From: Stephen Dranger To: Karl Denninger Very well. I will deal only with the facts, and I will show you that the BEA is an acceptable source of information compared to the Census. I've looked at the methodology of both, and in fact on the Census data page, it states that its methodologies ARE NOT COMPATIBLE with BEA's data. http://www.census.gov/hhes/www/income/compare1.html "Source of data. The personal income series is estimated largely on the basis of data derived from business and governmental sources. These sources include the industrial and population censuses, employer's wage reports under the Social Security programs, and records of disbursements to individuals by governmental agencies. The income data presented in the census reports, on the other hand are based directly on field surveys of households." So the BEA is actually MORE accurate than the Census because the census relies on field surveys. But here's the real kicker: "Income data obtained in household interviews are subject to various types of reporting errors which tend to produce an understatement of income." So the Census Bureau even ADMITS that their figures are UNDERSTATEMENTS of income. On Wed, Jul 15, 2009 at 1:00 PM, Karl Denninger wrote: > More ad-hominen. > > Tell me what's included in the BEA's definition of "personal income" - an= d > provide your reference. > > If you read their monthly releases, you know the answer already, and you > know why using their numbers for personal income requires backing out > certain things, or you end up canceling the effect that in fact isn't > canceled in the economy. What does this mean exactly? To what are you referring? What are "certain things" and what exactly do they "cancel out?" > I would have to go back through EVERY monthly > release to back this out accurately, which is why I didn't use that serie= s. > > You pointed to a page with hundreds of methodology documents.=A0 Show me = the > one that claim makes your case and I'll take time to rip it apart. > > I've explained why I didn't use the BEA personal income numbers, but you > want me to do your work for you.=A0 I read these reports EVERY MONTH when= they > come out, and there is a very good reason I used the Census data, but > frankly, as I've said, I have spent more than an hour on this with you to= day > and won't spend any more UNLESS you come up with a clean and referenced > definition - then I will take the time to rip it apart. Fine, here's their definition of "income", again from http://www.bea.gov/national/pdf/nipa_primer.pdf "The right side of the account features the components of personal income, which is the current income received by persons from all sources; that is, from their contributions to production (from their labor or from owning a home or business), from transfers from government and businesses, and from the ownership of financial assets (such as interest and dividends).2 The largest source of income for individuals is compensation, which they receive for their labor; compensation includes employee and employer contributions to retirement and pension plans. Proprietors=92 income is the income received by individuals for their labor and use of capital. Rental income is the income received by persons from their rental of property. Other components of personal income include interest income, dividend income, and current transfers. Current transfers include government social benefits payments for programs such as social security and Medicaid. Lastly, =93contributions for government social insurance=94 (mandatory contributions to social insurance programs such as social security) is deducted in the measurement of personal income because the benefits accruing from these contributions are already reflected in current transfers." I see nothing about adjustments, and every category listed is real money that people have. What exactly is included in the BEA's reporting of personal income that you have an objection to? > > If you send anything else back, I'll ignore the email and put your email = in > my "blocked list" - you have wasted a colossal amount of my time today, s= o > either show you have honorable intent and aren't just trying to play game= s > or go away. > > Your choice, but this is the last opportunity. > ================================== Delivered-To: dranger@gmail.com From: Karl Denninger More ad-hominen. Tell me what's included in the BEA's definition of "personal income" - and provide your reference. If you read their monthly releases, you know the answer already, and you know why using their numbers for personal income requires backing out certain things, or you end up canceling the effect that in fact isn't canceled in the economy. I would have to go back through EVERY monthly release to back this out accurately, which is why I didn't use that series. You pointed to a page with hundreds of methodology documents. Show me the one that claim makes your case