Category: Equitablog

The federal budget, interest rates, and savings gluts

Posted on by Bridget Ansel

The U.S. Congressional Budget Office yesterday released its updated Budget and Economic Outlook for the period between 2015 and 2025. As usually happens when CBO releases a document about the federal budget, most of the conversation focuses on the levels of spending and taxation the agency projects will happen in the future, particularly the difference between the level of spending and the level of taxation, better known as the budget deficit.

Perhaps a more interesting conversation would be about what CBO projects about the future path of interest rates, something that caught the eye of Matthew C. Klein at FT Alphaville. Despite CBO heralding increased budget deficits due to rising health care costs and an aging population, Klein sees that the projections of higher deficits are almost entirely about higher interest payments on debt the U.S. government already owes. In other words, the projections of a larger budget deficit are contingent on the path of future interest rates.

Specifically, CBO projects that the interest rate on a 10-year Treasury note will be 4.6 percent starting in 2020. For context, the 10-year interest rate in June 2007, before the damaged inflicted by the bursting of the housing bubble became apparent, was about 5 percent. And today the interest rate is about 1.8 percent.

Of course, very low rates today are a sign of concerns about economic growth outside of the United States, particularly in the European economies that use the euro. But how much higher can we expect long-term interest rates to rise? CBO projects that the 10-year rate will jump to 3.0 percent in 2015. There is cause to question such a quick pick-up in rates.

First, according to CBO’s own projections the overall growth rate of the economy is supposed to be below its potential growth rate for most of the 10-year window. Only in 2017 and 2018 does GDP reach its potential growth rate according to CBO. The rest of the time it’s below that rate.

Secondly, there are broader forces that inhibit rising long-term interest rates. The last time the U.S. Federal Reserve tried to raise interest rates, in 2004 there was no appreciable increase in the long-term rates. That phenomenon in part led then Fed Governor Ben Bernanke to coin the term “global savings glut” almost 10 years ago. The idea posits that the amount of savings in the global economy has increased so much that it has outpaced demand and interest rates across the world are held down. And while the source of the glut may be changing, it appears to still be around.

Of course, when talking about U.S. interest rates the decisions of the Federal Reserve have to be considered. Its policy-setting arm, the Federal Open Markets Committee, is currently meeting, but is not expected to start raising interest rates. Or at least not yet. But those moves should only affect short-term rates. As for the long-run, we all, including CBO, will just have to wait.

Morning Must-Read: Tim Duy: While We Wait For Yet Another FOMC Statement

Posted on by Brad DeLong

Given the inability of the Federal Reserve to attain traction at the ZLB, its current frame of mind–which appears to be doing certainty-equivalence policy–makes no sense to me. Certainty-equivalence is appropriate only with a symmetric loss function and a symmetric ability to compensate for deviations on either side of the target. We do not have either of those.

Has there been an explanation of why the Federal Reserve’s policy is appropriate given the asymmetry of the loss function and the asymmetry of the control levers that I have missed? If so, where is it?

Tim Duy: While We Wait For Yet Another FOMC Statement: “The Fed recognizes that hiking rates prematurely…

…to ‘give them room’ in the next recession is of course self-defeating. They are not going to invite a recession simply to prove they have the tools to deal with another recession. The reasons the Fed wants to normalize policy are, I fear, a bit more mundane: (1) They believe the economy is approaching a more normal environment with solid GDP growth and near-NAIRU unemployment. They do not believe such an environment is consistent with zero rates. (2) They believe that monetary policy operates with long and variable lags. Consequently, they need to act before inflation hits 2% if they do not want to overshoot their target. And they in fact have no intention of overshooting their target. (3) They do not believe in the secular stagnation story. They do not believe that the estimate of the neutral Fed Funds rate should be revised sharply downward. Hence 25bp, or 50bp, or even 100bp still represents loose monetary policy by their definition. I am currently of the opinion that there is a reasonable chance the Fed is wrong on the third point, and that they have less room to maneuver than they believe.

