Friday, July 21, 2017

Nirvana Fallacies and the "Enemy of the Good"

As NIMBY preferences make inclusive communities less likely, nirvana fallacies also lessen the chances of new productive agglomeration, due to "one size fits all" infrastructure requirements. Stated another way: not only is it difficult to make room for more of us in the productive agglomeration we already have. It is costly and cumbersome, to establish new settings where additional productive agglomeration could occur.

Among other problems, nirvana fallacies don't consider the decades old reality of wage stagnation. Yet how much stagnation was truly necessary? Non tradable sector production reform, would have meant substantial real wage gains for all concerned. What's more, many aspects of production reform, should not have to be complicated - especially those which make it simpler for individuals to coordinate their lives in closer proximity to one another.

With production reform, millions would be able to embrace simple transportation options that could be designed for local community levels. Meanwhile, too much transportation dialogue centers around "perfect solutions" such as autonomous vehicles. Such a reality might also be imposed on communities which don't particularly want them. Worse, it might become difficult to build new, wage responsive communities, should all regions be expected to bear the infrastructure costs of autonomous transportation as the "perfect" solution.

Why are non tradable sectors so reluctant, to respond to the shifting wage distributions and lifestyle preferences of the present? Had these sectors been open to technological innovation all along, worries about wage stagnation would never have been necessary. Proactive measures would have resulted in real wage gains, which reduced the need for government revenue at the same time. Of the nirvana fallacy, Wikipedia wrote:
The nirvana fallacy is the informal fallacy of comparing actual things with unrealistic idealized alternatives...It can also refer to the tendency to assume that there is a perfect solution to a particular problem...By creating a false dichotomy that presents one option which is obviously advantageous - which at the same time being completely implausible - a person using the nirvana fallacy can attack any opposing idea because it is imperfect.
Doesn't the reality of real wage losses, especially given the consequent effects on city budgets, deserve a more practical approach? Nevertheless, cities become flummoxed when citizens take matters into their own hands. For example, Toronto residents had already experienced mishaps on a steep trail in a community park, before a citizen went ahead and built a $550 stairway. Since a stairway which met city standards would cost approximately $65,000, the privately provided stairway may be torn down.

In this instance, the city should have little difficulty funding a stairway built to bureaucracy code. But what happens when existing regulations make it difficult for populations whose income levels are better suited for less costly options? Also consider how Wikipedia describes perfect, as the enemy of the good:
A widely accepted interpretation of "The perfect is the enemy of the good" is that one might never complete a task if one has decided not to stop until it is perfect. Completing the project well is made impossible by striving to complete it perfectly. Closely related is the nirvana fallacy, in which people never even begin an important task because they feel reaching perfection is too hard.
Non tradable sectors are particularly exposed to both of these problems. While the human capital investment requirements for time based services of healthcare and education are affected by the "enemy of the good", physical infrastructure suffers from the nirvana fallacy. The "perfect as the enemy of the good" has also become a problem, for matching potential between employees and employers. When jobs dialogue is caught in the polarization of employee obligations versus employee costs, much of the underlying rationale for high reservation wage requirements - on the part of the potential employee - is missed. To what degree does the nirvana fallacy in present day infrastructure, contribute to one's personal high reservation wage?

The one size fits all "perfect" solutions of many a rule and regulation, leave little room for the incremental growth and ownership that would strengthen the hand of those with limited income. I have suggested time arbitrage as a form of incremental growth, which could make good use of skills as they are being developed.

Likewise, incremental ownership would be possible in time arbitrage settings, through the flexible arrangements of building components which can be reconfigured as lifestyle needs change. No one's "perfect" dream would have to be shattered, every time a personal commitment or investment doesn't work according to plan. At the very least, we can make room for flexibility at the margins, where millions await their own chance for full economic participation and productive lives.

Wednesday, July 19, 2017

Of Deficits and Economic Participation

Which is the real problem for economic participation: domestic budget deficits, or national current account deficits? In part due to the fact the first issue remains unaddressed (even as revenue falls short), policy makers are ramping up the rhetoric, of the latter. Of current account deficits, Scott Sumner recently wrote that "we do borrow too much (due to the tax advantage of doing so) but that has nothing to do with the current account deficit", and added:
I have a solution. Treat international trade the way we treat trade between American states. Stop collecting records on important and exports. We don't have data on the CA deficit of Texas or the CA surplus of Massachusetts, and that lack of data doesn't seem to cause any problems. So stop doing so for the US as a whole.
In a sense, blaming national current account deficits for economic problems, is akin to putting the blame for economic problems on someone isn't "in the room". Except this assessment falls short. The wealth of a nation's trade role, can be represented in many national rooms. It also figures in the ways the participating rooms are constructed.