and I'll take time to rip it apart. I've explained why I didn't use the BEA personal income numbers, but you want me to do your work for you. I read these reports EVERY MONTH when they come out, and there is a very good reason I used the Census data, but frankly, as I've said, I have spent more than an hour on this with you today and won't spend any more UNLESS you come up with a clean and referenced definition - then I will take the time to rip it apart. If you send anything else back, I'll ignore the email and put your email in my "blocked list" - you have wasted a colossal amount of my time today, so either show you have honorable intent and aren't just trying to play games or go away. Your choice, but this is the last opportunity. The "personal income" numbers the BEA Stephen Dranger wrote: > You've just said that the point of the article is the GDP spread. I > offered a counter-argument against it, and now you have "no more time" > to correct what is obviously a factual error in your article. > > You said: "the entire issue is the efficiency of the economy - that > is, what is the "spread" between spending and income, and what is the > "spread" between GDP and income." THAT IS EXACTLY WHAT I WAS OFFERING > PROOF ABOUT. Are you even reading my emails? > > I know that if I wrote an article and someone pointed out a flaw in > one of my facts or data, I would correct it or at the very least > address it. You have done neither; you made some statement about BEA's > income data being "flawed" without offering any proof, and you've > ignored what are clearly very egregious errors in mathematics. I don't > know if you get paid for this, but at the very least it is quite > unprofessional. > > On Wed, Jul 15, 2009 at 12:37 PM, Karl Denninger wrote: > >> You haven't proved anything Stephen. >> >> You have steadfastly refused to go to the point of the article, and this has >> consumed over an hour of my time today. >> >> I have no more time for it. >> >> Goodbye. >> >> >> Stephen Dranger wrote: >> >> See, this is what happens whenever someone is wrong. You were >> perfectly happy to defend yourself when I made offhand insults before. >> Now that I've proven you wrong, you no longer wish to discuss things >> with me. >> >> You don't know what "ad-hominem" means. Ad-hominem would be if I were >> saying that you were wrong BECAUSE you're "an idiot" or because >> . Just because someone is insulted in an argument >> doesn't mean it's an ad hominem attack. >> >> The evidence I was bringing against you had nothing to do with >> personal attacks:1 >> >> 1. You used poor statistical judgement in comparing Per Capita income to GDP >> 2. You used two separate metrics to measure Per Capita Income against >> both GDP and Expenditures >> 3. You rejected a source >> >> You can't wave these points away by saying I'm being ad hominem. I >> apologize if I've insulted you, but I'm very frustrated that you keep >> on telling me "you're missing the point" and when I've offered >> argument against all your figures as being faulty, you move the >> goalposts and say I'm "missing the point" again. >> >> I dare say you're missing MY point: the figures you use to "prove" >> what a bad situation we are in are faulty. They are not based in sound >> math, science, or statistics. Therefore, no matter how correct your >> point might be, your article doesn't show it to be true. I was told by >> a reader of yours that you would correct articles if given good >> evidence. You are proving them wrong. >> >> On Wed, Jul 15, 2009 at 12:16 PM, Karl Denninger wrote: >> >> >> Now you've gone from a discussion to ad-hominen attacks. >> >> I have twice asked you to re-read the original article. You keep coming >> back with canards; the entire issue is the efficiency of the economy - that >> is, what is the "spread" between spending and income, and what is the >> "spread" between GDP and income. >> >> >> Turns out I've just investigated that, and AGAIN you rely on Census >> per-capita income when I've stated clearly that the BEA and the Census >> have different metrics; therefore to be consistent, if you use BEA >> data for expenditures and Per Capita GDP, you should also use it for >> personal income. >> >> If you believe that the BEA is "cooking the books," please illuminate >> me as to how. I am seriously asking. If the BEA's Income data is >> flawed, I want to know how and I want to see the source and proof of >> it. I deal with facts. >> >> Anyway, here's what the BEA's income data says about the "spread": >> >> 1981: PCI $11,266 / GDP $13,601 = 82.8% >> 2005: PCI $34,691 / GDP $41,961 = 82.6% >> >> So the "spread" really only dropped by 0.2%. But let's look at 2007: >> >> PCI $38,654 / GDP $45,670 = 84.6% >> >> So there goes that thesis out the window. Yes, yes, here come the >> arguments about the source. But unless I have proof of some kind of >> poor data collecting, I'm not buying it. I work with facts and proof, >> not handwaving and excuses. >> >> >> >> I've presented my case and have no more time for someone who wishes to argue >> that the RATIOS aren't the important issue when that's exactly how the >> original argument was framed. >> >> >> No, I was not arguing that they aren't the important issue. I was >> confused as to what "ratios" you were talking about because *I made an >> argument over almost every ratio I saw in your article.