Things to Read on the Afternoon of January 27, 2015

Posted on by Brad DeLong

Must- and Shall-Reads:

  • Heather Boushey: On “Capital in the Twenty-First Century”: “We… have lived through an era where the presumption is that our society marches always towards greater equality or less discrimination, even if slowly. But if Thomas is right… this era could be at an end… Downton Abbey… no other way for Grantham’s three daughters to maintain their standard of living other than marrying well. So, the show’s first season focuses on whether the eldest daughters would concede to marry her cousin Matthew. If Thomas is right, then once again, the rules over inheritances will make all the difference for the potential for women’s equality…. In 2014, only one-in-ten U.S. billionaires were women (11.4 percent) and the female share of self-made billionaires is only 3.1 percent…”
  1. Simon Wren-Lewis: Post Recession Lessons: “I regard 2010 as a fateful year for the advanced economies… the year that the US, UK and Eurozone switched from fiscal stimulus to fiscal contraction… this policy switch is directly responsible for the weak recovery in all three countries/zones. A huge amount of resources have been needlessly wasted as a result, and much misery prolonged. This post is… about… taking that as given and asking what should we conclude…. To answer that question, what happened in Greece (in 2010, not two days ago) may be critical…. Let me paint a relatively optimistic picture of the recent past. Greece had to default because previous governments had been profligate and had hidden that fact from everyone…. Recessions… tend to be when things like that get exposed. If Greece had been a country with its own exchange rate, then it would have been a footnote… fiscal stimulus that had begun in all three countries/zones in 2009 would have continued (or at least not been reversed), and the recovery would have been robust. Instead Greece was part of the Eurozone…. Policy makers in other union countries prevaricated…. So the Greek crisis became a Eurozone periphery crisis…. This led to panic not just in the Eurozone but in all the advanced economies. Stimulus turned to austerity. By the time some in organisations like the IMF began to realise that this shift to austerity had been a mistake, it was too late. The recovery had been anemic…”
  2. W. Arthur Lewis:
  3. Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on: “There is considerable controversy over why sluggish economic growth persists across many advanced economies six years after the onset of the financial crisis. Theories include a secular deficiency in aggregate demand, slowing innovation, adverse demographics, lingering policy uncertainty, post-crisis political fractionalisation, debt overhang, insufficient fiscal stimulus, excessive financial regulation, and some mix of all of the above. This paper surveys the alternative viewpoints. We argue that until significant pockets of private, external and public debt overhang further abate, the potential role of other headwinds to economic growth will be difficult to quantify.”
  4. Dean Baker: Did Cutting the Duration of Unemployment Benefits Lead to Faster Job Growth in 2014?: “Hagedorn, Manovskii, and Mitman…. The LAUS data are largely model driven… little direct data for many counties. The Bureau of Labor Statistics (BLS) generates employment estimates for these counties from a variety of variables…. The same sort of test can readily be constructed at the state level using the CES data… a much larger survey… of employers… [with] considerably less noise… measuring the number of jobs in the same states as we are measuring changes in benefit duration. Following HMM, I divided the states into a long duration group… and short duration group…. While HMM found the long duration group had a sharper uptick in job growth, the CES data show the opposite…”

Should Be Aware of:

 

  1. Greg Sargent: Republican State Officials Cast Doubts on Anti-Obamacare Lawsuit: “Several state officials who were directly involved at the highest levels… all of them Republicans or appointees of GOP governors… [say] that at no point in the decision-making process… was the possible loss of subsidies even considered as a factor. None of these officials… read the statute as the challengers do. Cindi Jones…. This week, a number of states will file a brief siding with the government, arguing that nothing in the ACA indicated opting for the federal exchange would cost them subsidies. They will argue… that the challengers’ interpretation raises serious constitutional questions: The states were never given clear warning that the failure to set up exchanges could bring them serious harm…. John Watkins…. Sandy Praeger…. Linda Sheppard…”
  2. Ogged: Have We Talked About Number Needed to Treat?: “Nice summary here. Longer Wired article here. NNT site here. Table of NNTs for common stuff here. Elegant little Wikipedia table here. Amazing how little effect so many established therapies have.”

