Worse than I thought

by Russ Roberts on February 28, 2008

in Data

As I mentioned in this post, there were some strange things in the Washington Post article on the middle class, particularly in the graphic:

Networth_2

So let’s take a closer look. As Randy pointed out in the comments, $55,000 seems like a lot of debt for the median family in 2004.  Look again. According to the chart, debt is $55,000 but mortgage debt by itself is $95,000.  A reader might think that the $55,000 is on top of mortgage debt. The description around the graphic says: "household debt more than doubled as more families used debt to finance day-to-day expenses." Is that what that $55,000 is about? Is that on top of mortgage debt? Whoa.

Well, no, it turns out.

The chart is incredibly misleading. Only the top line (income) and the bottom line (net worth) are true medians measured across all families.

The debt figure of $55,000 in 2004 (which supposedly is 151% higher than in 1989 to pay for day-to-day expenses) is actually ALL forms of debt INCLUDING mortgage debt. So how can that be? How can the median family have only $55,000 of all kinds of debt when there’s $95,000 of mortgage debt all by itself?

That’s because each line of the chart (other than the top line and the bottom line) is a subset of all families and a different subset.

So among families that have mortgage debt (maybe 40-50% of all families) the median mortgage debt among those families is $95,000.

But among families that have any kind of debt, (about 3/4 of all families) the median indebtednes including all kinds of debt is $55,000. That includes mortgages debt. So that $55,000 number has nothing to do with "day-to-day" expenses. And the scary 151% increase in "Debt" from 1989 to 2004 includes people choosing larger mortgages and nicer cars and going to college and everything people finance via borrowing.

So you can’t add up any of the lines of the chart or even compare them to each other. They’re each for a different subset of the population, the population who have that kind of debt or asset.

(This explanation of how those numbers must have been calculated comes from a Federal Reserve Board economist who compared the numbers in the Post graphic to Fed data from the Survey of Consumer Finances.)

 

The bottom line is the bottom line—net worth is up. That’s a good place to start. The rest of the chart is basically meaningless for drawing the kind of conlcusions implied in the text.

Be Sociable, Share!

Comments

comments

98 comments    Share Share    Print    Email

{ 50 comments }

Randy February 28, 2008 at 5:38 pm

Thanks for clearing that up. It matches a whole lot better with my personal experience – and it really is good news. Now lets have on the doom and gloomers to try to explain it away.

Martin Brock February 28, 2008 at 7:48 pm

So among families that have mortgage debt (maybe 40-50% of all families) the median mortgage debt among those families is $95,000.

Thanks for clearing that up. So it's not the median household's mortgage. It's the median mortgage, and the rise naturally tracks rising house prices.

But among families that have any kind of debt, (about 3/4 of all families) the median indebtednes including all kinds of debt is $55,000.

So it's the median debt, including the debt of many people without mortgages. That makes a lot of sense too. If 45% of households have a mortgage and 75% have debt, then nearly half (40%) of households with debt have no mortgage. The 40th percentile debt (among households with debt), whatever it is, includes no mortgage at all. It's hard to say how much of the median (50th percentile) debt is a mortgage.

Still, the median debt is up 151% since 1989, adjusted for inflation, and if the "wealth effect" theory of the personal saving rate is correct, much of this increase is consumer debt (the cars and such). I don't see how the clarification makes this increase any less gloomy. Maybe it's not very gloomy at all, but if it's gloomy before the clarification, it's still gloomy after.

The bottom line is the bottom line—net worth is up. That's a good place to start. The rest of the chart is basically meaningless for drawing the kind of conclusions implied in the text.

I wouldn't go that far. Median net worth covers all families, including the 30% of families with no debt. A net worth figure consistent with the debt figure (the median net worth of the 70% of families with some debt) is almost certainly lower, probably much lower, than the median net worth of all families, and we don't know that this figure rose at all between '89 and '04.

