Move­ment at the Sta­tion”: Cana­dian Cen­tral Bank Gov­er­nor Car­ney on the Age of Delever­ag­ing

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There was move­ment at the sta­tion,
for the word had passed around
That the colt from old Regret had got away…
(“Banjo” Pat­ter­son, “The Man from Snowy River”)

Click here for this post in PDF for­mat: Debt­watch mem­bers; CfESI mem­bers

Click here for the data used in this post: Debt­watch mem­bers; CfESI mem­bers

Before I make any crit­i­cal remarks, I’ll start by say­ing that I’m delighted to see the Gov­er­nor of a Cen­tral Bank even refer to Hyman Min­sky, let alone acknowl­edge that we are in a “Min­sky Moment” (p. 4: “The global Min­sky moment has arrived”—or should that be Mil­len­nium?), to acknowl­edge that we are now in an Age of Delever­ag­ing (the speech’s title was “Growth in the age of delever­ag­ing”), to focus upon the impact of changes in the aggre­gate level of debt rather than merely on its dis­tri­b­u­tion (p. 1: “Accu­mu­lat­ing the moun­tain of debt now weigh­ing on advanced economies has been the work of a gen­er­a­tion”), and to coun­te­nance that debt write­offs may have a role to play in escap­ing from this never-end­ing cri­sis (Car­ney 2011, p. 6: “Whether we like it or not, debt restruc­tur­ing may hap­pen”).

By way of con­trast, so far as I am aware, the word “Min­sky” has yet to pass from Ben Bernanke’s lips since this cri­sis began, and his dis­cus­sion of Min­sky prior to this cri­sis was, to put it politely, asi­nine. Bernanke devoted pre­cisely 2 sen­tences to Hyman Min­sky in his Essays on the Great Depres­sion (Bernanke 2000):

Hyman Min­sky (1977) and Charles Kindle­berger (1978) have in sev­eral places argued for the inher­ent insta­bil­ity of the finan­cial sys­tem but in doing so have had to depart from the assump­tion of ratio­nal eco­nomic behav­ior.. [A foot­note adds] I do not deny the pos­si­ble impor­tance of irra­tional­ity in eco­nomic life; how­ever it seems that the best research strat­egy is to push the ratio­nal­ity pos­tu­late as far as it will go. (Bernanke 2000, p. 43)

I expect that sheer embar­rass­ment may be one rea­son that Hyman’s name is taboo in Bernanke’s pres­ence.

Fig­ure 1: Result of search for “Min­sky” in Fed­eral Reserve Speeches

Sim­i­larly, the impact of delever­ag­ing on aggre­gate demand doesn’t even fit in Bernanke’s doggedly Neo­clas­si­cal mind­set: from that point of view, only the dis­tri­b­u­tion of debt mat­ters, and not his aggre­gate level. Despite his pop­u­larly-believed sta­tus as an expert on the Great Depres­sion, he sim­ply refused to coun­te­nance any expla­na­tion of that event that didn’t fit into the Neo­clas­si­cal basket—as evi­denced by his dis­missal of Irv­ing Fisher’s “Debt Defla­tion The­ory of Great Depres­sions” (Fisher 1933):

Fisher’s idea was less influ­en­tial in aca­d­e­mic cir­cles, though, because of the coun­ter­ar­gu­ment that debt-defla­tion rep­re­sented no more than a redis­tri­b­u­tion from one group (debtors) to another (cred­i­tors). Absent implau­si­bly large dif­fer­ences in mar­ginal spend­ing propen­si­ties among the groups, it was sug­gested, pure redis­tri­b­u­tions should have no sig­nif­i­cant macro-eco­nomic effects… (Bernanke 2000, p. 24; empha­sis added)

The high­lighted sec­tion of the above quote also shows how lit­tle thought Bernanke gave to the actual process of debt-defla­tion: dur­ing such a cri­sis, many debtors can’t repay their debts and there­fore there is no zero-sum “redis­tri­b­u­tion from debtors to cred­i­tors”, but wide­spread debt defaults. As Car­ney empha­sises, defaults are inevitable and pol­icy mak­ers may make things worse if they sim­ply try to avoid debt write-offs:

Whether we like it or not, debt restruc­tur­ing may hap­pen. If it is to be done, it is best done quickly. Pol­icy-mak­ers need to be care­ful about delay­ing the inevitable and merely fund­ing the pri­vate exit. (p. 6)

So bravo to Gov­er­nor Mark Car­ney for being prob­a­bly the first OECD Cen­tral Bank Gov­er­nor to acknowl­edge Min­sky, delever­ag­ing, and the inevitabil­ity of debt defaults (though not the first Cen­tral Bank Gov­er­nor in the world; that hon­our almost cer­tainly belongs to Mer­cedes Marcó del Pont, Gov­er­nor of the Cen­tral Bank of Argentina).