Afternoon Must-Read: Heather Boushey: On “Capital in the Twenty-First Century”

Posted on by Brad DeLong

Heather Boushey: On “Capital in the Twenty-First Century”: “We… have lived through an era…

…where the presumption is that our society marches always towards greater equality or less discrimination, even if slowly. But if Thomas is right… this era could be at an end… Downton Abbey… no other way for Grantham’s three daughters to maintain their standard of living other than marrying well. So, the show’s first season focuses on whether the eldest daughters would concede to marry her cousin Matthew. If Thomas is right, then once again, the rules over inheritances will make all the difference for the potential for women’s equality…. In 2014, only one-in-ten U.S. billionaires were women (11.4 percent) and the female share of self-made billionaires is only 3.1 percent…

This reminds me of what I wrote back in 2002:

Back before the industrial revolution bequests were a major component of acquired wealth. With a society-wide total capital-output ratio of 3:1 and a
generation length of 25 years, roughly 12 percent of a year’s output will change hands and pass down through the generations through inheritance every year…. My guess is that every year bequests turned over to the receiving cohort were equal to between 16 and 24 percent of annual output. This is more than ten times the contribution of net investment to wealth. Contrast the dominance of inheritance over net investment before the industrial revolution with the situation today…. Net investment… [of] between 12 percent and 16 percent of total output…. This balance between [net] accumulation and bequests is in sharp contrast
to the more than 1:10 ratio of the pre-Industrial Revolution past…

If one imagines that creative destruction shifts an extra 7% of so of today’s output from losers to winners each year, then the ratio of accumulation to bequests today is not 1:1 but rather 3:2–an even more striking contrast with the pre-industrial past.

And Thomas Piketty thinks we are likely to go back there, so that choosing the right parents and marrying well will once again be of overwhelming importance in upward (or avoiding downward) mobility…

Afternoon Must-Read: Simon Wren-Lewis: Post-Recession Lessons

Posted on by Brad DeLong

A generation or two ago, the push for central-bank independence was all about harnessing central banks’ credibility as inflation fighters in a context in which it was feared that elected legislators would lean overboard on the excessive spending side.

Today, Simon Wren-Lewis calls for transferring not just monetary policy but fiscal policy stabilization authority over to central banks, on the grounds that their technocratic chops are much better for fiscal policy then relying on elected legislators who are the prisoners of ordoliberal ideologies, the belief the governments like households need to balance their budgets, and of the austerity-loving 0.1%.

What could possibly go wrong?

Simon Wren-Lewis: Post Recession Lessons: “I regard 2010 as a fateful year for the advanced economies…

…the year that the US, UK and Eurozone switched from fiscal stimulus to fiscal contraction… this policy switch is directly responsible for the weak recovery in all three countries/zones. A huge amount of resources have been needlessly wasted as a result, and much misery prolonged. This post is… about… taking that as given and asking what should we conclude…. To answer that question, what happened in Greece (in 2010, not two days ago) may be critical…. Let me paint a relatively optimistic picture of the recent past. Greece had to default because previous governments had been profligate and had hidden that fact from everyone…. Recessions… tend to be when things like that get exposed. If Greece had been a country with its own exchange rate, then it would have been a footnote… fiscal stimulus that had begun in all three countries/zones in 2009 would have continued (or at least not been reversed), and the recovery would have been robust. Instead Greece was part of the Eurozone…. Policy makers in other union countries prevaricated…. So the Greek crisis became a Eurozone periphery crisis…. This led to panic not just in the Eurozone but in all the advanced economies. Stimulus turned to austerity. By the time some in organisations like the IMF began to realise that this shift to austerity had been a mistake, it was too late. The recovery had been anemic.

Why is that an optimistic account? Because it is basically a story of bad luck…. Now for the pessimistic version. The political right in all three countries/zones was always set against fiscal stimulus…. Without Greece, we still would have had a Conservative led government taking power in the UK in 2010, and we still would have had Republicans blocking stimulus moves and then forcing fiscal austerity. The right’s strength in the media, together with the ‘commonsense’ idea that governments like individuals need to tighten their belts in bad times… [meant] austerity was bound to prevail…. Greece may have just voted against austerity, but there is every chance that in the UK the Conservatives will retain power this year on an austerity platform and the Republicans are just the presidency away from complete control in the US. If the pessimistic account is right, then it has important implications for macroeconomics. Although it may be true that fiscal stimulus is capable of assisting monetary policy when interest rates are at the ZLB, the political economy of the situation will mean it may well not happen….

