’t be in this mess. Instead we are faced with an eternity of deadlock as corporations try to chisel out savings to pay down debt.

  29. Gravatar of Saturos Saturos
    11. February 2013 at 09:32

    And re Travis’ comment – apparently Mr. Klein at Free Exchange titled his latest post, “Scott Sumner is wrong”: http://www.economist.com/blogs/freeexchange/2013/02/central-banking-and-bubbles

    (I think that’s the first time you’ve made it into the title of a page in the Economist.)

  30. Gravatar of TravisV TravisV
    11. February 2013 at 09:52

    Saturos,

    What is Mr. Klein’s full name?

  31. Gravatar of ssumner ssumner
    11. February 2013 at 10:06

    Brian, Yes, recession is more clearly defined.

    Matt and Negation, Saving is the funds used to finance investment.

    Greg, Your comment has no bearing on anything I said.

    Geoff, Read my blog and you’ll find out.

    Ritwik, But recall that saving is not an alternative to investment, rather it’s a way of financing investment.

    Master of None, Don’t confuse financial investments with physical investment (what Krugman is discussing.) The purchase of stocks is “saving” not “investment,” even though people talk of “investing” in the stock market.

    TravisV, Only to the extent that the Fed thinks it affects NGDP. Whether a futures market exists is not the issue. The Fed should target expected NGDP even if there is no futures market.

    Stone, Interesting theory–I don’t really have an intelligent view either way. (Although I oppose bailouts for other reasons.)

    Saturos, I’m honored. I already did a long reply, but feel no urgency to post it. Almost no one is giving me any good RA job hunting suggestings after my new post.

  32. Gravatar of TravisV TravisV
    11. February 2013 at 10:32

    Does anyone know who “M.C.K.” at Free Exchange is? I remember that “R.A.” is Ryan Avent but I forgot who “M.C.K.” is.

  33. Gravatar of Becky Hargrove Becky Hargrove
    11. February 2013 at 10:58

    TravisV,
    The first name is Matthew, I don’t know the middle initial.

  34. Gravatar of TheMoneyIllusion » Say Law follies TheMoneyIllusion » Say Law follies
    11. February 2013 at 19:01

    [...] Yesterday I wrote: But if and when Krugman does draw some policy implications from the “sinkhole” of corporate saving, he’s way too savvy to ignore the saving/investment identity.  He’ll talk about income distribution, propensities to save, and dysfunctional monetary policy.  Or at least imply those assumptions. [...]

  35. Gravatar of Geoff Geoff
    12. February 2013 at 09:42

    Dr. Sumner:

    “Geoff, Read my blog and you’ll find out.”

    I have been, I just don’t see the reason. I don’t like to stake my convictions on faith, unless of course it is faith in my ability to run the monetary system optimally.

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