Reply #47: The History Retreats Back to The Mid-18th Century

[ProfessorGAC]

Of course the variables shift but taken in even sized slices, certain behaviors can be deduced in the overall economy. But, the inputs shift along with the global nature of the economy, so the factors and effects move in a similar fashion. One cannot compare 1910 to 1980, but one can trend the causative behaviors of 1910 to those of 1980.

As to your first question, M1 has always been the most critical factor in finding causation of certain macroeconomic behaviors. Outstanding credits are exponentially weighted, so that small changes have little effect, and only if they get extreme do they show statistically significant leverage. That same thing happens on M2 and M3, but to not at as strongly sigmoidal a curve.

I see the banking-plunder issue (good name, btw), as bad, and probably will in fact cause a bail-out, based upon more borrowed money, which will trigger a recession (even by classical definition). But, i don't see disaster, just tough economic sledding. The economy is so glacially-paced, that it will survive such things without catastrophe. But, that doesn't mean it's impervious to pain.
The Professor