When some economists over the last few years began to push the idea of helicopter money, I was initially rather sceptical… helicopter money when you have inflation targets is identical to tax cuts plus Quantitative Easing (QE), so why not just argue for an expansionary fiscal policy?… However, if the pessimistic account is correct, then arguing with politicians for better fiscal policy is quite likely to be a waste of time…. A more robust response is to argue for institutional changes so that politicians find it much more difficult to embark on austerity at the ZLB…. Central banks have QE, but helicopter money would be a much more effective instrument. To put it another way, central bank independence was all about taking macroeconomic stabilisation away from politicians, because politicians were not very good at it. The last five years have demonstrated how bad at it they can be…

Morning Must-Read: Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on

Posted on by Brad DeLong

I have a very easy time believing that debt overhangs–private, international, and public–can be enormous headwinds and exert substantial drag on growth and recovery. What I cannot understand is how debt can do so without also being an impaired asset to those who hold it. Debt that is painful enough to bear that it discourages enterprise and spending is also debt that may not be collected in the end, and thus debt that sells at a low price and carries a high face interest rate.

Claiming that the pieces of debt selling at record-high prices and carrying record-low face interest rates–which is the case right now for the death of credit-worthy sovereigns possessing exorbitant privilege–are in any sense a drag or a headwind seems to me to be simply wrong. I do not understand how people of note and reputation can believe it…

Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on: “There is considerable controversy…

…over why sluggish economic growth persists across many advanced economies six years after the onset of the financial crisis. Theories include a secular deficiency in aggregate demand, slowing innovation, adverse demographics, lingering policy uncertainty, post-crisis political fractionalisation, debt overhang, insufficient fiscal stimulus, excessive financial regulation, and some mix of all of the above.

This paper surveys the alternative viewpoints. We argue that until significant pockets of private, external and public debt overhang further abate, the potential role of other headwinds to economic growth will be difficult to quantify.

The pitfalls of just-in-time-scheduling

Posted on by Nick Bunker

Part-time and low-wage employees today are increasingly at the mercy of “just-in-time scheduling,” which uses a computer algorithm to create an employee schedule based on predicting customer demand, driven by factors such as time of day, season, weather, or even a nearby sporting event. Retail and service industries are the most avid users of just-in-time scheduling—the very industries in which workers already face a lack of benefits, poor working conditions, and insufficient pay.

This use of “workplace optimization systems” ensures that stores have a correct number of workers on an hourly basis, yet wreaks havoc on workers, who have no control over their erratic schedule. Workers’ “just-in-time” schedules change from day to day, and they typically receive only three days’ notice of their schedule for the coming week. Employees are often obliged to be “on call,” seeing their shift canceled only a couple hours before it is meant to begin. Workers may arrive at work only to be sent home, which is particularly burdensome for the working poor, who commit more time and a greater portion of their income to commuting.

Such a situation is especially untenable for parents, who already struggle to patch together a system of childcare. In many instances, they must resort to poor quality options when left in a bind, with implications for our children’s development and future productivity.

Joan C. Williams, a Distinguished Professor and Founding Director of the Center for WorkLife Law at the University of California Hastings College of Law—as well as a 2014 Equitable Growth grantee—is conducting research to address these issues. Working alongside Susan Lambert, a University of Chicago professor who has pioneered work on scheduling issues, Williams has created a pilot program to test new ways to stabilize worker schedules in ways that benefit employers, employees, and taxpayers alike.

Yes, taxpayers, too, because just-in-time schedules can create sky-high levels of absenteeism, and managers’ response often is to cut workers’ hours to ensure a sufficient pool of people to call as replacements when a worker doesn’t show up. But workers who work too few hours to support themselves may end up turning to government benefits for help.

Furthermore, these workers’ earnings may fluctuate depending on how many hours they work in any given month. This not only affects these workers’ ability to put food on the table, but also more generally, deprives our economy of much-needed demand for products and services to power sustained economic growth.

There are companies out there that are beginning to take their employees’ well-being seriously. After The New York Times published an article chronicling the hardship imposed on a Starbucks barista and her family by the company’s scheduling practices, the company vowed to change. Indeed, The Gap, Inc. has agreed to take part in William’s research, allowing her team to work directly with 30 Gap store managers in the San Francisco Bay Area and Miami, Florida.  Williams, through her partnership with The Gap, will compare stores with and without her scheduling pilot program to uncover the effectiveness of a more stable scheduling program for employees and employers’ bottom lines alike.

