U.S. Savings Rate - Negativo

For the entire year 2005, the U.S savings rate was -0.5%. The savings rate has only been negative twice before over the course of 12 months - in 1932 and 1933, both Depression years. International Herald Tribune

Breaking News (!) : Fed Drops Word "Measured" from Statement.

Bloomberg

It's Been Real, Alan

Today is Alan Greenspan's (wikipedia) last day on the job as Chairman of the Board of Governors of the Federal Reserve (wikipedia).

Related: Senate confirms Bernanke as Fed chief - Reuters

The Debt to the Penny

Somehow, someone's figured out how to calculate the federal debt down to the penny:
http://www.publicdebt.treas.gov/opd/opdpenny.htm

On January 26th, that amount stood at $8,190,567,748,779.48. It's a little hard to read, as your eye passes over all the sets of three digits and commas. It is a long number. Rounding it down just a hundred billion dollars or so we get a big fat, whole value of $8 trillion dollars.

It's a good thing we can round down, because the legal limit set by Congress for our federal debt is $8.148 trillion, or $8,148,000,000,000.00 when looked at long hand. If you look closely, it is clear that we have already shot through the ceiling.

San Francisco Chronicle article from January 8th, 2006

The Price of the 10-year Treasury, 1974 - 2006

Big Picture guy explains how we should give credit to Paul Volcker (wikipedia) (Federal Reserve Chairman, 1979 - 1987) for the era of low interest rates during Greenspan's term. Autrement dit, credit should not go to Greenspan.

http://bigpicture.typepad.com/comments/2006/01/chart_of_the_we_3.html

Sometimes It Makes You Ill

"What did it take for the American consumer to deliver yet again? It certainly didn’t come from the traditional income-generating capacity of the US labor market. Private sector compensation outlays expanded only 2.5% in real terms over the 12 months ending November 2005 -- a full percentage point below trend and an especially disappointing outcome following the anemic pace of labor income generation in the first three years of this expansion. In fact, by our reckoning, in November 2005, private compensation remained nearly $390 billion below the composite trajectory of the past four US business cycles. With America’s internal income-generating capacity continuing to lag, US consumers once again tapped the home equity till to draw support from the Asset Economy. According to Federal Reserve estimates, equity extraction by US households topped $600 billion in 2005 -- more than enough to compensate for the shortfall of earned labor income. Comforted by this asset-based injection of purchasing power, consumers had little compunction in stretching traditional income-based constraints to the max. The personal saving rate fell deeper into negative territory that at any point since 1933, and outstanding household sector indebtedness -- as well as debt service burdens -- hit new record highs."

from http://www.morganstanley.com/GEFdata/digests/20060120-fri.html#anchor0

Kasriel and Bangalore say "Mission Accomplished"

The cycle of rising rates has done it's job:
http://www.northerntrust.com/library/econ_research/outlook/us/us0106.pdf

Flat as a Pancake

The 3-month, 2-year and 10-year bonds are yielding the same:
http://www.bloomberg.com/markets/rates/index.html

Hmm

"If historians searched for a precise date on which America's singular dominance of the world's economy ended, they might settle on August 15th, 1971." pg 334, Secrets of the Temple by William Greider. What a great hook for a paragraph. I''l let you know what I find out . . .

Software Idea

So as your typing there appear little grey, translucent boxes that flash suggestions to you - they are facts - little snippets like "Roosevelt decoupled the dollar from gold in 1932." So then the blogger can right click or, better yet, use a key - the right arrow or something - and some options come up - edit the statement with your own words, quote some equivalent statement from some other text and provide a link to the text, and maybe even an optional footnote. That is how easy communicating information on the internet should be. It should not just be the blogger or emailer typing and communicating, but the entire internet, or the entire documented awareness of the human race about itself.

Dollar Land

If you're reading this you probably live in it. If you don't live in it you maybe envy it. Or you despise it. But it exists and it is ever present. Dollar Land controls everything - armies, merchants, kings and princes. Dollar Land makes the rest of the world bend over. Dollar Land plunges in, exploits, rapes and then Dollar Land withdraws. Dollar Land is getting old and people are sick of it. Who knows. Learn how to farm? Start buying gold? Learn French and Chinese? Look for work in Bangalore? It's a big world out there. A lot can happen.

Premise

I'm not an economist, but they say that money is a good like anything else. There is a pile of money over there next to a pile of corn. They both have their uses and their value. They also each have a price.

The price of money is reflected in the interest rate. How much will it cost to use this pile of money for a while? That is the amount of interest you pay on a loan. In addition to having to return the pile, you have to pay the fee for borrowing it.

So how about the price of money these days? It's seems pretty cheap. People don't seem to value it too much. Usually, prices fall when the supply of something increases. So do we just have more money sloshing around? Is it because it has lost it's value - it's effectiveness at being used for more higher returns? Are we out of wealth-creating ideas just like we are out of ideas for original screenplays?

I too would like to know the answers to these questions. Was it Disraeli who said that the best way to learn about something was to write a book about it? He might have said that the second best way was to write a blog.

Ben Franklin's Birthday

The father of self-improvement and thrift . . . and educational institutions, and states and scientific theories. And lightning. Born on this day, Januray 17th, in 1706.