* You talked >> about the ratio of PCI to GDP, I argued against it. You talked about >> the ratio of PCI to expenditures, I argued against it. I was >> legitimately wondering what other ratios you could be talking about. >> I've just investigated your latest ratio in the paragraph above and I >> believe shown it to be false. I'd like to think that someone who is an >> economist will either accept my arguments and admit they're wrong or >> elucidate me as to why my arguments are false without complaining >> about ad hominem. >> >> >> >> Goodbye Stephen. >> >> >> Stephen Dranger wrote: >> >> On Wed, Jul 15, 2009 at 11:03 AM, Karl Denninger wrote: >> >> >> Because the BEA has ADJUSTMENTS they make to income. Care to try to back >> 'em out? I don't know if you CAN - this, by the way, is a big part of where >> the problem with their "savings rate" comes from - its false, because it >> counts paying down debt as "savings". >> >> >> Source, please. I looked at the BEA's methodologies >> (http://www.bea.gov/methodologies/index.htm#national_meth) and see >> nothing about "adjustments" made to income. I don't see it in the >> table. And the numbers I got weren't even adjusted for inflation. >> Perhaps I'm ignorant of some government trickery to falsify the income >> numbers, but getting two different numbers from two different sources >> who may very well use VASTLY DIFFERENT methodologies is just bad >> science, bad math, and even bad statistics. >> >> >> >> >> Go ahead and make the adjustments to the BEA "income" numbers - if you can >> get the adjustment factors going back to 1981 and compute them. Good luck. >> >> This, by the way, is why BEA never showed expenses at more than a couple >> percent negative compared to incomes (that is, expense > income) even though >> it was. Census' data has more lag in it (there is nothing beyond 2006 at >> this time) but they actually collect and report the data without cooking it. >> >> >> But I don't see it negative on the chart *anywhere*. And why are the >> Census's numbers so trusted? If you have an actual reason for >> distrusting the BEA, I'd like to see it, but otherwise I have to >> assume YOU are the one trying to fit a thesis. >> >> >> >> Only actual money in the pocket counts Stephen. >> >> BEA has a SMALL amount of distortion in expenditures but nowhere near as >> much. Its harder to cook expenditures, basically. >> >> >> So I'm right and this is about the government "cooking" the books. >> Source, please. I don't buy government conspiracies without proof. >> >> >> >> If Census' data is so "flawed" in 2005 why isn't it equally "flawed" in >> 1981? >> >> >> I'm not saying it's "flawed," I'm saying that they use a different >> metric for measuring personal income. The first Per Capita income >> chart I showed you had yet a THIRD value for personal income. It's not >> about cooking the books, it's about different ways to measure things. >> I'm just asking you to be consistent. >> >> >> >> You're trying to fit a thesis. It doesn't work; I'm concerned with RATIO >> CHANGES, because they speak to efficiency in the economy, whether what we're >> doing is sustainable or not, and whether we are headed for a parabolic-style >> blow-off and collapse. >> >> >> "Ratio changes?" A ratio of what? Most of the "ratios" you use in your >> article are based on poor statistics (trying to compare GDP to Per >> Captia Income) or trying to compare two separately gathered sources as >> being comparable. If you're going to show evidence of blow-off, debt, >> and collapse, please show it in a way that is factually accurate and >> not so insulting to those of us who can do math. >> >> >> >> The bottom line is efficiency loss in the economy Stephen, and how and why >> the debt bubble - going from 150% of GDP to 350% from 1981 to 2009 - >> happened. >> >> >> Maybe this did happen, but your "economic fundamentals" article >> doesn't show that at all. Your article is flawed and needs to be >> corrected. >> >> I'll check out that 150% and 350% figure -- I don't trust any of your >> numbers anymore. >> >> >> >> It was the only way to continue to pull forward demand and keep GDP >> "growing", but in doing so it widened the gap between GDP and income on a >> percentage basis - that is, it damaged economic efficiency and thus the >> ability to continue to grow the economy going forward. >> >> See the follow-up article posted this morning. >> >> Stephen Dranger wrote: >> >> Then why is the entire introduction to your