[obrero]

Debt is a symptom, not the disease. Excessive debt is a method of not dealing with problems and kicking the can down the road. Of course it makes things ultimately worse, but why do people need to go into debt they can't get out of, and why do people finance loans to people who can't pay them off in the first place? The central problem lay in that direction.

The problem is utilized industrial capacity has been falling for decades. Companies are not employing the invested capital and machinery they already own at anywhere near full capacity. So why invest more?

Even with capital utilization rates falling for decades, there is still overproduction - or underconsumption, depending on the angle. Corporations are flush with cash reserves. Naval Ravikant turned down a $600 million blank check from Chinese investors. Meanwhile wages have been moribund for a long time. Inflation-adjusted hourly wages were higher in the U.S. 45 years ago. Real hourly wages aee lower, yet more capital equipment exists and productivity has risen. It is trying to sell more to people who have less.

The economic report of the president (US) has US industrial capacity utilization rates- over 87% from 1967 to 1969. By 2011 it was below 77%. (table b54 of the economic report of the president 2013).

[yummyfajitas]

Industrial production [edit: said "capacity" before] has been rising.

https://research.stlouisfed.org/fred2/series/INDPRO

Inflation-adjusted hourly compensation has never been higher.

https://research.stlouisfed.org/fred2/series/COMPNFB

People are not underconsuming. Per-capita consumption is going up: https://research.stlouisfed.org/fred2/graph/?g=3oWn

Why are so many people making up random facts and posting them in this thread? I don't understand this.

[obrero]

> industrial capacity has been rising

that is what "more capital equipment exists" means. Its utilization of 87%+ in the late 1960s to below 77% in 2011 is the problem.

> inflation-adjusted hourly compensation has never been higher

The chart you refer to is very obviously NOT inflation adjusted. Adjusted for inflation it was higher in the early 1970s - it has fallen over 45 years.

> making up random facts

I am citing data correctly. You are pointing to charts showing hourly wages are 10 times what they were 50 years ago and saying they are not adjusted for inflation.

[yummyfajitas]

You are right, I copied the wrong graph for compensation. Here is real compensation per hour:

https://research.stlouisfed.org/fred2/series/COMPRNFB

My mistake, thanks for the correction. It's still going up.

The claims that wages have not risen are based entirely on cherry-picked data, carefully choosing endpoints, and ignoring non-wage compensation as well as the fact that CPI wildly overstates inflation in the long run [1].

Also, the graph I provided is industrial production, which is going up. You might be right that capacity grew faster than production (cite?), but production has also gone up.

[1] See, e.g. Boskin commission, the lack of hedonic adjustments in healthcare, and the variable basket of goods used in chained CPI which prevents it from actually being a long term inflation measure. (I.e., inflation from 1970->2015 should only include goods invented in 1970, but chained CPI adds new goods yearly in order to accurately measure 1983->1984 inflation.)

[maxerickson]

The Fed does also claim a rise in real compensation:

https://research.stlouisfed.org/fred2/series/COMPRNFB

(note the additional R before complaining it is the same link)

Of course it is not as dramatic as the rise in compensation.