Consider how nations have improved their standard of living, over time. This has been made possible to the extent governments embrace economic activity beyond their own borders, via both tradable and non tradable sector activity. While the financial sector brings these international connections together, there are positive effects closer to home, as well. International monetary flows particularly contribute to the composition of productive agglomeration, in prosperous regions.

Nevertheless, non tradable sector activity needs alternatives which don't require using the resource flows of open economies to define asset and service costs. Why? The spread of today's income levels became too extensive around the turn of the century, for some nations to successfully maintain complete economic participation. Protectionism is the threatened response of isolation at a general equilibrium level, to this circumstance.

Yet fortunately, it's not necessary to take such a draconian step. Alternate equilibrium could be used to isolate coordination factors between assets and services for lower income levels, and yet remain completely open to global tradable sector activity. Doing so, could also reduce the domestic budget burdens which do represent a true threat.

The problems of economic participation and societal coordination, are hardly just an issue for lower income levels and their fragile connections along the margins. Consider the earlier ambivalence of Fed remarks, regarding high skill service providers and seemingly everyone else, in a most telling FOMC transcript from September 2008 - the infamous meeting which put "Great" in the Great Recession:
MS YELLEN. I agree with the Greenbooks' assessment that the strength we saw in the upwardly revised real GDP growth in the second quarter will not hold up. Despite the tax rebates, real personal consumption expenditures declined in both June and July, and retail sales were down in August. My contacts report that cutbacks in spending are widespread, especially for discretionary income. For example, East Bay plastic surgeons and dentists note that patients are deferring elective procedures. [Laughter].
Inexplicably, these worrisome developments elicited laughter from the group. Might it have been nervous laughter? Nevertheless, her report didn't stop the misplaced determination to "fight" inflation, even as deflation was knocking at the door.

Though today's monetary tightening is nothing like what occurred in all too recent memory, it serves as a reminder that nations have yet to address the source of their real problems, at home. When economies don't have a chance to evolve, neither do they stand still. What else could explain the return of mercantile thought - much of which hasn't been taken seriously, since nations were only beginning to emerge in the global spotlight?

Meanwhile, policy makers confuse global trade and aggregate demand, and hope to "bring jobs back home". Yet this approach would not bring greater wealth, or broader economic participation, At worst, it could possibly undermine much of the progress which open economies have achieved. Instead of undermining the conditions of general equilibrium in an ill fated attempt to restore long term growth, why not make room for alternate equilibrium scenarios, so as not to destabilize open economies. Budget deficits are indicative of a lack of balance between the aggregate supply and demand of domestic non tradable sector activity - not the supposed trade "imbalances" of nations.

Monday, July 17, 2017

The Productivity Potential of Time Based Product

At first glance, time based services don't even appear capable of generating meaningful productivity gains. In contrast with the comparatively exponential output of tradable sectors, time based product is limited to the possibility of contributing to new time based product, one hour at a time. So why bother? Especially since today's time based product, is constructed in ways which are notoriously difficult to measure or understand.

Some would even find this reality, reason enough to replace our personal participation with automation, wherever possible. Before others end up making these decisions on our behalf: Are there better ways for us to conceptualize time based productivity, in relation to the productivity of other economic activity? After all, if we don't reconsider the worth and organizational capacity of time based product, ultimately there may not be enough consumers, for all that recently acquired automated product capacity.

Consider two reasons, why thinking about service based organizational patterns has not been a straightforward process:

First: Even though services contribute to equilibrium flow, they are not organized, so as to recognizably add to its output formation. This is also why Say's Law of markets - given the earlier prevalence of tradable goods, - held more relevance (for defined output gains) than Keyne's interpretation that "everyone's income is someone else's expenditure". In particular, Adam Smith was among the first to note, that time based services are dependent on other revenue. Consequently, time based services output (as currently constructed) is not capable of generating new income streams on direct terms.

