Subject: Re: can marci help?
Rossel's claim that GDP -25 to 27 trillion- is a positive sign ignores that some of that numeric gain means many are getting less goods and services for the same amount, or pay more for the same amount. It doesn't necessarily mean we are producing and selling more cereal or getting a better deal on services.

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This is one area of peril when trying to explain ANYTHING to ANYONE about economics using statistics. It isn't clear in her presentation if any of the figures are adjusted for inflation or are raw numbers. Imagine someone citing the following two statistics:

* 2022 calendar year GDP = $25 trillion in 2022 dollars
* 2023 calendar year GDP = $25.75 trillion in 2023 dollars

What happened between 2022 and 2023? Did the economy "grow" by 3%?

If inflation was 0% between 2022 and 2023, then YES, real economic output grew by 3% because 2023 dollars are worth the same as 2022 dollars. If inflation averaged 3% over that year, then essentially economic activity didn't grow at all. If inflation was 5% over that year, then economic activity actually FELL because 2022's output of $25 trillion would have been $26.25 trillion in inflated 2023 dollars but 2023 GDP measured in 2023 dollars was only $25.75. The economy shrunk by $500 billion or 2% in real terms.

At some level, it is IMPOSSIBLE to have a meaningful conversation about economics at this level of detail using statistics you hear in the media because few media outlets carefully edit their content to use "like" numbers to ensure any comments about "growth" are based on consistent numbers -- either nominal numbers or inflation-adjusted numbers.

Your point about becoming misled by figures about GDP "growth" when the economy is not evenly distributing the goods and wealth produced by that economy is valid but also represents another problem with discussions about economics. Any attempt to devise some metric that ensures some definition of "fairness" or equity is accounted for in what would otherwise be a purely aggregate statistic will likely make that statistic worthless. Either because it will be so negatively skewed ("if ONE person isn't better off, then we haven't improved...") that it will never point up or it will become so subjected to manipulation by interested parties wanting to claim a policy win or deflect blame for damage that it will become useless.

Overall, I think Marci Rossell did a good job in this presentation trying to explain much of the "doom loop" thinking that stems from extrapolating the behavior of an economy 40 years ago to shocks unique to the environment 40 years ago to current conditions. In a nutshell, the inflationary crush of the 1970s was due to direct, PHYSICAL shocks in the market for a resource (oil) that America was particularly dependent upon and extremely inefficient in our use, triggering massive ripples from the auto manufacturing and transportation sectors outwards into all other areas of the economy. In the 2020s, America was subjected to more general shocks in labor markets and supplies for finished goods from overseas markets which could be countered by different monetary tactics. For the most part, we DID pull off a relatively "soft landing" recovering from that shock but 40 year old history has conditioned many policy makers and powerful people to expect similar negative feedback as experienced in the late 1970s and 1980s.

In college, I took a class in Money & Banking taught by Hyman Minsky, a man famous in banking circles for his theories of the sources of systemic risk in "modern" economies due to fiat currency and fractional reserve lending. His class was the first introduction I had to concerns about Ponzi schemes and the processes that wound up creating the derivative-based crash of 2008. He was famous (infamous?) for his rather interesting classroom modus operandi, which included tossing in extremely terse quotes in non sequitor fashion in the middle of other discussions that often appeared to have no bearing on anything. One of his favorites (as he quoted it...) was:

You could not step into the same river twice... -- Heraclitus

Of course, that's not the exact quote or the full quote, which made it all the more puzzling for the students in the class. (Whaaaaa? What is he TALKING about?) The actual quote is:

No man ever steps in the same river twice, for it's not the same river and he's not the same man. -- Heraclitus

THAT makes sense. What Minsky was conveying in that class in 1987 and what economists today need to recognize is that certain PATTERNS of problems may be similar to those in the past but circumstances are complicated and never identical, especially over long stretches of time. There may be a few general principals that can help accurately structure maybe 85% of the solution to a particlar economic problem but the last 15% will also require more finesse and pragmatic give and take rather than continued, militant conformance to overly simplistic policy tropes of the past.

Cut business taxes!

Cut capital gains tax rates!

Accelerated depreciation!

Enterprise zones!

Reduced regulation!

Lower interest rates!

Cut entitlement spending!



WTH