Martin Brock February 28, 2008 at 7:55 pm

The 40th percentile debt (among households with debt), whatever it is, includes no mortgage at all.

Correction. That's not implied. Some households below the 40th percentile could have small mortgages and little other debt. 40% of debtor households have no mortgage, but some of these have more debt than households with a mortgage.

Randy February 28, 2008 at 8:16 pm

Martin,

"A net worth figure consistent with the debt figure…"

Sorry, but I don't understand what makes you think that the net worth figure is not consistant with the debt figure. Why wouldn't people with higher net worth feel more comfortable with taking on more debt?

Martin Brock February 28, 2008 at 8:41 pm

Sorry, but I don't understand what makes you think that the net worth figure is not consistant with the debt figure. Why wouldn't people with higher net worth feel more comfortable with taking on more debt?

Roberts explains that the net worth figure is the median net worth (the figure with 50% of other figures below it) of all households. The debt figure is the median only for households with debt, and this population includes only 70% of households.

If we determine the median net worth of only the 70% of households with debt (the same households for which the median debt figure applies), we find a different median net worth, so the two figures certainly are not comparable.

I thought of your objection and so wrote "almost certainly lower", but the figure could be higher rather than lower. The statistics don't answer the question. People with debt can have higher net worth than people with no debt.

Martin Brock February 28, 2008 at 8:41 pm

Martin Brock February 28, 2008 at 9:07 pm

The 35% increase in median net worth over 15 years is the not only meaningful statistic on the chart, and it could indicate only an inflation of prices of rent-generating assets exceeding the inflation of other prices. I expect this result from easy credit combined with an unusually large proportion of the population in their peak saving years.

Systematically ignoring statistics that don't paint a rosy picture is not science and blinds us to bad policy. I think we've had unusually bad Federal government policy in the last decade, and I expect some not so rosy consequences.

Martin Brock February 28, 2008 at 9:08 pm

Apologies for the blockquote snafu.

jpm February 28, 2008 at 9:26 pm

While I am unable to read these lengthly diatribes (mostly by Martin Brock) about how capitalism in the US sucks, I am amazed at what a lack of life he has!

Martin Brock February 28, 2008 at 10:09 pm

While I am unable to read these lengthly diatribes (mostly by Martin Brock) about how capitalism in the US sucks, I am amazed at what a lack of life he has!

You're incredibly knowledgeable of diatribes you haven't read.

In reality, I haven't written a single word about how capitalism in the U.S. sucks. You're simply dishonest.

jpm February 28, 2008 at 10:17 pm

to quote Mr. Martin: "Still, the median debt is up 151% since 1989, adjusted for inflation, and if t the "wealth effect" theory of the personal saving rate is correct, much of this increase is consumer debt (the cars and such). I don't see how the clarification makes this increase any less gloomy. Maybe it's not very gloomy at all, but if it's gloomy before the clarification, it's still gloomy after."

I think the last time I was reading Martin's stuff, he was railing about how the massive surge in the population (about 8% above, then lower) was going to mean that life comes to an end for all Americans because all productivity ceases at age 65!

Yeah, SS will go bust. Nobody ever doubed that. So the state. That doesn't mean that poverty follows the individual, but Martin can't see that.

jpm February 28, 2008 at 10:21 pm

I wonder why, for Mr Martin, that for all that gloomy 151% in debt since 1989 ther is no corresponding rosy and cheery increase in interest and economic rents for those wealthy retired lenders, now or soon to be absent their $600 monthly SS payments?!

jpm February 28, 2008 at 10:25 pm

Why! of course! Silly me! It is because the rich are getting richer! the poor are getting poorer! If only I were such the student of Mt Malthus and Mr Marks, as Mr Martin is! Then I would be honest! then I would understand!

Where is our savoir?! Where is Hillary?! Where is Mr. Hussein?!

