dlakelan

dlakelan, 6 days ago

@economics@a.gup.pe

This NBER paper used anonymized tax records and actually matched children to their actual parents... For kids born in the 80s to parents who had median incomes, MORE THAN HALF of them had LOWER incomes than their parents CPI all-items adjusted

https://www.weforum.org/agenda/2020/09/social-mobility-upwards-decline-usa-us-america-economics/

https://opportunityinsights.org/paper/the-fading-american-dream/

dlakelan, 6 days ago

@economics@a.gup.pe

Preliminary results from today's fiddling with data...

I constructed a CPI index using Rent, Food at home, Transport, Education/Childcare, and Healthcare. Because I don't know exactly what the weights should be, but families use at least a similar-ish quantity of each I used a Dirichlet([15,15,15,15,15]) prior, and plotted 25 draws. Basically around 20% weight of each in 1981... Then projected forwards in time.

dlakelan, 6 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

Different weightings for the inflation index, uncertainty associated with how much of each kind of thing families need to buy. For example, what fraction of your expenses is rent today? what fraction is food at home? what fraction is transportation costs? what fraction is childcare/education? what fraction is healthcare?

dlakelan, 6 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

You could think of it as "we don't know what the right values are exactly" or you could think of it as "different families have different needs" also.

dlakelan, 6 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

It's really both simultaneously. Also this is a very basic model, I just wanted something that reflected that I don't have ideal information but believe that all 5 components are nontrivial important components to real family expenses.

dlakelan, 9 days ago

@GhostOnTheHalfShell
I've never really understood the money multiplier concept. Here is M2/all bank reserves...

Looks pretty constant to me 🙄
@economics

dlakelan, 9 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

Banks can make reserve deposits into checkable deposits via loans. Banks can make Govt bonds into checkable dep. via loans... banks can make mortgage backed securities into checkable dep. via loans... banks can make collateralized debt obligations into checkable dep. via loans...

The actual amount of "reserve dollars" is irrelevant. Either you lend against a govt bond, or you sell the bond to The Fed for reserves... make little diff

dlakelan, 9 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

Well, if we ignore cash, the multiplier is D/R, and D/R is what I plotted... it went from 180 to 10 overnight, basically overnight The Fed converted bonds to Reserves as if this was something that would save us all... Of course it helps avoid violating banking laws etc but if "the money multiplier" were a real thing, then M2 would have been about 17 times bigger than it was in 2010 or so.

dlakelan, 9 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

Right at one bank every loan goes on the books as an asset, no reserves are required because you never need to transfer to another bank you can just hold those loan papers, when people pay each other you're just moving money from one deposit account to another... The single central bank is just a bookeeper. This is the real "work" banks do. What they get paid for is being careful with numbers.

dlakelan, 9 days ago

@GhostOnTheHalfShell
It's right. Just imagine starting with a bank that has $1 reserve, and an infinite string of people each borrowing $1000. every loan they make adds the loan paper asset and the $1000 deposit. Whenever they get a check they just move deposits from say my account to your account. Their equity never goes negative because they never actually have to deliver anything to anyone, everything is ledger data.
@economics@a.gup.pe

dlakelan, 9 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

Right, as people slowly pay interest to the bank, the bank slowly accumulates funds. If its paid exactly enough to pay its workers and have the owners pay for their cost of living, then the whole thing is stable and money doesn't go out of control. If the bank accumulates more than the cost of operations then slowly the bank's owner becomes the owner of all assets in the world as they use money to buy up stuff.

dlakelan, 9 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

These are really good questions that actually would be best addressed by agent-based modeling, where individual agents (banks, employees, investors, bond traders, federal govt, state govt, firms etc) each have behaviors defined by rules and you run the system adjusting the rules to see how the scenario plays out. #julialang is a great tool for this using the Agents.jl library in part because it's fast

dlakelan, 9 days ago

@GhostOnTheHalfShell @economics@a.gup.pe

Minsky seems to be great based on Keen's blog posts and I like the double-entry bookkeeping part a lot. But it is primarily concerned with aggregate behavior it seems to me. It's probably possible to model say 10000 different agents but it would be unwieldly.

@psmaldino wrote a book on agent based models of social systems. https://www.amazon.com/Modeling-Social-Behavior-Mathematical-Agent-Based/dp/0691224145/

dlakelan, 9 days ago

@GhostOnTheHalfShell @economics@a.gup.pe @psmaldino

A model of 5 banks would be very interesting, but I think it would require having a few thousand representative citizens who each have different needs for cash etc in order to make it reasonably informative. You'd create a probability distribution for assets, liabilities, income, expenses etc, and people would need to respond to the imposed conditions (massive layoffs, or a pandemic, or a loss of confidence in banks or whatever)

dlakelan, 10 days ago

Roughly we can say that we need required longevity to be equal to typical longevity of real buildings, and the assumption should be that the steady state that was about right... somewhere in the 150 year range on this graph.

dlakelan, 10 days ago

Note that there's a dimensionless factor not included in here, so this is just proportional to the real required longevity. The factor is more or less related to the typical household size, which has been fairly constant at like 2.6-2.5 people/dwelling for the last 20+ years but declined from near 4 in 1940. Data available here: https://www.census.gov/data/tables/time-series/demo/families/households.html

dlakelan, 10 days ago

Dagnab it, I am constantly wishing I had more text in my messages and forgetting to tag stuff in my first post. This message is just to tag @economics@a.gup.pe and some hash tags #economics #housing #data #statistics

This discussion is about housing longevity and the adequate production rate of housing starts to keep housing from becoming scarce. There's a graph in the first post that shows very interesting dynamics.

dlakelan, 10 days ago

@mike805
Turns out the plane was sitting stationary on the runway. Your model was right but certain relevant facts were missing.

Btw here's the paper
https://www.bmj.com/content/363/bmj.k5094

@GhostOnTheHalfShell @economics@a.gup.pe

dlakelan, 10 days ago

@mike805
Anyway, the whole "if you're so smart why aren't you rich" falls apart when you realize that you can be 100% correct and still not have the information needed to put into your model to make good predictions... And people who have insider trading info can be dumb as a brick and make money.
@GhostOnTheHalfShell @economics@a.gup.pe

dlakelan, 10 days ago

@GhostOnTheHalfShell @msbellows @economics@a.gup.pe

If the real economy is growing, in general you will need the size of the money supply to grow too, or prices will decline and this often causes people to misallocated production. So you should run deficits. If the economy is not growing but the interest rate isn't particularly high then you should probably reduce your deficits. If the economy is not growing but interest rates are high you should increase them... 1/

dlakelan, 10 days ago

@GhostOnTheHalfShell @msbellows @economics@a.gup.pe

because in that case money is probably a limiting factor... If prices of goods are going up but real production isn't increasing, you should tax money out of the system and run a "government surplus" because people are demanding things with money that just aren't produceable. 2/

dlakelan, 10 days ago

@GhostOnTheHalfShell
Well, the limiting factor for monetary growth is inflation, if the economy is lackluster but interest rates are low (therefore money is relatively easy to get) you won't get improved output from helicoptering money, you'll just get inflation. But if interest is high, yeah helicoptering money could help.
@msbellows @economics