Bruce Greenwald Fall 2015
Bruce Greenwald Fall 2015
Bruce Greenwald Fall 2015
Nineties
Year
% M1
%Y
Year
% M1
%Y
1961
0.7
3.3
1991
6.7
3.0
1962
2.8
5.8
1992
8.6
5.5
1963
2.1
5.5
1993
14.3
5.0
1964
3.4
7.3
1994
10.2
5.9
1965
4.6
8.0
1995
1.8
4.6
1966
5.0
8.5
1996
(1.9)
5.4
1967
2.4
5.8
1997
(4.1)
5.9
1968
6.4
9.8
1998
(0.6)
4.9
1969
7.7
8.0
1999
1.5
5.5
2
20
20
20
19
19
19
19
19
19
19
19
19
08
05
02
99
96
93
90
87
84
81
78
75
72
69
66
63
60
57
54
51
48
20
20
20
20
20
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
08
06
04
02
00
98
96
94
92
90
88
86
84
82
80
78
76
74
72
70
68
66
64
62
60
58
56
54
52
50
48
46
Billions of USD
M1
19
19
19
19
19
19
19
19
19
M1/Nominal GDP
Monetary Policy
M1and Nominal GDP 1946-2008
Nominal GDP
16000
14000
12000
10000
8000
6000
4000
2000
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
Imperfect Information
Funding Constraints
Risk Constraints
Liquidity
Default/Regulatory
Moral Hazard
Deposit Funding
Cost / Pay-Out
Zero Interest Rate Ceiling (No Pay-Out, Discretionary Pay-Out)
Current Practice (Market Pay-Out)
Duration
Ever Increasing Deposits (Long Duration)
Fluctuating Deposits (Short, Uncertain Duration)
Business Credit
Year
1955
1960
1965
1969
1973
1979
1983
1989
1992
1996
2003
2007
2013
22.7
23.0
24.4
25.4
23.4
22.4
23.0
20.9
18.5
20.2
14.3
15.4
13.0
7
10
11
Policy Alternatives
Structural Local Banking
Volcker Rule
Financial Leverage Management
12
13
Nineties
Year
% M1
%Y
Year
% M1
%Y
1961
0.7
3.3
1991
6.7
3.0
1962
2.8
5.8
1992
8.6
5.5
1963
2.1
5.5
1993
14.3
5.0
1964
3.4
7.3
1994
10.2
5.9
1965
4.6
8.0
1995
1.8
4.6
1966
5.0
8.5
1996
(1.9)
5.4
1967
2.4
5.8
1997
(4.1)
5.9
1968
6.4
9.8
1998
(0.6)
4.9
1969
7.7
8.0
1999
1.5
5.5
14
15
16
17
Govt Surplus
(%)
Interest Rate
(10 YR)
2009
2011
2009
2011
2011
Germany
5.7
5.7
(3.2)
(1.0)
1.24
Netherlands
4.2
9.6
(5.5)
(4.6)
1.68
Austria
2.7
2.1
(4.1)
(2.6)
1.89
Finland
1.9
(0.8)
(2.5)
(0.6)
1.48
France
(1.4)
(2.2)
(7.6)
(5.2)
2.09
Ireland
(2.8)
0.4
(14.0)
(13.0)
5.62
Italy
(1.9)
(3.4)
(5.4)
(3.9)
6.03
Spain
(4.8)
(3.6)
(11.2)
(8.9)
6.79
Portugal
(11.0)
(6.8)
(10.2)
(4.2)
10.47
Greece
(10.9)
(8.9)
(15.6)
(9.2)
24.26
1960
10.0
1970
12.6
1980
10.6
1985
8.6
1990
7.8
1995
6.4
2000
4.0
2005
2.6
2007
3.0
2008
5.0
2009
6.1
2010
5.6
2011
5.7
2012
5.6
2013
4.5
2014 Q1
4.0
Top 20% :
15% Savings
Bottom 80%: 50% Income
50% Income
7.5% Savings
(7.0%)Savings (3.5%) Savings
19
20
Depression
1930-2 Contraction
Relatively Slow Recovery
Non-Recovery
(Argentina)
Current Recession
Long-Lived Contraction
(Greece, Italy, Europe)
Relatively Slow Recovery
(Japan)
21
Alternative Theory
(1) Sectoral Collapse (Globally)
Depression Analysis
Agricultural Collapse
1920s Weak
1929-32 Price Collapse
1929-32 Income Collapse
1930-32 Mobility Collapse
(30-35% US Population)
International Competition
Country Recoveries Related to Devaluations (Argentina, Australia)
Devaluation Constraint Prevent Global Recovery
Policy Solution
World War II Finances Rural to Urban Transition
Non-Reappearance of Depression
Non-Recovery (Argentina)
23
Current Crisis
Manufacturing Collapse
- Temporally Extended
(US 1979-84; Japan 1989, Asia Crisis)
- Crisis Generated by Huge Asian Capacity
Additions (Post 2000)
Policy Solution
- Nowhere in Sight
24