Martin Brock February 28, 2008 at 10:53 pm

I think the last time I was reading Martin's stuff, he was railing about how the massive surge in the population (about 8% above, then lower) was going to mean that life comes to an end for all Americans because all productivity ceases at age 65!

I've never written such a thing. You're a very deliberate liar.

Yeah, SS will go bust. Nobody ever doubed that. So the state. That doesn't mean that poverty follows the individual, but Martin can't see that.

I've never written that SS will go bust either. I advocate reforms of the system, but it won't go bust, because income taxes will pay the additional benefits as the payroll tax is no longer sufficient, as was the plan all along.

I've never anywhere suggested that anyone is about to be impoverished.

I wonder why, for Mr Martin, that for all that gloomy 151% in debt since 1989 ther is no corresponding rosy and cheery increase in interest and economic rents for those wealthy retired lenders, now or soon to be absent their $600 monthly SS payments?!

No one is about to be absent any SS payment, and I suppose the increase in rents is what renters have in mind, but the problems with easy credit are insolvency, confused economic signals and inflation.

Why! of course! Silly me! It is because the rich are getting richer! the poor are getting poorer! If only I were such the student of Mt Malthus and Mr Marks, as Mr Martin is! Then I would be honest! then I would understand!

Expecting you to distinguish Marx from Mises is clearly expecting too much.

FreedomLover February 28, 2008 at 11:20 pm

Martin, I haven't read a single positive thought from you in this blog ever. You come off as a sociopath, frankly.

jpm February 28, 2008 at 11:30 pm

Martin writes from Feb 21, Wealth, savings & debt page: "The bulge of Boomers are now aged 43 to 54.
More like 43 to 63. You can see it in the age distribution. It stands out like a sore thumb. Population was relatively low immediately after the war, but the birth rate shot up almost immediately, and birth rate isn't the only factor to consider. Lower mortality is also a factor."

Yeah, I'm responding to a troll, I know (It's so much fun though)

FreedomLover February 29, 2008 at 12:24 am

jpm:

It's like so much wasted breath when it comes to Martin. He talks to you like you're a wall, like you don't exist. That's why I speculate about his sociopathic tendencies.

Tim February 29, 2008 at 7:57 am

I was at the Third National Summit on Economic and Financial Literacy in DC the other day. The article is a prime example of something one of the speakers said: that economic and financial illiteracy is linked to math illiteracy.

RR's post just pointed out what people with some understanding of math, economics, and personal finance would/should have been questioning at the outset.

Keith February 29, 2008 at 8:22 am

I have to wonder that with the rampant spending/borrowing from the government and the inevitable inflation that will follow, that it's logical for people to carry large amounts of "money" debt in an effort to accumulate "material" wealth to offset the depreciation of the money.

I'm not an economist, nor do I profess to know much of the details or nuances of the field, but it seems to me a self interested logical action for people to take.

Martin Brock February 29, 2008 at 9:36 am

Martin, I haven't read a single positive thought from you in this blog ever. You come off as a sociopath, frankly.

That's your mindless characterization of a skeptic of your own peculiar partisanship. The vague and pointless ad hominem only increases your solidarity with your choirboys.

When I write that I'm happy to support my parents but don't like the way Social Security structures the support, that's positive with a caveat. When I write that real economic growth can continue regardless of inflationary monetary policy, that's positive without being pollyannish. I've written both and many other positive assertions. That you selectively ignore them is evidence only of your "sociopathic" theory of people disputing your choir.

Martin Brock February 29, 2008 at 9:42 am

Yeah, I'm responding to a troll, I know (It's so much fun though)

You quote a true statement that doesn't substantiate your earlier, thoroughly dishonest statement at all, and you're gleefully satisfied.

You think whatever you please regardless of any facts.

Martin Brock February 29, 2008 at 9:48 am

It's like so much wasted breath when it comes to Martin. He talks to you like you're a wall, like you don't exist. That's why I speculate about his sociopathic tendencies.