That said, there are sev­eral points on which I’ll quib­ble with Carney’s analy­sis.

Private debt is different

Car­ney lumps pri­vate sec­tor and pub­lic sec­tor debt together, and excludes finan­cial sec­tor debt from his statistics—clearly in the belief that finance sec­tor debt doesn’t mat­ter, pre­sum­ably (since he doesn’t pro­vide his rea­son­ing for doing so) in the belief that finance sec­tor debt to the finance sec­tor is a “zero sum game”.

Fig­ure 2: Carney’s key debt to GDP ratio chart

From the per­spec­tives of Minsky’s the­ory, the empir­i­cal record, and the process of pri­vate money and debt cre­ation, both these decisions—lumping gov­ern­ment and pri­vate sec­tor debt together, and ignor­ing finance sec­tor debt—are in error.

Minsky’s “Finan­cial Insta­bil­ity Hypoth­e­sis” focused upon the dynam­ics of pri­vate debt, with the core con­cept being that lever­aged spec­u­la­tion would rise dur­ing a period of tran­quil growth in a cap­i­tal­ist econ­omy because tran­quil­lity was the excep­tion rather than the rule:

Stability—or tranquillity—in a world with a cycli­cal past and cap­i­tal­ist finan­cial insti­tu­tions is desta­bi­liz­ing. (Min­sky 1982, p. 101)

Min­sky saw prop­erly-man­aged pub­lic spending—and hence pub­lic debt—as a poten­tial “home­o­sta­tic sta­bi­lizer” to this dynamic of pri­vate debt. Ris­ing tax­a­tion and declin­ing social secu­rity pay­ments dur­ing a boom made a pub­lic sec­tor sur­plus likely, which would take money out of cir­cu­la­tion and reduce the scale of pri­vate spec­u­la­tion, while declin­ing tax­a­tion and ris­ing social secu­rity pay­ments dur­ing a slump would give pri­vate busi­nesses a cash flow they wouldn’t oth­er­wise have, mak­ing it eas­ier to repay debts. I mod­elled this aspect of his hypoth­e­sis in my first papers on Min­sky (Keen 1995; Keen 1996; Keen 2000), and got the out­come that Min­sky pre­dicted: a pri­vate sys­tem that was prone to a debt-defla­tion could be sta­bi­lized by counter-cycli­cal gov­ern­ment spend­ing.

Fig­ure 3: A Min­sky model with­out gov­ern­ment spend­ing

Fig­ure 4: A Min­sky model with gov­ern­ment spend­ing

In my model, the gov­ern­ment sec­tor was “resolute”—increasing spend­ing if unem­ploy­ment exceeded 5% and reduc­ing it below that level. In the real world, gov­ern­ments have accepted ris­ing unem­ploy­ment, and accu­mu­lated debt in pur­suit of fol­lies (like the war in Iraq) as well as in pur­suit of eco­nomic sta­bil­ity. But even so, the counter-cycli­cal role of gov­ern­ment debt can be seen when one com­pares pri­vate sec­tor debt—including finan­cial sec­tor debt—to gov­ern­ment (see Fig­ure 5).

Fig­ure 5: Sep­a­rat­ing out pri­vate sec­tor and pub­lic sec­tor debt in the USA

This is more appar­ent when we look just at the change in debt: pri­vate and pub­lic debt move in oppo­site direc­tions.

Fig­ure 6: Pri­vate and pub­lic debt move in oppo­site direc­tions

Finance sector debt matters

Ignor­ing finance sec­tor debt is a mis­take. Firstly, it’s huge: by far the largest com­po­nent of debt, pri­vate or pub­lic, in the USA (see Fig­ure 7).

Fig­ure 7

Sec­ondly, finance sec­tor debt is not a “zero sum game”. Though lend­ing by a non-bank finan­cial com­pany to another entity doesn’t cre­ate money, it does cre­ate debt; and the ini­tial lend­ing by a bank to a non-bank cre­ates both credit money and debt. Since the finance sec­tor was the source of most of the spec­u­la­tive debt that fuelled the bub­ble, and it is by far the major force in delever­ag­ing now, leav­ing it out of the analy­sis exempts a major causal fac­tor in both the pre-2008 boom and the post-2008 deba­cle.

