I have suggested that people would be better off if they massively increased their savings rates.  The aggregate Personal Savings Rate (PSR) is defined as the difference between disposable (after-tax) income and consumption spending.  It is reported each month by the Department of Commerce and has recently been running around 4%, compared to a 50-year… Read more

The U.S. Bureau of Economic Analysis (BEA) released their first estimate of the fourth quarter 2013 Gross Domestic Product today. The estimate indicates that the economy grew 3.2 percent in 4th quarter. This followed a 4.1 percent growth rate in quarter 3 which followed a 2.5 percent growth rate in quarter 2. The growth in… Read more

Declining underwriting standards for mortgage loans played a major role in the housing boom and bust that culminated in the financial crisis of 2007-2009.  During the housing boom in the years preceding the crisis, housing prices were rising rapidly and nearly all loans, irrespective of underwriting standards, performed well.  In part due to this strong… Read more

Winners of the 2013 Nobel Prize in Economics are three professors – Eugene Fama, Robert Shiller and Lars Peter Hansen – who collectively pushed forward economists’ understanding of asset prices.  Fama invented the efficient market hypothesis (EMH) which says that liquid asset markets like stock markets are efficient in the sense that relevant information is… Read more

This article was written by Bill Watkins and previously published on New Geography on November 12, 2013. Jerry Brown is supposed to be a different kind of politician: well informed, smart, slick, and skilled. While he has had some missteps, he’s always bounced back. His savvy smarts have allowed him to have a fantastically successful… Read more

The key to sustainable wealth is to tie your level of consumption spending to the product of your total wealth (including financial wealth and human capital, or the present value of future net income) and the after-tax real rate of return.  If you do this, the affluence that you enjoy in your youth, due to… Read more

The preliminary estimate of United States third quarter economic growth was released today. The growth number is 2.8 percent, stronger than any of the three quarters prior. The quarter 2 growth rate was 2.5 percent, and the quarter 3 result beat our forecast of 1.3 percent. This was despite slowdowns in the growth of consumption… Read more

One of the major components of the 2010 Dodd-Frank financial reform bill (The Dodd-Frank Act) is the Volcker Rule that is designed to prevent banks from engaging in proprietary (or “prop”) trading, or in acquiring or sponsoring a hedge fund or private equity fund.  Prop trading has been defined to be “engaging as a principal… Read more

My favorite economics chart shows income divided by population (this is income per person) on the vertical axis and time on the horizontal axis.  The time line runs from prehistoric times to the modern era (from, say 1000 BC to 2000).  The line in the chart is basically flat at an income per person of… Read more

I have written several essays lately on various aspects of what I call the Sustainable Financial Plan (SFP).  My colleague at CLU, Bill Watkins, suggests that I produce a simplified version of these essays that is targeted for young people (I think this is Bill’s nice way of saying that the original essays were indecipherable). … Read more