In reality, my replies to your posts are far more responsive and substantive than your replies to mine. You won't find me anywhere ignoring every substantive point in one of your posts and simply avoiding every issue raised by calling you a "troll" or a "sociopath" or an "idiot" or the other harmony of ad hominems coming from your choir. You're clearly projecting here.

vidyohs February 29, 2008 at 10:06 am

Happily I don't show up in debt graph at all. Everything I own is paid for. I have no credit card(s), I have no bank account, and I receive 1099s about this time of each year which go promptly into the trash bin.

Love it.

The only debt I have carried in my life ever has been home and vehicle. Currently I owe nothing to anyone. My next new vehicle will be paid for in cash (and I'll probably be visited by the FBI for doing so).

When I retired from the Navy and started my first business in 1983 I applied for a credit card because I thought it might be beneficial and convenient. It immediately began to accelerate my spending. I saw the inevitable results, so I cut it up, paid it off and sent the remains back.

I deal strictly in cash now and have since 1984. I don't crave a lot of "toys", cheap or expensive.

I was fortunate to realize early on that all of the economy in the U.S.A. is set up deliberately to urge, almost coerce, each individual to consume consume consume, and use debt if necessary. We are even told that we "deserve" that shiny new SUV or that 2 week cruise. No one is ever asked to think about the question of "why do we deserve it", what have we done to "deserve" it, like work and save maybe.

Like so many other cultural arenas in America, I saw it, I did not like it, I stepped out of it, and I am still out of it, a fact of which I am proud.

Tell me I am out of "it", and I'll just smile and say, "Yep! and damn glad to be. Thank you very much."

We complicate life way too much in America and we do that because the ability to think is a passing skill not latched on to by most.

What does this have to do with median income vs average income, or median debt with average debt? It is only relevant in that I don't worry about where I am in the income side and I am not included in the debt side; all of this and I have everything I want as well without being "filthy rich".

Martin Brock February 29, 2008 at 10:10 am

… it's logical for people to carry large amounts of "money" debt in an effort to accumulate "material" wealth to offset the depreciation of the money.

I agree that inflation has this effect and that monetary authorities will avoid a deflationary reaction if possible.

Inflation need not affect all prices at the same rate at the same time. The prices of rent generating assets like houses, corporate shares and binds can rise faster than the corresponding rents (existing home prices rise faster than rents, P/E ratios rise, interest rates fall) and faster than the price of consumer goods.

The measure of "inflation" with which we adjust prices is biased toward the rate at which the rents and consumer goods rise.

We measure "wealth" in terms of the price of the rent generating assets and we adjust it for "inflation" using the rate at which consumer prices rise.

Thus inflation can masquerade as rising wealth, for a while at least. If it happens for very long, I expect consumer prices to catch up by rising faster than prices of rent generating assets for a while or I expect the price of rent generating assets to fall.

Either of these scenarios is a fall in real wages if common labor is in the "rent generating assets" category, as I suppose it is. Hopefully, I'm entitled to the rental value of my own labor, but I'm obviously not entitled to all of it, because I pay high taxes on it as well as debts to my educators and so on.

vidyohs February 29, 2008 at 10:26 am

martinduck,

I have to agree, I doubt you are truly a troll, just a compulsive pointless pontificator of great magnificence.

It is evident to those of us who can read that you are more than happy to respond to a 200 word post with a two hundred paragraph rebuttal. Even your agreements are of so thinly plastered on an undercore of rebuttal.

As to being substantive, I invite you and others to go back up-thread and view "methinks" first post, then track down to your response. In lawyer terms, "not reponsive or relevant."

methinks had as her theme "individual free choice" and stated it in clear concise words, which you promptly quoted and ran off into an irrelevant pointless pontification on Austrian economics.

Get a grip, man, a farmer never feeds his entire load of hay to one cow, a preacher doesn't preach a three hour sermon to one parishoner, yet you inundate us with huge massive mostly irrelevant uninteresting pontifications on every single theme or subtheme offered by everyone. And, you've shown a willingness to beat that dead horse until the poor sucker is flayed to the bone, and then run off to go "round the mulberry bush" when anyone challenges your version.