Research indicates that unstable schedules lead to high annual turnover, possibly because a worker quits or doesn’t show up to work because they can’t balance their work and life schedules. Companies, therefore, must invest in increased re-hiring and training costs, and may suffer from poor customer service because, as Williams says, “new employees do not have a strong grasp of the product and a high level commitment to the organization.”

Investing in company profit and employee well-being may not be a zero sum situation. Instead, providing scheduling stability to workers may allow them to realize their full economic potential.  Williams’ research involving The Gap should provide some telling answers.

Things to Read on the Afternoon of January 26, 2015

Posted on by Brad DeLong

Must- and Shall-Reads:

 

Nick Bunker: Did Credit Replace Wage Growth in the Mid-2000s?: “So were the middle class and the rich were taking out much larger loans than before or more mortgages? According to Adelino, Severino, and Schoar… more so the latter… new borrowers entering the market…. Adelino, Severino and Schoar’s paper would seem to indicate that what caused the run up in mortgage debt wasn’t due to a change in ‘lending technology’ such as securitization or looser government policies. Rather, the debt was built by the same kind of bubble dynamics that leads to investors betting that an asset will never lose value. Which story is true is still up for debate, but it could just be that this time wasn’t no different after all…”

  1. Brian Buetler: Repealing Obamacare Would Be Immoral: “As a political matter Obamacare probably can’t be repealed outright…. Strain also notes that conservatives might ‘have their way with Obamacare’ if ‘the Supreme Court deals it a death blow.’… [Strain’s] wishing for this outcome is morally dubious, and Strain’s counterclaim is unusually weak. ‘In a world of scarce resources, a slightly higher mortality rate is an acceptable price to pay for certain goals–including more cash for other programs, such as those that help the poor; less government coercion and more individual liberty; more health-care choice for consumers…. Such choices are inevitable. They are made all the time.’ This argument about ends is concise, unobjectionable, and completely unresponsive to the situation at hand. If the Supreme Court eliminates ACA subsidies… the federal government will indeed spend less…. But none of the other tradeoffs Strain lists will happen… [no] programs that help the poor… individual liberty will not increase… a wider array of health plans will not materialize. Millions will lose their coverage, insurance markets will collapse…. The moral implications of this outcome are hideous…”

  2. Ann Friedman: Can We Solve Our Child-Care Problem?: “I called economist Heather Boushey to find out. ‘What’s interesting about the cost question is that it presumes that no one is paying the costs right now…. We are paying for it, we’re just paying for it in this inefficient way that doesn’t work for families and isn’t good for kids.’ Families that can scrape together the money for safe, inspected day-care facilities are forgoing other priorities like saving for retirement or buying new shoes. Families who can’t afford day care are relying on a relative or a neighbor to provide informal care, which may or may not be paid…. Obama’s suggested tax credit is a first step. But he was not proposing a network of state-run, quality day-care facilities–which actually did exist, during World War II, when men were at war and women flooded the workplace…. Nixon vetoed a bill that would have established a network of federally subsidized child-care centers, open to all parents on a sliding scale. He cited the bill’s ‘family-weakening implications’…. The notion that affordable day care is harmful to families sounds downright crazy today…. Sure, personal politics play a role in how each family makes child-care decisions. But in the vast majority of cases, the economics matter far more…”

  3. Kenneth Thomas: What Is Noah [Smith] Thinking?: “Noah Smith put up a post Sunday purporting to show that things aren’t so bad for the middle class… immediately shows us a chart of median household income. Stop right there….. We need to look at individual data, aggregated weekly… to know what’s going on…. The individual real weekly wage is still below 1972 levels, [so] households… have traded time and debt for current consumption. This is not an improvement in the middle class lifestyle…. Richard Serlin points out that we also need to consider risk…. The middle class is less secure than it was in 1972. Noah has lots of interesting things to say, and you should check out his blog if you haven’t already. But this is an error on his part, and I don’t understand what he’s thinking.”