Second, and equally important: Time based product is person specific. In other words, this particular product - even though it is not often enough expressed as such - is connected to an individual whose actual time constraints cannot be waved away. While this time constraint factor isn't a problem for institutions which hire individuals based on their skills capacity, it's a problem for marketplaces where the personal attention (time) of individuals is deemed an important product component, by other individuals.

Again: What are standard ways of thinking about potential productivity gains? One approach is to cause the same amount of output to yield a larger output. The other approach, is to produce the same output via less input. For centuries, the first approach was most commonly observed. Yet more recently, developed nations are gradually generating the same amount of output, via less input.

The reason this is a problem, however, is that less input currently means reductions in personal participation, in relation to aggregate output. Which translates into fewer buyers, for roughly a constant amount of output. Unfortunately, central bankers are reflecting this real economy development, as they seldom speak of the importance of nominal income, in relation to aggregate output. In a sense, IOR is little more than a representation of those who currently stand on the sidelines.

Could time arbitrage address the second productivity option, of generating the same output (for time based product) via less input, without further reductions in human participation? One way to do so, which could also preserve the economic participation of millions, is to organize education as a direct component of wealth creating functions.

Even though general equilibrium has formal requirements that consequently make the "education as workplace" approach untenable, this approach could feature in alternate equilibrium scenarios. And while matched time arbitrage units can't "multiply" the time of their unique providers, these units are capable of contributing more units of time overall (due to increasing levels of economic participation), than what presently occurs today, via the Solow Residual. Also, even a single set of matched time, is a recognizable contribution to aggregate output and consequent exchange potential, much as Say described the tradable sector markets he observed, centuries earlier.

Presently, quality gains for time based product, have substituted for quantity in a merit based workplace. Merit based participation has gradually come to require increased levels of input (or personal educational requirements), for the amount of person specific time based output which is possible, in aggregate. These merit based requirements also run counter to traditional production expectations to such an extent, that widespread cultural skirmishes are now taking place, for the knowledge based access which is still possible, given budgetary constraints.

Fortunately, achieving the same output via less input, is also possible without subtracting humanity from the economic equation. Until now, it wasn't necessary to focus on the difficulties of extensive input requirements in relation to outputs, for time based product. As more constituencies question the validity of education, it helps to remember that education is not the problem. After all, the experiential value of education, is one of the most important aspects of being human. Education is - and will continue to be - among the most useful and highly valued products of our era. The challenge is to expand the definition of what education actually consists of, rather than restricting learning processes in the belief that meritocracy - with its associated cultural limits - is the only valid educational approach.

Nonetheless, formal education has become problematic, due in part to special interests which gain from the process of increasing input requirement levels. Alas, everyone's knowledge use requirements have become everyone's burdens, as well. Education could more directly contribute to productivity, when our efforts provide a torch of knowledge which can be passed to others, at the outset. Since our personal efforts would no longer exist in isolation, they would contribute to additional income streams. Time arbitrage moves the criterion of inputs to outputs towards a recognizable outcome - one which provides a continuum, for the dispersal of knowledge based wealth.

Saturday, July 15, 2017

Knowledge Enclosure as Limits to Growth

The land enclosures which took place centuries earlier, posed hardships for many, who faced the challenges of generating new livelihoods elsewhere. Yet fortunately, this form of enclosure led to long term economic benefits. Ownership of property, made it reasonable for individuals to commit to better production methods, which gradually increased total output. The result? A dynamic marketplace, which includes a rising global standard of living that continues to this day. Why, then, hasn't the more recent enclosure of knowledge, provided similar benefits?

When knowledge is utilized in the context of a specific individual's time, that unit of time cannot be multiplied. In recent decades, time based services have partially supplanted forms of economic activity which were capable of higher output levels. Initially, the artificial knowledge scarcities involved in this process, weren't so problematic. Many institutional claims for time based knowledge use went unnoticed, since populations had numerous opportunities to produce other goods and commodities. As the marketplace continued to expand and diversify, automation in one sector would eventually lead to new opportunities in other areas.

Yet automation could have different results this time. Even as many individuals continue to prepare for what is essentially knowledge based work, much of what currently exists in this regard, is not structured to benefit from the full inclusion of human capital. In recent years, these limits are finally making themselves known. As people begin to question the benefits of formal education, one can't help but wonder: Will we end up with a future, where millions are born, only to discover there's little if any room for the contributions they seek to provide?