While you might have worthwhile things to say how the hell or we supposed to find them when we have to dig through massive copious wordy posts? (actually I ceased to do so long ago) If you're going to write novels, at least choose good characters and a decent plot.

vidyohs February 29, 2008 at 10:28 am

OOOPs.

"Even your agreements are of so thinly plastered on an undercore of rebuttal."

First 'of' shouldn't be there.

Martin Brock February 29, 2008 at 10:42 am

I have to agree, I doubt you are truly a troll, just a compulsive pointless pontificator of great magnificence.

Coming from you, I'll take that as a compliment.

Martin Brock February 29, 2008 at 11:08 am

methinks had as her theme "individual free choice" and stated it in clear concise words, which you promptly quoted and ran off into an irrelevant pointless pontification on Austrian economics.

That's your summary. Since you raise the point, I propose that you save me the trouble and at least specify the thread.

Get a grip, man, a farmer never feeds his entire load of hay to one cow, a preacher doesn't preach a three hour sermon to one parishoner, …

I'm not preaching to the choir here. If you likely don't understand the point I'm making, brevity only feeds the impulse to leap to conclusions, as when jpm incredibly confuses a Misean position with a Marxist position.

And, you've shown a willingness to beat that dead horse until the poor sucker is flayed to the bone, and then run off to go "round the mulberry bush" when anyone challenges your version.

No one is compelled to read my posts, and I only beat horses that are still living.

… actually I ceased to do so long ago …

You aren't quite ignoring me yet.

Methinks February 29, 2008 at 4:16 pm

No one is compelled to read my posts, and I only beat horses that are still living.

Beating living horses is not nice. Not safe, either. They tend to have a nasty kick.

vidyohs February 29, 2008 at 6:09 pm

martinduck,

"You aren't quite ignoring me yet.
Posted by: Martin Brock | Feb 29, 2008 11:08:28 AM"

Not quite, the process is somewhat different. I rarely read your stuff and never bother with the volumnous tomes you are adept at.

I scan posts and read the ones written by those who I have come to respect and admire, such as methinks for example, then that post is in my mind as I scan down the posts. When I saw a quote pulled from her post I looked to see who was commenting on her thoughts. There was martinduck's name appended, so I read the post and saw immediately that you were off in la la land and missed her brief and concise point. A tactic that is typical of you.

As to whether I am right in my interpretation of her "thesis" we can let her make that judgment since she has indicated she is aware.

This is the paragraph of mine in contention, let's let her make the call.

"methinks had as her theme "individual free choice" and stated it in clear concise words, which you promptly quoted and ran off into an irrelevant pointless pontification on Austrian economics."

Was methinks addressing the issues of Individual free choice, or Austrian economics?

When I was 12 years old I went hunting in a small copse of woods along the little Colorado river near Holbrook, Arizona on a Sunday afternoon. I had my trusty slingshot with marble ammo. I was after cottontail rabbits or game of opportunity. I finally saw a large owl sitting in a Cottonwood tree and got a lucky shot and dropped it. At that age I had already shot, skinned and gutted a lot of small game so that was no big deal, but I had never seen the inside of an eyeball. Here I had an owl with large eyes, so I put the point of my hunting knife on its eyeball and pushed. The eyeball slid away under my point and the more I tried the less success I had.

You are like that eyeball, patrons of this Cafe push their point on you and you just slide away and run around the mulberry bush. It isn't just me, if it was I'd go pull up some books on debate and writing to improve. I'll also let the "patrons" of this Cafe make the call on whether this is a fair judgment on your technique, or if I am out in left field.

Frankly, in my humble opinion, you beat that horse long after it is dead and you run around the mulberry bush until at long last and after suffering volumes and volumes of words the other party simply just quits with the realization that one more lick at the horse and another trip around the mulberry bush after martinduck is fruitless and pointless.