article based on faulty >> data? You're ignoring a load of bullshit you put at the beginning of >> the article by claiming "ITS NTO THE POINT." >> >> However, the figures that you claim are the point are also flawed. As >> I've seen, there are several ways to calculate Per Capita Income. You >> got your expenditure figures from the BEA. Why didn't you get your Per >> Capita Income from the BEA? (Actually, I could see making this >> mistake; until I investigated it, I had no idea the figures could vary >> so wildly.) >> >> >> Anyway, let's see what the *same* source you got your Expenditure data >> says about Income: >> >> http://www.bea.gov/national/nipaweb/TablePrint.asp?FirstYear=1981&LastYear=2009&Freq=Year&SelectedTable=253&ViewSeries=NO&Java=no&MaxValue=306245&MaxChars=7&Request3Place=N&3Place=N&FromView=YES&Legal=&Land= >> >> Just so happens "personal expenditure" data is on this table, too, and >> that data does correspond to your Per Capita calculation. >> >> 1981: 11,266 (spent "about $8,600", actual spending $8,439) >> 1992: 20,870 (you didn't calculate this one, actual spending $16,485) >> 2005: 34,691 (spent "$29,000 per capita", actual spending $29,368) >> >> So, this premise is also faulty! We're not spending more than we >> make!! This is a more subtle error, one that's definitely >> understandable. But *you should really correct your blog.* >> >> And actually, the same exact table I got this data from also shows Per >> Capita GDP -- it ALSO proves the beginning section of your article is >> flawed: >> >> Anyway, the BASIC PREMISE of your entry is correct -- we are starting >> spend a higher percentage of our income. But your blog exaggerates it >> and uses numbers in a very flawed manner. I'm tired of politicians >> abusing numbers -- I'd like the blogging community not to follow in >> their footsteps. >> --Stephen >> >> >> On Wed, Jul 15, 2009 at 6:00 AM, Karl Denninger wrote: >> >> >> GO BACK AND READ IT AGAIN. >> >> The issue isn't GDP-per-capita - IT IS PERSONAL EXPENSES IN EXCESS OF >> PERSONAL INCOME, BOTH PER CAPITA. >> >> Both of those series are from the BLS - SAME DATA SOURCE. >> >> We went from spending $400 more than we make (less than 5%) to 16% more than >> we make ($4,000), both per-capita per year. >> >> How? DEBT. >> >> As I said: GO BACK AND READ IT AGAIN. >> >> Stephen Dranger wrote: >> >> "Now let's norm it for population growth: We've added about 30% to the >> population in the same time frame. This makes per-capita GDP go from >> $13,700 to $41,000, and when you check again, you see the ratio of GDP >> to income is about the same." >> >> Except that you don't use actual figures for that. And it doesn't >> explain the relationship with the total personal income stats -- which >> the per capita income figures ARE DERIVED FROM IN THE FIRST PLACE. >> >> You're hiding behind handwaving online. I did the actual math using >> online census population data: >> http://www.census.gov/popest/estimates.html >> >> 1981: 229465714 * 8476.0 = 1.944 trillion >> 1992: 255029699 * 14847.0 = 3.786 trillion (94% gain) >> 2005: 292892127 * 25036.0 = 7.332 trillion (93.6% gain) >> >> So they're about 6-7 percent within keeping up with the GDP. This is >> not the massive alarming shortfall you stated in your article. >> Furthermore, the data I found (which obviously uses a different >> metric) shows it's even better than this scenario. >> >> So why don't you include some actual math on your blog entry? >> --Stephen >> >> On Wed, Jul 15, 2009 at 5:09 AM, Karl Denninger wrote: >> >> >> Go back and read it again. >> >> Stephen Dranger wrote: >> >> >> Re: your article, "Morning Madness: Economic Fundamentals" >> >> Apparently you must have slept through *math* fundamentals class >> because you compare GDP, which is a GROSS total, to Per Capita, which >> is DIVIDED BY POPULATION. Of *course* there's going to be a lag in Per >> Capita spending -- US population has gone up!! >> >> What you wanted to use was the total personal income, NOT the per >> capita. Let's look at the numbers, shall we? >> >> 1981: $2,580,600,000 (2.58 / 3.1 = 83% of GDP) >> >> 1992: $5,349,384,000 (more than double!) (5.34 / 6.2 = 86% of GDP) >> >> 2005: $10,252,973,000 (another double!) (10.25 / 12.4 = 82% of GDP) >> >> TPI source: >> http://lwd.dol.state.nj.us/labor/lpa/industry/incpov/incpoverty_index.html >> >> So looks like your thesis is utterly incorrect. I hope you make a >> correction on your blog. >> >> >> %SPAMBLOCK-SYS: Matched [i-agree], message ok >> >> >> >> >> >> %SPAMBLOCK-SYS: Matched [i-agree], message ok >> >> >> >> %SPAMBLOCK-SYS: Matched [i-agree], message ok >> >> >> >> %SPAMBLOCK-SYS: Matched [i-agree], message ok >> >> >> >> %SPAMBLOCK-SYS: Matched [i-agree], message ok >> >> > > > %SPAMBLOCK-SYS: Matched [i-agree], message ok > --------------010707060202020703040800 Content-Type: text/html; charset=ISO-8859-1 Content-Transfer-Encoding: 7bit More ad-hominen.