Decades earlier, when tradable sector activity was still dominant, staying connected mostly meant being willing to relocate and start over, when necessary. Access to work today is a more complicated matter. The knowledge enclosure of today's time based services, means years of personal commitment and sacrifice, before one can even help anyone for the first time, on economic terms. Consequently, the marketplace for time based services, is not as extensive as commonly assumed, given its costs.

Revenue dependence contributes to the problems of non tradable sectors which rely on knowledge enclosure. Whereas much of tradable sector innovation accrues to customers, healthcare's revenue dependence may translate into innovation which doesn't reduce costs or increase output. Often, tradable sector activity can centralize, yet maintain marketplace output. But when healthcare providers centralize so as to reduce costs, the result is less time based product, which means fewer opportunities for knowledge use to respond to specific circumstance. While centralization is a understandable response to budgetary pressures, ultimately this approach leave societies less able to utilize knowledge effectively.

Restrictions on the use of knowledge, can't be lightly dismissed. We shouldn't wait too long, before taking new approaches to improve the organizational capacity for knowledge based wealth. Already, asset formation and human capital investments have suffered, as many cities and communities lose the productive agglomeration which has become a 21st century requirement. Granted, no one should expect today's knowledge providers to abandon their present day organizational structure. Still these individuals need to reach out to the people and places that are falling behind, so that knowledge use might be better harnessed for the wealth of the future.

Thursday, July 13, 2017

Does Money Still Function Well as "Half of Every Exchange"?

So long as money is mostly representative of tradable sector activity, prices serve as a fairly good measure of societal coordination. However, when time is arbitraged in the marketplace with no direct relationship to its existing aggregates, and time based services become more prominent in relation to tradable goods, total societal coordination eventually becomes less effective.

While listening to a podcast between David Beckworth and Steve Horwitz re monetary disequilibrium, I was reminded of some of the implications, when Horwitz stated that money is "half of every exchange". Even though this representation is perfectly suited for tradable sector activity; alas, it has only proven a partial solution for the introduction (and consequent dispersal) of knowledge use in the marketplace. A different set of dynamics comes into play, for money as representative of the non random nature, of economic time.

Since human capital investment makes additional claims on (all) existing resource capacity, the result in total factor productivity terms, has been additional input requirements in relation to aggregate output. These demand requirements translate into additional claims on existing revenue, such as what also occurs in recessions. As a result, monetary disequilibrium is no longer limited to recognizable recessionary conditions.

Which means today's increased dominance of time based service activity, includes disequilibrium effects which extend beyond the recession conditions Horwitz referred to in his podcast with David Beckworth. Recent recessions are increasingly a result of monetary tightening on the part of central bankers. This almost imperceptible tightening, may also represent an attempt to manage a gap which continues to grow, between the monetary value of finite time, versus that of "infinite" resource capacity. Presently, monetary tightening continues at an almost imperceptible level, even though economies may appear as normal or in recovery.

Inflation targeting in particular, is a blunt tool for central bankers to respond to the Baumol effect, which adjusts the value of time based services to to tradable sector income, in prosperous areas. The Baumol effect helps to explain the difficulties of adopting a productivity norm (as explained by George Selgin), which could take the good deflation of tradable sector activity, into account. The inability to do so, helps to explain the constituencies which oppose today's fiat monetary systems.

Yet interestingly enough, consider why the Baumol effect is actually a natural outcome, of the fact that money has functioned as half of every economic exchange! Since money has to coordinate for both "infinite" resource capacity and "finite" or limited time, policy makers are increasingly faced with a need to adjust nominal income as if time aggregates could somehow remain in a constant relationship with other resource aggregates. Yet this is not possible in general equilibrium settings. Fortunately, however, it is possible to account for time constraints in relation to other resource capacity, in alternative equilibrium scenarios.

Decades earlier, the monetary expectations of non tradable sectors, weren't so problematic. After all, tradable sector dominance included a domestic (national) monetary framework which was easier to understand. For centuries, time based product demands could readily be coordinated via the expanding revenues of tradable sector output. Whereas now, the production norm which would have worked well for a tradable sector dominant economy, is difficult to implement at general equilibrium levels, given the revenue requirements of non tradable sector dominant economies.

Meanwhile, aggregate output as measured by all resource capacity, continues to pull away from the finite limits of time aggregates - not to mention their representative asset formation, as banks become anxious to unwind balance sheets. When money has no choice but to "stand in" for more direct forms of coordination for time based product, the random and growing nature of total resource capacity, introduces elements of political and social uncertainty, for the continuation of knowledge use throughout the marketplace.