There you are sir martinduck, I don't read you, I scan the thread and see what is interesting. You're misquoting and out of context replies to people sometimes are interesting simply because they are so blatant.

The other reason I don't read your posts is because I never saw any original thought or even new thought on old topics. It is all just rote repetitious pontification on topics you clearly have recorded but never thought about.

And, yes like was mentioned recently, you are a statist and you reveal it in your responses. No one can respond to me and tell me that there is no property without the state, I know I am talking to a tape recorder (muirduck) or a statist (muirduck wannabe). Either way it's the same.

Martin Brock February 29, 2008 at 9:55 pm

Can a voluminous tome logically disclaim interest in my voluminous tomes?

vidyohs February 29, 2008 at 11:12 pm

"Can a voluminous tome logically disclaim interest in my voluminous tomes?
Posted by: Martin Brock | Feb 29, 2008 9:55:27 PM"

Well of course, it is a matter of record in Austrian Economics, a matter with which, I would assume due to your serious past pontification, you would be famliar with.

vidyohs February 29, 2008 at 11:14 pm

And, of course Hayek, Freidman, Bastiat, and Lysander Spooner agree with me.

So does Karl and Adolf, oh and Benito as well.

Bush is ambivalent.

Hillary and Barack are on your side.

Martin Brock March 1, 2008 at 1:30 pm

And, of course Hayek, Freidman, Bastiat, and Lysander Spooner agree with me.

"The gold standard was based on what was essentially an irrational superstition. As long as people believed there was no salvation but the gold standard, the thing could work. That illusion or superstition has been lost. We now can never successfully run a gold standard. I wish we could. Its largely as a result of this that I have been thinking of alternatives." – Frederich Hayek

http://www.reason.com/news/show/33304.html

The superstition is what you describe above, the idea that gold itself is money and that some gold somewhere backs every unit of currency under a gold standard and that nothing else will suffice as money. You simply ignore what your own link says about copper cents, because this ignorance is necessary to preserve the superstitious illusion.

A gold standard is a policy fixing the price of gold as a monetary policy, and as such it can check inflationary monetary expansion in principle, but the policy also has defects, and it never prevented fractional reserve credit. What matters are the credit extension policies, not gold or anything else in a bank vault.

Requiring gold in a vault is a statutory regulation limiting the creation of money to extend credit. Money itself is a credit, an entitlement to consume goods and services provided currently, not simply entitlement to gold dug from the ground and deposited in banks in the past. Gold is just one thing you may purchase with money. Under a gold standard, you may buy it at a fixed price at a bank; otherwise, the state closes the bank.

Hillary and Barack are on your side.

Your simple, dualistic view of the world, with Ds on one side and Rs on the other, is nonsense. Neither Hillary nor Barack much want anything I advocate here.

Methinks March 1, 2008 at 7:52 pm

As to whether I am right in my interpretation of her "thesis" we can let her make that judgment since she has indicated she is aware.

I'm assuming we're talking about that lovely exchange, complete with leaping lords, serfs forced to build castles for Lords, dragons, ladies sighing, etc.

Yes, Vidyohs, no surprise – you understood exactly what my "thesis" was. I had not read any of Martin's posts before and didn't know that my response to his post would mean immediate, gestapo-style cross examination. It appears to me that Martin has a talent for shifting the discussion to accusing one of accusing him of things he does not "advocate" ("let the record show"). What Martin does and does not advocate is supposed to be magically known in advance. God forbid one misunderstands what Martin advocates! The obscure references full of Lords forcing his children to build them castles come fast and hard.

Martin Brock March 1, 2008 at 8:56 pm

… immediate, gestapo-style cross examination.

You don't specify any gestao-style cross examination.