Thirdly, by lump­ing together pri­vate and gov­ern­ment debt and ignor­ing finance sec­tor debt, Carney’s aggre­ga­tion obscures the com­par­i­son of today with the Great Depres­sion, under­states the growth of debt since the end of WWII, mis-iden­ti­fies the start of the Age of Delever­ag­ing, and under­states the degree of delever­ag­ing to date.

With Carney’s aggre­ga­tion, “Peak Debt” dur­ing the Great Depres­sion was 285% of GDP ver­sus 254% today, the buildup in debt only began in 1980, “Peak Debt” occurred in August 2009, and delever­ag­ing has been rel­a­tively mild since then.

How­ever, con­sid­er­ing just pri­vate sec­tor debt and includ­ing the finance sec­tor, Peak Debt in the Great Depres­sion was 238% ver­sus 303% today, the build-up in debt began right from 1945, “Peak Debt” occurred in Feb­ru­ary 2009, and delever­ag­ing since then has been stark.

Con­sid­er­ing all pri­vate and pub­lic debt together, the sit­u­a­tion today is worse than the Great Depres­sion (307% then ver­sus 373% today), the debt build-up dates to 1950, “Peak Debt” was in March 2009, and deleveraging—despite a huge increase in gov­ern­ment debt—has been marked.

Fig­ure 8: Com­par­ing debt ratios

Which aggre­ga­tion is bet­ter? This is best answered by look­ing at why aggre­gate debt mat­ters, which is the role of chang­ing debt lev­els in aggre­gate demand.

Aggregate Demand is Income + Change in Debt

I’m begin­ning to feel a bit like Cato the Elder here, who ended every speech with “Fur­ther­more, it is my opin­ion that Carthage must be destroyed”: in the credit-based econ­omy in which we live, aggre­gate demand is the sum of incomes plus the change in debt. This mon­e­tary demand is then expended on both goods and ser­vices and claims on finan­cial assets.

This is a case that is made well by both Schum­peter and Min­sky, but has been ignored by neo­clas­si­cal eco­nom­ics (and for­got­ten even by some mod­ern non-neo­clas­si­cal econ­o­mists):

From this it fol­lows, there­fore, that in real life total credit must be greater than it could be if there were only fully cov­ered credit. The credit struc­ture projects not only beyond the exist­ing gold basis, but also beyond the exist­ing com­mod­ity basis. (Schum­peter 1934, p. 101)

If income is to grow, the finan­cial mar­kets, where the var­i­ous plans to save and invest are rec­on­ciled, must gen­er­ate an aggre­gate demand that, aside from brief inter­vals, is ever ris­ing. For real aggre­gate demand to be increas­ing, … it is nec­es­sary that cur­rent spend­ing plans, summed over all sec­tors, be greater than cur­rent received income and that some mar­ket tech­nique exist by which aggre­gate spend­ing in excess of aggre­gate antic­i­pated income can be financed. It fol­lows that over a period dur­ing which eco­nomic growth takes place, at least some sec­tors finance a part of their spend­ing by emit­ting debt or sell­ing assets. (Min­sky 1982, p. 6; empha­sis added)

We can use this to show that Carney’s aggre­ga­tion is mis­lead­ing, because using his aggre­ga­tion, there has been no delever­ag­ing. The change in debt, on his mea­sure, remained pos­i­tive right through the cri­sis.

Fig­ure 9: Change in debt in US$ mil­lion

But when the finan­cial sec­tor is included and gov­ern­ment sec­tor excluded, there has been a huge turn­around from ris­ing debt adding almost 30% to aggre­gate demand at the peak of the bub­ble, and then sub­tract­ing 20% from aggre­gate demand at its trough.

Fig­ure 10: Change in debt as per­cent of GDP

The final clincher is the cor­re­la­tion of these mea­sures to unem­ploy­ment. There is a strong neg­a­tive cor­re­la­tion between change in debt and the level of unem­ploy­ment, since increas­ing debt increases aggre­gate demand and reduces unem­ploy­ment. Carney’s mixed pri­vate-pub­lic-minus-finance mea­sure has a rea­son­able cor­re­la­tion to unem­ploy­ment of –0.45, but the pri­vate-only-includ­ing-finance has a cor­re­la­tion of –0.94.

Fig­ure 11: Far stronger cor­re­la­tion of change in Pri­vate debt to Unem­ploy­ment

What’s “old Regret” got to do with it?