Even though spontaneous coordination of time based product (at national levels) remains desirable, limits to growth in this form of knowledge use dispersal, are becoming evident. It's important to maintain fiat money for spontaneous national coordination of time and knowledge value, but with a caveat: make room for local coordination of time based product, in which a unit of time functions as half of every time based exchange.To make this possible, a new institution would allow money to further back these transactions, as newly generated commodity wealth. Time value would finally receive the formal recognition that it deserves, as a basic economic activity.

Indeed, time arbitrage could gradually contribute to a productivity norm for time based services at equilibrium margin. Margin equilibrium adjustments would gradually decrease total factor productivity imbalances. This would allow the gap to grow - undisturbed by monetary tightening - between the valuations of total resource capacity, versus aggregate time value.

By allowing money to reinforce time value in relation to itself as a commodity good, no policy maker need be compelled to shorten (or tighten) the gap between time aggregates and other resource aggregates, in order to fight the Baumol effect. Doing so, is only unnecessary constraints on long term growth. Instead of attempting to manage the distance between finite time value and "infinite" resource value, it would be more conducive to allow money to assume an additional function, as commodity wealth for economic time value.

Tuesday, July 11, 2017

Notes for Time as (Formalized) Value in Use

This summer I've been enjoying "The Growth of Economic Thought", by Henry William Spiegel. The text begins in biblical times, and covers some basics for history of economic thought, up to the latter part of the 20th century. Surprisingly, I was nearly 200 pages in, before coming across an interesting passage which compelled me to follow through with my own thoughts.

John Law lived from 1671 to 1729. While he is oft remembered for his financial misadventures, his contributions to economic thought, weren't quite so controversial. Spiegel explains John Law's analysis of economic value:
Aristotle had distinguished between the use and the exchange of a good. This distinction Law expands, and like the classical economists later, he distinguishes between value in use and value in exchange. The classics, however, who adhered to a labor theory of value, developed only the theory of exchange value and discarded the concept of use value as soon as they had mentioned it. Law, on the other hand, combined both use and exchange value in a subjective theory that explains the exchange value of a good in terms of its usefulness and scarcity. Goods have value because they are useful, but how much value they have is determined by "the greater or lesser quantity [supply] of them in proportion to the demand of them. " In the same manner, changes in demand and supply account for changes in the value of goods...To Law, all economic values are subjective and in this sense imaginary, derived as they are from use.
Of course, today we live in a value in exchange world, in which knowledge/time based product is presented to the public via costs that aren't subjective or imaginary! Since time based service product has been indirectly coordinated thus far (price coordination initially takes place between total monetary representation, not finite time aggregates) utility for time based product remains externally defined. Whereas "staying in the game" for tradable goods manufacture, includes - at minimum - a response to subjective opinions.

Firm pricing for time based product, while understandable - given the broader spontaneous coordination it makes possible - leaves little room for subjective appraisals to contribute to economic outcomes. Yet this is not just a problem for one's pragmatic or experiential preferences. After all, the present tight money circumstance of general equilibrium conditions, can only extend "concrete" exchange valuations, so far. How does all of society commit to a value in exchange framework, if its asset formation and terms of participation are limited at the outset?

Fortunately, time arbitrage could provide as a value in use option, for those who need a more subjective approach to time value. Just as the productive value of work has become more subjective than the labour expectations of recent centuries, so too, the preferences of time commitments in the workplace.

A new institution is needed, which can restore and formalize the value in use function for personal and group time priorities. By allowing time to function in a recognizable supply and demand framework (for dispersal of knowledge and skill), all concerned could make more realistic appraisals of their time preferences in all areas of life. Time arbitrage could allow a different focus on time preferences, than what skills arbitrage often makes possible. In order to function as a true price (true supply and demand) for services , time would serve as a unit of measure, exchange, and account for the participating groups. Money also represents this time value, as a basic commodity and source of new wealth.

There are also legal contractual considerations, for knowledge, time and skill as a formalized value in use designation. Since time is the coordination point instead of money, these services would not have a recognizable market price. Consequently, this form of arbitrage would not be confused as "being on offer" for populations in general. After all, these services are not value in exchange, but instead represent an option to maintain a wider range of human capital potential, via sustainable means.