… shifting the discussion to accusing one of accusing him of things he does not "advocate"

You don't specify any shift of this sort. Stereotyping and cliquish groupthink is the norm here and in forums generally. It was the norm in high school. It was the norm in playground sandboxes.

What Martin does and does not advocate is supposed to be magically known in advance.

It's a discussion, a give and take, not magic. You're free to be specific here, but you aren't. We've had no exchange in this thread. I ask vidyohs to specify the thread, and he doesn't reply. You express a vague emotional reaction and also specify nothing. I can't possibly respond to any criticism you raise here, because the criticisms are impossibly vague by design.

Martin Brock March 1, 2008 at 9:42 pm

O.K. Here it is.

[Leftists] believe that it is the government's job to decide how much wealth should be used for consumption and how much for investment, not individual Americans.

The Austrian view concerns the amount of money flowing toward investment vs. the amount flowing toward consumption. If the "wealth effect" theory is true, we've possibly seen a feedback effect of a monetary expansion driving up the price of rent-generating assets like homes and corporate shares to unsustainable levels that don't reflect real growth. If so, either prices rise more generally (inflation) or the price of rent-generating assets falls.

methinks's post responded to Roberts' assertion: "Between 1989 and 2004, Americans accumulated more wealth. They decided to use some of that wealth for increased consumption today.".

The counterpoint to Roberts' analysis of this "wealth effect" is not simply "leftist". The libertarian "right" claimed for years that monetary expansion fueled a housing bubble, that much of the recent rise in house prices is inflation and not real wealth. Here's Eric Englund at LewRockwell.com in 2004, long before house prices peaked and before "subprime mortgage" became household words.

http://www.lewrockwell.com/englund/englund13.html

I read this perspective almost exclusively from "the right" for years, just as I read antiwar arguments almost exclusively from "the right". The counterpoint to Roberts' view comes at least as much from the libertarian "right" as from the left, so when methinks debunks a "leftist" counterpoint that she first asserts herself, I respond with a classically liberal counterpoint.

The response seems both topical and germane to methinks' post, particularly in a forum memorializing the man largely responsible for the liberal counterpoint.

Martin Brock March 1, 2008 at 9:46 pm

And I don't see any gestapo-style cross examination either.

Martin Brock March 1, 2008 at 9:50 pm

And here's Tyler Cowen at Marginal Revolution attributing the idea directly to Hayek.

http://www.marginalrevolution.com/marginalrevolution/2008/01/the-return-of-h.html

vidyohs March 1, 2008 at 10:22 pm

martinduck,
poor martinduck,

methinks spoke to you and told you you misunderstood her, I told you that.

Other patrons of the cafe are making the exact same analysis of your posting as I do. Poor boy, you are just so full of yourself and your definitive pontification on every single topic, digression, or controversial word posted on the cafe.

God knows where you got the foundation for your diatribe on gold above in response to my 'tome' in cheek comment above.

Martin Brock March 1, 2008 at 10:58 pm

I didn't misunderstand her. I bothered to find the post as you suggested, and you've completely ignored it again, just as you ignore the copper money in your own link to a U.S. money law, just as you ignore Hayek calling your understanding of the gold standard "superstitious".

I don't need to apologize for my voluminous tomes, because I enjoy the game, and no one is compelled to read them. You write a tome on my tomes claiming no interest in my tomes, and you expect me to take you seriously.

Hans Luftner March 1, 2008 at 11:45 pm

Stereotyping and cliquish groupthink is the norm here and in forums generally. It was the norm in high school. It was the norm in playground sandboxes.

I find this very interesting. You post some views, some people disagree, you get belligerent & declare that "they're all ganging up on me, like in high school!"

It's a great story. It would mean there's nothing wrong with any of your opinions, so you can go on feeling smart. You can just blame it on "groupthink." It's a wonderful defense mechanism. You could also use "they're all just jealous! Jealous of my intelligence!" That would also work.