Tell me what's included in the BEA's definition of "personal income" - and provide your reference.

If you read their monthly releases, you know the answer already, and you know why using their numbers for personal income requires backing out certain things, or you end up canceling the effect that in fact isn't canceled in the economy.  I would have to go back through EVERY monthly release to back this out accurately, which is why I didn't use that series.

You pointed to a page with hundreds of methodology documents.  Show me the one that claim makes your case and I'll take time to rip it apart. 

I've explained why I didn't use the BEA personal income numbers, but you want me to do your work for you.  I read these reports EVERY MONTH when they come out, and there is a very good reason I used the Census data, but frankly, as I've said, I have spent more than an hour on this with you today and won't spend any more UNLESS you come up with a clean and referenced definition - then I will take the time to rip it apart.

If you send anything else back, I'll ignore the email and put your email in my "blocked list" - you have wasted a colossal amount of my time today, so either show you have honorable intent and aren't just trying to play games or go away.

Your choice, but this is the last opportunity.



The "personal income" numbers the BEA

Stephen Dranger wrote: 
You've just said that the point of the article is the GDP spread. I
offered a counter-argument against it, and now you have "no more time"
to correct what is obviously a factual error in your article.

You said: "the entire issue is the efficiency of the economy - that
is, what is the "spread" between spending and income, and what is the
"spread" between GDP and income." THAT IS EXACTLY WHAT I WAS OFFERING
PROOF ABOUT. Are you even reading my emails?

I know that if I wrote an article and someone pointed out a flaw in
one of my facts or data, I would correct it or at the very least
address it. You have done neither; you made some statement about BEA's
income data being "flawed" without offering any proof, and you've
ignored what are clearly very egregious errors in mathematics. I don't
know if you get paid for this, but at the very least it is quite
unprofessional.

On Wed, Jul 15, 2009 at 12:37 PM, Karl Denninger<karl@denninger.net> wrote:
  
You haven't proved anything Stephen.

You have steadfastly refused to go to the point of the article, and this has
consumed over an hour of my time today.

I have no more time for it.

Goodbye.