Again, what is being arbitraged in these instances is not skill, but time. This approach could also preserve the integrity and monetary value, of the "value in exchange" professionals who might choose to assist these groups - especially in their startup efforts. Last but certainly not least: it's important to have time arbitrage as an option - not something to be imposed on anyone who does not find this a well suited approach for their preferred work habits and aspirations.

Sunday, July 9, 2017

Solving for (Basic) Equilibrium

By basic, I'm referring to the simplest equilibrium possible: small communities with few extra amenities. There are stark contrasts between the basic equilibrium environments of today's developed nations, versus the managed resource capacity of earlier local communities. Early basic equilibrium was non monetary and self sufficient, even if precariously so. Today's basic equilibrium environments often appear less precarious by comparison, given their general equilibrium dependence (retirement, disability, etc).

Basic equilibrium could be a useful construct, in that it suggests conceptual framing for the evolution of general equilibrium conditions. General equilibrium is often expressed either in terms of concrete mathematical formulas, or assumed to be complex beyond comprehension. How to think about the matter differently?

Regular readers won't be surprised that I imagine basic equilibrium, as local sets of non tradable sector housing and time/knowledge based services. It's interesting that these now burdensome aspects of our lives, evolved prior to money. Money became necessary as tradable sector activity grew more complex. Not only did tradable sector activity appear random as contrast with non tradable sector activity, it started society down the path to long term growth and progress. Gradually, the (constantly) changing relationships between tradable and non tradable sectors, generated the complexity which makes it difficult to categorize general equilibrium dynamics.

Over time, the basic equilibrium of local sectors gradually become enmeshed with governmental budget burdens, which feature in today's growth limits. Nevertheless: While governments contribute to economic stagnation, by no means are they alone. They don't have a monopoly on the economic activities which lead to income capture or excessive human capital requirements (input). As more inputs are required in relation to output, governments are left with fewer output results to redistribute. Both public and private interests have inadvertently reduced aggregate output potential and marketplace expansion. Albeit by different means, different sectors often emphasize aggregate input over aggregate output - a problem which likely impacts both total factor productivity and the natural rate of interest.

A notable feature of today's basic equilibrium settings, is the dearth of locally derived income. Yet those earlier, non monetary basic equilibrium communities were self supporting because they had to be. They had to solve for basic equilibrium as best they could. Hence survival meant awareness of the vital relationship, between aggregate inputs and aggregate outputs.

While national dependence still appears safer than risky self supporting alternatives, communities are nonetheless vulnerable to the growing budgetary battles of the present - especially the struggles which involve healthcare. In the modern version of nationally defined basic equilibrium, one's personal time value may not provide adequate survival options, in the event of budget breakdown. Is it possible to change this circumstance? No matter how small, a local community needs the same understanding re inputs to output ratios, as their governments.

There's a childhood game called "Red Light Green Light", which provides what I hope is a simple way to envision total factor productivity, aggregate inputs and outputs, and the natural rate of interest. I'll briefly explain the game. First, we drew a line at the end of the street, where the person making the calls would stand. Everyone else faced the caller from a distance, and approached the line on the green light announcement. If they were still moving when "red light" was announced, they had to back up and start over.

Now, imagine the game as an economics scenario. Perhaps one could think of the person making the calls for red or green light, as referring to recessions and recoveries. Each sector is represented, as a person approaching the line. Each step forward by a sector participant, represents an output gain over the required inputs, which in turn means extra resource capacity beyond what was needed to begin with. The steps taken by all sector participants during the course of the game, is total factor productivity. The line is the natural rate of interest. As each sector crosses the line, their additional resource capacity ("left over" outputs) becomes available for redistribution, whether for savers, governments, firms or others.

Why is it so difficult, for the time based product of non tradable sector activity to cross the line? More inputs are being required, in relation to the total output these participants gain before they can proceed forward. Yet this handicap in total factor productivity is hidden, by others who have already crossed the line where their additional gains become available for redistribution. Another sector which experiences difficulty crossing the line, is loan formation which focuses on the income capture of consumers, instead of generating new growth potential.

By turning more time value (input) into output, during the entire process of human capital investment, sectors which feature time based product could also cross the line, thereby making their contribution to the natural interest rate. As more total output once again becomes available for redistribution, growth could resume, and monetary policy could return to a true normal. Let's solve for basic equilibrium.