The three lines at the begin­ning of this post are from the famous poem/bush balled “The Man from Snowy River”. For two rea­sons, I couldn’t resist link­ing it to this story because it reminded me of the cliché “shut­ting the fence after the horse has bolted”.

Firstly, Carney’s mea­sure makes it very hard to iden­tify when the cri­sis began: the change in debt in his mea­sure remains pos­i­tive, and all that can be iden­ti­fied is a slight slow­down in the rate of growth of debt (from 14% of GDP p.a. to 7%, after which it “recov­ers” back to about 10%). Peak Debt occurs in August 2009—two years after the cri­sis began.

The pri­vate-includ­ing-finance mea­sure how­ever clearly iden­ti­fies the end of 2007 as the begin­ning of the crisis—when the change in debt plunged from almost 30% of GDP p.a. down to minus 20% at its nadir in early 2010. So “the colt from old Regret” got away two years before the first Cen­tral Banker noticed.

Sec­ondly, while I’m again very thank­ful that Gov­er­nor Car­ney has put Min­sky into the vocab­u­lary of West­ern cen­tral bankers, we would have been far bet­ter off had Minsky’s wis­dom been heeded decades ago, rather than after the event.

This was pos­si­ble because knowl­edge of Min­sky wasn’t lim­ited to a few obscure non-ortho­dox econ­o­mists like myself: the head of the BIS’s research depart­ment from 1995 till 2008 was another Cana­dian, Bill White, and he was an out and out Min­sky fan whose warn­ings of a poten­tial cri­sis were ignored.

That said, it’s good to see that sen­si­ble eco­nom­ics, rather than the fan­tasy that is neo­clas­si­cal eco­nom­ics, is finally being con­sid­ered in the realms of Cen­tral Banks.

Postscript

I was dou­bly bemused to see the title of Gov­er­nor Carney’s paper because I was work­ing on a paper with almost exactly the same title:


Aca­d­e­mic prece­dence being what it is, I’m happy to cede inven­tion of the term “The Age of Delever­ag­ing” to Gov­er­nor Car­ney, and I’ll cite him when­ever I refer to this term in future.

Bernanke, B. S. (2000). Essays on the Great Depres­sion. Prince­ton, Prince­ton Uni­ver­sity Press.

Car­ney, M. (2011). Growth in the age of delever­ag­ing. Empire Club of Canada/Canadian Club of Toronto. Toronto, Bank of Inter­na­tional Set­tle­ments.

Fisher, I. (1933). “The Debt-Defla­tion The­ory of Great Depres­sions.” Econo­met­rica
1(4): 337–357.

Keen, S. (1995). “Finance and Eco­nomic Break­down: Mod­el­ing Minsky’s ‘Finan­cial Insta­bil­ity Hypoth­e­sis.’.” Jour­nal of Post Key­ne­sian Eco­nom­ics
17(4): 607–635.

Keen, S. (1996). “The Chaos of Finance: The Chaotic and Marx­ian Foun­da­tions of Minsky’s ‘Finan­cial Insta­bil­ity Hypoth­e­sis.’.” Economies et Soci­etes
30(2–3): 55–82.

Keen, S. (2000). The Non­lin­ear Eco­nom­ics of Debt Defla­tion. Com­merce, com­plex­ity, and evo­lu­tion: Top­ics in eco­nom­ics, finance, mar­ket­ing, and man­age­ment: Pro­ceed­ings of the Twelfth Inter­na­tional Sym­po­sium in Eco­nomic The­ory and Econo­met­rics. W. A. Bar­nett, C. Chiarella, S. Keen, R. Marks and H. Schn­abl. New York, Cam­bridge Uni­ver­sity Press: 83–110.

Min­sky, H. P. (1982). Can “it” hap­pen again? : essays on insta­bil­ity and finance. Armonk, N.Y., M.E. Sharpe.

Schum­peter, J. A. (1934). The the­ory of eco­nomic devel­op­ment : an inquiry into prof­its, cap­i­tal, credit, inter­est and the busi­ness cycle. Cam­bridge, Mass­a­chu­setts, Har­vard Uni­ver­sity Press.