Stephen Dranger wrote:

See, this is what happens whenever someone is wrong. You were
perfectly happy to defend yourself when I made offhand insults before.
Now that I've proven you wrong, you no longer wish to discuss things
with me.

You don't know what "ad-hominem" means. Ad-hominem would be if I were
saying that you were wrong BECAUSE you're "an idiot" or because
<insert insult here>. Just because someone is insulted in an argument
doesn't mean it's an ad hominem attack.

The evidence I was bringing against you had nothing to do with
personal attacks:1

1. You used poor statistical judgement in comparing Per Capita income to GDP
2. You used two separate metrics to measure Per Capita Income against
both GDP and Expenditures
3. You rejected a source

You can't wave these points away by saying I'm being ad hominem. I
apologize if I've insulted you, but I'm very frustrated that you keep
on telling me "you're missing the point" and when I've offered
argument against all your figures as being faulty, you move the
goalposts and say I'm "missing the point" again.

I dare say you're missing MY point: the figures you use to "prove"
what a bad situation we are in are faulty. They are not based in sound
math, science, or statistics. Therefore, no matter how correct your
point might be, your article doesn't show it to be true. I was told by
a reader of yours that you would correct articles if given good
evidence. You are proving them wrong.

On Wed, Jul 15, 2009 at 12:16 PM, Karl Denninger<karl@denninger.net> wrote:


Now you've gone from a discussion to ad-hominen attacks.

I have twice asked you to re-read the original article.  You keep coming
back with canards; the entire issue is the efficiency of the economy - that
is, what is the "spread" between spending and income, and what is the
"spread" between GDP and income.


Turns out I've just investigated that, and AGAIN you rely on Census
per-capita income when I've stated clearly that the BEA and the Census
have different metrics; therefore to be consistent, if you use BEA
data for expenditures and Per Capita GDP, you should also use it for
personal income.

If you believe that the BEA is "cooking the books," please illuminate
me as to how. I am seriously asking. If the BEA's Income data is
flawed, I want to know how and I want to see the source and proof of
it. I deal with facts.

Anyway, here's what the BEA's income data says about the "spread":

1981: PCI $11,266 / GDP $13,601 = 82.8%
2005: PCI $34,691 / GDP $41,961 = 82.6%

So the "spread" really only dropped by 0.2%. But let's look at 2007:

PCI $38,654 / GDP $45,670 = 84.6%

So there goes that thesis out the window. Yes, yes, here come the
arguments about the source. But unless I have proof of some kind of
poor data collecting, I'm not buying it. I work with facts and proof,
not handwaving and excuses.



I've presented my case and have no more time for someone who wishes to argue
that the RATIOS aren't the important issue when that's exactly how the
original argument was framed.


No, I was not arguing that they aren't the important issue. I was
confused as to what "ratios" you were talking about because *I made an
argument over almost every ratio I saw in your article.* You talked
about the ratio of PCI to GDP, I argued against it. You talked about
the ratio of PCI to expenditures, I argued against it. I was
legitimately wondering what other ratios you could be talking about.
I've just investigated your latest ratio in the paragraph above and I
believe shown it to be false. I'd like to think that someone who is an
economist will either accept my arguments and admit they're wrong or
elucidate me as to why my arguments are false without complaining
about ad hominem.



Goodbye Stephen.


Stephen Dranger wrote:

On Wed, Jul 15, 2009 at 11:03 AM, Karl Denninger<karl@denninger.net> wrote:


Because the BEA has ADJUSTMENTS they make to income.  Care to try to back
'em out?  I don't know if you CAN - this, by the way, is a big part of where
the problem with their "savings rate" comes from - its false, because it
counts paying down debt as "savings".


Source, please. I looked at the BEA's methodologies
(http://www.bea.gov/methodologies/index.htm#national_meth) and see
nothing about "adjustments" made to income. I don't see it in the
table. And the numbers I got weren't even adjusted for inflation.
Perhaps I'm ignorant of some government trickery to falsify the income
numbers, but getting two different numbers from two different sources
who may very well use VASTLY DIFFERENT methodologies is just bad
science, bad math, and even bad statistics.