The groupthink charge can be easily disproven, though, when you realize we disagree with each other all the time. Usually what unites us is in disagreeing with people like you & muirgeo, two posters who go on & on with such easily debunked nonsense. If we weren't so busy responding to that junk I think you'd see how "groupthink" we really were.

If you really thought we were so petty & cliquey, why would you continue to engage us?

vidyohs March 2, 2008 at 10:32 am

martinduck!!!!

By jove you have hit it!! methinks misunderstood herself, it is obvious because she said I did understand her and you did not…………….but she was wrong and you have pointed it out!!!!

Furthermore since I believed that I have said nothing about the gold standard on this or any recent post(last month or more), you ferreted me out and shot my nonexistent gold standard comments down!!!

Damn you're good!

It was hard to do but you have exceeded muirduck in uninteresting stupidity.

vidyohs March 2, 2008 at 10:35 am

No martinduck, I am wrong and I apologize.

Really unique stupidity such as you have displayed here is worth acknowledging, kids do need a bad example like yours to compare with the really good examples of others who patronize this cafe.

You do serve a purpose.

Methinks March 2, 2008 at 8:26 pm

I didn't even realize that you guys were talking about Martin's response to that post. I didn't read the reply because I didn't think that post deserved a reply – it was meant as a bit of humour (and we know humour sails right over Martin's head). Every post is a death match to Martin. I thought you guys were referring to our exchange on the Laffer Curve thread.

In the end, Martin. You missed the point once again. My post had nothing to do with whether the appreciation in household wealth was inflation or real appreciation in the price of the asset. It most definitely had nothing at all to do with which side was claiming inflation. It had to do with opinions on who decides gets to control wealth. The reason I didn't assert that this growth in household net worth is inflation or real is because I don't have enough data. First of all, I have no idea how much of this household net worth is a home, how much is retirement, and how many other assets the family might own – like a sole proprietorship. Secondly, even for home values, I don't know how much is real appreciation and how much is inflation. Even if I had the data on home prices, I could only venture a wild guess. Paucity data, lack of robust price data and meaningful comps is the problem in fragmented, illiquid markets. In fact, later in the thread, I wondered about that.

This I thought was funny, though:

ME: Only if the return on the their assets is lower than the interest they're paying on their debt. Since net worth is growing, I'm inclined to believe this isn't the case. So, they are better off taking on more debt.

For example, even though I had the cash to buy my car, I chose to finance the car and invest the cash in my business because the interest rate I pay on the car is much lower than the return on my business. I have more debt, but I'm better off.

Martin:This psychology is precisely how easy credit becomes a bubble. More to the point, the borrowing we've seen recently seems to fuel consumption. If it's fueling the consumption of nondurable goods, that's very different than borrowing to buy productive means.

If it was not obvious already, my shiny new SUV was not "productive means". I just had a hankering for a shiny new SUV and I bought it on credit instead of cash. Yet, I'm much better off than if I had spent cash. Martin obviously couldn't work it out the first time but managed to assert that this very bad thinking. Let's see if he has another go. Because this "psychology" is a very basic cost benefit analysis.

Methinks March 2, 2008 at 8:29 pm

There's some really poor editing in the above post, for which I apologize. I was interrupted a few times.

Martin Brock March 3, 2008 at 9:58 pm

I find this very interesting. You post some views, some people disagree, you get belligerent & declare that "they're all ganging up on me, like in high school!"
/

There's nothing belligerent about my description. People are cliquish. It's a fact. This business about "ganging up" is your description, not mine. You find yourself interesting.

Martin Brock March 3, 2008 at 9:59 pm

Martin Brock March 3, 2008 at 10:03 pm

Martin obviously couldn't work it out the first time but managed to assert that this very bad thinking.

I never say a word about your thinking. I refer to easy credit. Easy credit is a behavior of monetary authorities, not your personal behavior.

Hans Luftner March 3, 2008 at 11:59 pm

Martin, you debate like a child. Those are my words. The record is very clear.

Previous post:

Next post: