[quote=pri_dk]Dave, you are one of the more knowledgeable posters here, but I’m afraid you don’t understand the definition of “zero sum.” And there really is no accepted use of the term “n-sum” such as you are trying to use with “1.5%-sum.”[/quote]
Dave’s point is entirely legitimate, and you are babbling about semantics.
Increasing debt (a credit bubble) does not inherently result in any permanent increase in GDP. All it does is pull consumption in from the future. So it’s a “zero sum game” except that GDP productivity increases all the while.
My own analysis showed that the direct effect of “Mortgage Equity Withdrawal” is modest, a few percentage points here and there on the enormous Personal Consumption Expenditures number. Even considering total increase in mortgage debt did not explain the depth and severity of the recession.
Larger effects, such as the “wealth effect” of real estate equity or perhaps ongoing migration of less skilled jobs overseas or displacement by automation, are needed to explain the change.
Krugman is bizarre and frightening; far more bizarre and frightening is how seriously he is taken. He uses misleading graphics and shrill language to make his points; both are unethical and disreputable and hardly in keeping with his supposed stature. But people seem to just love him, perhaps because he is such an outspoken counter balance to the right wing.