Go ahead and make the adjustments to the BEA "income" numbers - if you can
get the adjustment factors going back to 1981 and compute them.  Good luck.

This, by the way, is why BEA never showed expenses at more than a couple
percent negative compared to incomes (that is, expense > income) even though
it was.  Census' data has more lag in it (there is nothing beyond 2006 at
this time) but they actually collect and report the data without cooking it.


But I don't see it negative on the chart *anywhere*. And why are the
Census's numbers so trusted? If you have an actual reason for
distrusting the BEA, I'd like to see it, but otherwise I have to
assume YOU are the one trying to fit a thesis.



Only actual money in the pocket counts Stephen.

BEA has a SMALL amount of distortion in expenditures but nowhere near as
much.  Its harder to cook expenditures, basically.


So I'm right and this is about the government "cooking" the books.
Source, please. I don't buy government conspiracies without proof.



If Census' data is so "flawed" in 2005 why isn't it equally "flawed" in
1981?


I'm not saying it's "flawed," I'm saying that they use a different
metric for measuring personal income. The first Per Capita income
chart I showed you had yet a THIRD value for personal income. It's not
about cooking the books, it's about different ways to measure things.
I'm just asking you to be consistent.



You're trying to fit a thesis.  It doesn't work; I'm concerned with RATIO
CHANGES, because they speak to efficiency in the economy, whether what we're
doing is sustainable or not, and whether we are headed for a parabolic-style
blow-off and collapse.


"Ratio changes?" A ratio of what? Most of the "ratios" you use in your
article are based on poor statistics (trying to compare GDP to Per
Captia Income) or trying to compare two separately gathered sources as
being comparable. If you're going to show evidence of blow-off, debt,
and collapse, please show it in a way that is factually accurate and
not so insulting to those of us who can do math.



The bottom line is efficiency loss in the economy Stephen, and how and why
the debt bubble - going from 150% of GDP to 350% from 1981 to 2009 -
happened.


Maybe this did happen, but your "economic fundamentals" article
doesn't show that at all. Your article is flawed and needs to be
corrected.

I'll check out that 150% and 350% figure -- I don't trust any of your
numbers anymore.



It was the only way to continue to pull forward demand and keep GDP
"growing", but in doing so it widened the gap between GDP and income on a
percentage basis - that is, it damaged economic efficiency and thus the
ability to continue to grow the economy going forward.

See the follow-up article posted this morning.

Stephen Dranger wrote:

Then why is the entire introduction to your article based on faulty
data? You're ignoring a load of bullshit you put at the beginning of
the article by claiming "ITS NTO THE POINT."

However, the figures that you claim are the point are also flawed. As
I've seen, there are several ways to calculate Per Capita Income. You
got your expenditure figures from the BEA. Why didn't you get your Per
Capita Income from the BEA? (Actually, I could see making this
mistake; until I investigated it, I had no idea the figures could vary
so wildly.)


Anyway, let's see what the *same* source you got your Expenditure data
says about Income:

http://www.bea.gov/national/nipaweb/TablePrint.asp?FirstYear=1981&LastYear=2009&Freq=Year&SelectedTable=253&ViewSeries=NO&Java=no&MaxValue=306245&MaxChars=7&Request3Place=N&3Place=N&FromView=YES&Legal=&Land=

Just so happens "personal expenditure" data is on this table, too, and
that data does correspond to your Per Capita calculation.

1981: 11,266 (spent "about $8,600", actual spending $8,439)
1992: 20,870 (you didn't calculate this one, actual spending $16,485)
2005: 34,691 (spent "$29,000 per capita", actual spending $29,368)

So, this premise is also faulty! We're not spending more than we
make!! This is a more subtle error, one that's definitely
understandable. But *you should really correct your blog.*

And actually, the same exact table I got this data from also shows Per
Capita GDP -- it ALSO proves the beginning section of your article is
flawed:

Anyway, the BASIC PREMISE of your entry is correct -- we are starting
spend a higher percentage of our income. But your blog exaggerates it
and uses numbers in a very flawed manner. I'm tired of politicians
abusing numbers -- I'd like the blogging community not to follow in
their footsteps.
--Stephen


On Wed, Jul 15, 2009 at 6:00 AM, Karl Denninger<karl@denninger.net> wrote:


GO BACK AND READ IT AGAIN.