  4. Arun Garg: Value Investing as Software Eats the World: “Venture capitalist Marc Andreessen’s trenchant phrase–‘Software is Eating the World’–evokes the reach and power of this pervasive and powerful phenomenon…. There are serious investing implications…. The following is just a small sample of companies that once used to dominate their niche are now are either gone, or fundamentally transformed, by the encroachment of software: The bookstore chain Borders got ‘eaten’ by software-based Amazon. The music store chain Tower Records got ‘eaten’ by iTunes software. Apple’s iTunes itself is getting ‘eaten’ by Pandora and Spotify streaming software. The video chain Blockbusters got ‘eaten’ by Netflix software. Newspapers and magazines got ‘eaten’ by the websites and blogs and online ads. Yellow Pages got ‘eaten’ by Google software. Kodak got ‘eaten’ by digital photos and smartphone cameras. AT&T and Vodaphone are under attack from Skype, Whatsapp, Facetime, and Facebook. Retailing giants like Sears, Target, Walmart, and Tesco are being ‘eaten’ by Amazon. Bank clerks got ‘eaten’ by ATM machines. Human brokers were ‘eaten’ by online brokerage sites. Travel agencies are being ‘eaten’ by Expedia and Travelocity, etc. Recruiters are being ‘eaten’ by LinkedIn and other social networks. Insurance underwriters and actuaries are being ‘eaten’  by ‘big data’ analytic software…. the list grows every day. This should be of critical interest to all value investors since companies in the process of being eaten alive can often seem attractive to investors–inexpensive on the basis of the usual valuation ratios–right until their very end…. It seems clear, at least to me, that the old value investing strategy of avoiding technology stocks is no longer tenable as software keeps eating more and more of the world…”

Should Be Aware of:

 

  1. Andrew Kaczynski: Ben Carson Advocated Partial Government Health Care Takeover In His 2012 Book: “Dr. Ben Carson advocated for government-run catastrophic health care as late as 2012. Responding to a report from BuzzFeed News during a press conference at the Iowa Freedom Summit on Saturday, Carson said that a 1996 essay that ran in the Harvard Journal of Minority Public Health in which he proposed government-run nationalized catastrophic care and end-of-life national guidelines for who should and should not receive care, ‘bears about as much resemblance to my current views as our views on Afghanistan did 20 years ago.’ Carson, however, advocated a nearly-identical proposal to reform health care in his 2012 book, ‘America the Beautiful’…”

  2. Simon Wren-Lewis: Alternative Eurozone Histories: “It would be very nice if this was all about history. Unfortunately exactly the same mistakes are continuing, with equally damaging effects. Fiscal policy continues to be pro-cyclical, meaning that we had a second Eurozone recession and no real recovery from that. Monetary policy is either perverse (2011), or 6 years too late (!) and continues to openly encourage fiscal austerity. That most policy makers in the Eurozone have still not understood past errors remains scandalous…”

  3. Andrea Matranga: Climate-driven technical change: seasonality and the invention of agriculture: “During the Neolithic Revolution, seven populations independently invented agriculture. In this paper, I argue that this innovation was a response to a large increase in climatic seasonality. Hunter-gatherers in the most affected regions became sedentary in order to store food and smooth their consumption. I present a model capturing the key incentives for adopting agriculture, and I test the resulting predictions against a global panel dataset of climate conditions and Neolithic adoption dates. I find that invention and adoption were both systematically more likely in places with higher seasonality. The findings of this paper imply that seasonality patterns 10,000 years ago were amongst the major determinants of the present day global distribution of crop productivities, ethnic groups, cultural traditions, and political institutions.”

Afternoon Must-Read: Nick Bunker: Did Credit Replace Wage Growth in the Mid-2000s?

Posted on by Brad DeLong

Let me highlight the last paragraph of Nick Bunker’s piece over at our Value Added, just for those of you who don’t click through either from the home page or from the title list at right:

Nick Bunker: Did Credit Replace Wage Growth in the Mid-2000s?: “So were the middle class and the rich…

…were taking out much larger loans than before or more mortgages? According to Adelino, Severino, and Schoar… more so the latter… new borrowers entering the market…. Adelino, Severino and Schoar’s paper would seem to indicate that what caused the run up in mortgage debt wasn’t due to a change in ‘lending technology’ such as securitization or looser government policies. Rather, the debt was built by the same kind of bubble dynamics that leads to investors betting that an asset will never lose value. Which story is true is still up for debate, but it could just be that this time wasn’t no different after all…