 

 

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • LCTesla

    Gary Shilling beat both of you to claim­ing the inven­tion of that term, Steve: http://www.amazon.com/Age-Deleveraging-Investment-Strategies-Deflation/dp/0470596368
    That might solve a mys­tery regard­ing what sub­con­scious well­spring you had both been draw­ing from when com­ing up with it like this in par­al­lel. 😛

    It seems to me that neo-clas­si­cal econ­o­mists ignore the boost to demand from debt growth on account of how the expect a kind of Ricar­dian Equiv­a­lence to hold in the pri­vate sec­tor like they pre­sume it does in the pub­lic sec­tor. Any increases in demand given rise to by debt growth is, by their logic, off­set by decreases in demand from expec­ta­tions to delever at a later stage. Mon­e­tary pol­icy com­pli­cates this some­what, though, because the lever­ag­ing hap­pens at a higher inter­est rate than the delever­ag­ing. I would expect some­one to make the argu­ment that the ratio­nal­ity prin­ci­ple is not in ques­tion and the exces­sive lever­ag­ing is sim­ply given rise to by mon­e­tary pol­icy that rewards lever­ag­ing on a sys­tem-wide level for this rea­son. The only ques­tion this would leave unan­swered is how the pri­vate sec­tor as a whole coor­di­nates it’s actions so as to give rise to this “sys­tem wide lever­ag­ing”…

  • cliffy

    If I lend myself $20,000, clearly their is lit­tle likely dif­fer­ence in the eco­nomic expres­sion of the before and after state of that trans­ac­tion.

    How­ever, If a guy in Syd­ney lends a guy in Thai­land $20,000, clearly some­thing in the eco­nomic nature of things has changed.

    This for me this is the rea­son why though on paper a loan from one entity to another has an ele­ment of squar­ing off, it is the expres­sion of that trans­ac­tion in the real world that makes ris­ing debt have effect out­side of any increase in money sup­ply asso­ci­ated with finan­cial sec­tor activ­ity.

    An inter­est­ing study would be the cor­re­la­tion between the char­ac­ter­is­tic dis­tinc­tions between Cred­i­tor and Debtor and the extent of pres­ence of Min­sky mar­kets.

    For exam­ple, if the Debtors and Cred­i­tors are in the same city as opposed to the Debtors being in one city and the Cred­i­tors in another is there a mate­r­ial change in the like­li­hood that mar­kets go Min­sky?

  • mahaish

    what beg­gars belief,

    is that as a cen­tral banker,

    he hasnt come out and attacked the sin­gle cur­rency union idea itself

    cen­tral bankers are obsessed with the com­po­si­tion of the mon­e­tary base,

    and i would have thought one of the many impor­tant rea­sons why you have a float­ing exchange rate as oppossed to a cur­rency union or peg, is that cur­rency imbal­ances can be com­pen­sated for through exchange rate move­ments, which helps to min­imise the impact on the mon­e­tary base

    per­haps he thought men­tion­ing min­sky was con­tro­ver­tial enough with­out adding fuel to the fire and con­dem­ing the very idea of a euro

  • alain­ton

    Steve you are right to keep pub­lic and pri­vate sec­tor debt sep­a­rate

    1. An expan­sion in gov­ern­ment debt through Tbills or bonds is a sec­toral trans­fer pay­ment in the short term and a com­mit­ment to mon­e­tary expan­sion over term — hence it has much less impact on AD in the short term com­pared to bank cre­ated credit which has an imme­di­ate expan­sion­ary effect.

    2. Changes to gov­ern­ment debt are steady and pre­dictable and sig­nalled through the ‘risk free’ rate (cough cough) — changes to pri­vate sec­tor debt can be much more rapid — espe­cially where bal­ance sheets go into neg­a­tive

    3. The veloc­ity mul­ti­plier of gov­ern­ment debt is likely to be much lower than pri­vate sec­tor debt — indeed if funded by poorly designed taxes and fund­ing non invest­ment spend­ing it can be neg­a­tive.

    4. The key effect of pub­lic sec­tor debt reduc­tion is on the liq­uid­ity of banks — tbills at 2.5% are a straight no-brain liq­uid­ity equiv­a­lent to cash, the com­bi­na­tion of less gov­ern­ment debt and enhanced cap­i­tal ade­quacy require­ments is a pri­vate sec­tor delever­ag­ing. A post-keyn­sian ‘crowd­ing out’ effect.