The issue isn't GDP-per-capita - IT IS PERSONAL EXPENSES IN EXCESS OF
PERSONAL INCOME, BOTH PER CAPITA.

Both of those series are from the BLS - SAME DATA SOURCE.

We went from spending $400 more than we make (less than 5%) to 16% more than
we make ($4,000), both per-capita per year.

How?  DEBT.

As I said: GO BACK AND READ IT AGAIN.

Stephen Dranger wrote:

"Now let's norm it for population growth: We've added about 30% to the
population in the same time frame.  This makes per-capita GDP go from
$13,700 to $41,000, and when you check again, you see the ratio of GDP
to income is about the same."

Except that you don't use actual figures for that. And it doesn't
explain the relationship with the total personal income stats -- which
the per capita income figures ARE DERIVED FROM IN THE FIRST PLACE.

You're hiding behind handwaving online. I did the actual math using
online census population data:
http://www.census.gov/popest/estimates.html

1981: 229465714 * 8476.0 = 1.944 trillion
1992: 255029699 * 14847.0 = 3.786 trillion (94% gain)
2005: 292892127 * 25036.0 = 7.332 trillion (93.6% gain)

So they're about 6-7 percent within keeping up with the GDP. This is
not the massive alarming shortfall you stated in your article.
Furthermore, the data I found (which obviously uses a different
metric) shows it's even better than this scenario.

So why don't you include some actual math on your blog entry?
--Stephen

On Wed, Jul 15, 2009 at 5:09 AM, Karl Denninger<karl@denninger.net> wrote:


Go back and read it again.

Stephen Dranger wrote:


Re: your article, "Morning Madness: Economic Fundamentals"

Apparently you must have slept through *math* fundamentals class
because you compare GDP, which is a GROSS total, to Per Capita, which
is DIVIDED BY POPULATION. Of *course* there's going to be a lag in Per
Capita spending -- US population has gone up!!

What you wanted to use was the total personal income, NOT the per
capita. Let's look at the numbers, shall we?

1981: $2,580,600,000 (2.58 / 3.1 = 83% of GDP)

1992: $5,349,384,000 (more than double!) (5.34 / 6.2 = 86% of GDP)

2005: $10,252,973,000 (another double!) (10.25 / 12.4 = 82% of GDP)

TPI source:
http://lwd.dol.state.nj.us/labor/lpa/industry/incpov/incpoverty_index.html

So looks like your thesis is utterly incorrect. I hope you make a
correction on your blog.


%SPAMBLOCK-SYS: Matched [i-agree], message ok





%SPAMBLOCK-SYS: Matched [i-agree], message ok



%SPAMBLOCK-SYS: Matched [i-agree], message ok



%SPAMBLOCK-SYS: Matched [i-agree], message ok



%SPAMBLOCK-SYS: Matched [i-agree], message ok

    


%SPAMBLOCK-SYS: Matched [i-agree], message ok
/html> --------------010707060202020703040800-- --------------080003070805070205020108 Content-Type: text/x-vcard; charset=utf-8; name="karl.vcf" Content-Transfer-Encoding: 7bit Content-Disposition: attachment; filename="karl.vcf" begin:vcard fn:Karl Denninger n:Denninger;Karl org:Cuda Systems LLC adr;dom:;;314 Olde Post Road;Niceville;FL;32578 email;internet:karl@denninger.net tel;work:850-376-9364 tel;fax:850-897-9364 x-mozilla-html:TRUE url:http://market-ticker.org version:2.1 end:vcard --------------080003070805070205020108--