  • alain­ton

    Oh Steve, reminded by read­ing some Stephen Kin­sella that if you are cor­rect­ing national account­ing to national income as well as change in debt and net expen­di­ture on assets you also need to include net depre­ci­a­tion

    Dont know if you have caught his recent paper on the ‘state of the art’ of mon­e­tary cir­cuit mod­el­ling — a must read
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1955613

    Im sure you would raise a wry smile at the fol­low­ing

    The role of prices in stock flow mod­els is not well under­stood at the basic
    levels.It takes God­ley and Lavoie nearly 250 pages to allow prices
    to move’

  • Christo­pher Dob­bie

    I’m think­ing the MF Global deba­cle should be a clear indi­ca­tor to investors of how the finan­cial sec­tor plans to delever­age.

  • Thanks Andrew, that is a good lit­tle paper.

  • Lyon­wiss

    Back when I first started in finan­cial mar­kets, there was a “par­a­digm shift” in
    the per­cep­tion of Australia’s cur­rent account deficit, from the Pitch­ford the­sis:

    Pitch­ford J (1989), ‘A Scep­ti­cal View of Australia’s Cur­rent Account and Debt
    prob­lem’, The Aus­tralian Eco­nomic Review, 86, pp 5–14.

    The deficit was largely due to pri­vate sec­tor debt, not gov­ern­ment debt.
    The Pitch­ford view was that pri­vate sec­tor debt is pri­vate sec­tor prob­lem between
    con­sent­ing adults. The under­ly­ing assump­tion is the effi­cient mar­ket hypoth­e­sis,
    ie the lenders knew what they were doing and they could han­dling the con­se­quences of their deci­sions. The gov­ern­ment has no role:

    http://www.rba.gov.au/speeches/2011/sp-ag-080711.html

    The GFC has proved this view to be false. All the bailouts (and any debt
    jubilees) effec­tively con­verted pri­vate debt to pub­lic debt, sub­stan­tially
    caus­ing the sov­er­eign debt crises we are see­ing. Unless gov­ern­ments refrain from mon­e­tary inter­fer­ence, which is vir­tu­ally impos­si­ble, the dis­tinc­tion between
    pri­vate money (debt) and pub­lic money (debt) can only be tem­po­rary.

    Under Key­ne­sian (or social­ist) eco­nom­ics, with a fiat money sys­tem, the dis­tinc­tion between pri­vate and pub­lic money is even less clear. As the cur­rent cri­sis devel­ops, the risk that pri­vate sav­ings in pen­sion accounts will be “stolen” for pub­lic pur­pose will increase.

  • End­less

    If any­one feels inclined I’d be inter­ested in a cri­tique of Joye’s lat­est offer­ing:

    http://www.businessspectator.com.au/bs.nsf/Article/house-prices-housing-property-debt-income-economy–pd20111220-PQ28K?OpenDocument&src=sph

  • glu­bilee

    Maybe there are some cracks in the ortho­doxy, let’s hope. they are start­ing to get there, but are still blind to many of their assump­tions.

    I think the Cen­tral Bankers are in shock, they, like well-edu­cated doc­tors of the 1700s, they are still try­ing to bleed the patient to heal them, and the patients keep dying.. Of course, the patients are all ghetto dwelling worth­less human­ity in their minds any­ways, so no big loss if they kill a few economies, as long as the banks are okay. But when their friends and fam­ily bankers are effected, will they keep bleed­ing or wake up to the errors of their ways?

    FYI

    Inter­est­ing view 3 charts at Of Two Minds blog
    http://www.oftwominds.com/blogdec11/three-charts12-11.html

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  • Bhaskara II

    Steve, you men­tioned in a pre­vi­ous post your inter­est in get­ting a 3D print­ing machine to make a phys­i­cal rep­re­sen­ta­tion of the results of your model with gov­ern­ment spend­ing, such as in fig­ure 4. 

    Bent wire would be an excel­lent way to cre­ate a 3D phys­i­cal rep­re­sen­ta­tion of a para­met­ric plot. 

    Bend­ing wire can be done by an artis­tic hand or by com­puter con­trolled indus­trial machine. A wire form­ing machine could form your plots, pos­si­bly from the inside out to keep from get­ting tan­gled. Or, the wire could be formed in a few pieces and then con­nected.

    There are cus­tom man­u­fac­tur­ing com­pa­nies that bend wire to order based on a com­mand file. Their ser­vice is known as “wire form­ing” or “wire bend­ing”.

    Exam­ples:
    http://www.voganmfg.com/custom-wire-services.html
    In Aus­tralia,
    http://www.manufacturelink.com.au/processes/springs-cnc-wire-bending.aspx

    There are videos of the machines work­ing on youtube.com.

  • Hmmm. It was a partly friv­o­lous idea, but one worth pur­su­ing. Thanks for that link.

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