Bank of England Statistical Releases—February 2022

(from the Bank of England)

Money and Credit

Overview

These monthly statistics on the amount of, and interest rates on, borrowing and deposits by households and businesses are used by the Bank’s policy committees to understand economic trends and developments in the UK banking system.

Key Points
  • Net borrowing of mortgage debt by individuals amounted to £4.7 billion in February. Mortgage approvals for house purchases fell slightly to 71,000 in February, from 73,800 in January, but remains above the 12-month pre-pandemic average up to February 2020 of 66,700.
  • Consumers borrowed an additional £1.9 billion in consumer credit, on net, of which £1.5 billion was new lending on credit cards.
  • Sterling money (known as M4ex) increased by £7.2 billion in February. Households’ holdings of money weakened with net flows of £4.0 billion, compared with £7.2 billion in January.
  • The effective interest rate paid on individuals’ new time deposits with banks and building societies rose by 10 basis points to 0.77%.
  • Large businesses borrowing from banks rose to £4.0 billion in February, whilst small and medium sized businesses repaid £0.5 billion. Private non-financial companies (PNFCs) redeemed £4.1 billion in net finance from capital markets.

Read the full paper [Archived PDF].

Effective Interest Rates

Commentary on this data is now incorporated into the Money and Credit statistical release [Archived PDF, from above] to facilitate analysis.

Get the data tables [Archived Excel XLS].

BEA News: Gross Domestic Product (Third Estimate), Corporate Profits, and GDP by Industry, Fourth Quarter and Year 2021

(from the U.S. Bureau of Economic Analysis)

The U.S. Bureau of Economic Analysis (BEA) has issued the following news release today:

Real gross domestic product (GDP) increased at an annual rate of 6.9 percent in the fourth quarter of 2021, following an increase of 2.3 percent in the third quarter. The increase was revised down 0.1 percentage point from the “second” estimate released in February. The acceleration in the fourth quarter was led by an acceleration in inventory investment, upturns in exports and residential fixed investment and an acceleration in consumer spending. In the fourth quarter, COVID-19 cases resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country. Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased as provisions of several federal programs expired or tapered off.

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $20.4 billion in the fourth quarter, compared with an increase of $96.9 billion in the third quarter.

Private goods-producing industries increased 5.4 percent, private services-producing industries increased 8.5 percent, and government increased 0.1 percent. Overall, 19 of 22 industry groups contributed to the fourth-quarter increase in real GDP.

Read the full report [Archived PDF].

Education and the Skill of Focusing

There are various names and places that float around our minds because of their mention in movies, comic books, cartoons, skits, and innumerable other mass media “contacts” with these “famous” persons and locales out there in ill-defined “media land” and hence our imaginations. Let’s use Cardinal Richelieu (died 1642) as an example and see what it would mean to go from inchoate and amorphous to “under control” somehow.

There are innumerable movies featuring Richelieu, including made-up movie titles such as The Loves of Cardinal Richelieu mentioned in the British classic movie from 1945, Brief Encounter by David Lean and Noël Coward.

The romantic pair, Laura and Alec discuss two movies to choose between, The Loves of Cardinal Richelieu and Love in the Mist, both fictional. The movie is set in 1938 and the former fictional title is based on the real movie Cardinal Richelieu from 1935.

One can of course read up on Richelieu in reference books, encyclopedia, Wikipedia and so on. The problem there is that the entry is a welter of facts and dates and kings and places so that you can’t really get a “handle” or achieve focus and come away with an intricate set of fragmentary facts which then “evaporate” from the mind as the days and weeks go by.

Here’s an alternative characterization of Richelieu that gives you a real “flashlight” of comprehension:

“The three principal ministers (Richelieu was one of them) divided among themselves the presentation of the reform program to the assembly, Richelieu significantly reserved for himself the theme of financial reform.

As he observed in his Testament Politique, finance was like the fulcrum of Archimedes, which, once established, could move the world.”

(Richelieu and Olivares, J.H. Elliott, Cambridge University Press, 1991, page 80)

Richelieu was a statesman who, like others of his time, was instrumental in the centralization of national power and saw modernized public and royal finances (taxes, spending, budgets) as the key to stable nation-building. We now call this way of management, “the fiscal stance.”

Thus Richelieu was a significant force in fusing fiscal reforms to centralized national French power looking both inward and outward. Thus, all the colorful real and imagined movie depictions are covering up his basic impetus: money and the French state.

Every student should be on the lookout for ways to bring names and places into focus and not “swim forever” in movie images.

Go back to the movie Brief Encounter for a moment. On her first trip to Milford after meeting Dr. Harvey, Laura (the female protagonist) walks past a bookstore window. On display are a range of books published in 1944 and 1945, including Something in My Heart by Walter Greenwood, A Showman Goes East by Carroll Levis, The End of the Mildew Gang by S. Fowler Wright, Capri Moon by Kelman Dalgety Frost, Winter’s Tales by Karen Blixen, Triple Mirror by Kathleen Wallace, Once a Jolly Swagman by Montagu Slater, and Grand Barrage by Gun Buster (a.k.a. John Charles Austin). The only one of these works that survives today is Winter’s Tales by Karen Blixen (born Karen Dinesen; pen name Isak Dinesen) whose works are still very current such as the famous movies Out of Africa and Babette’s Feast.

Again, the educational point is to develop the “focusing skill” and the ability to extract some “signals from all the noise.”

Research Update: Oil Price Dynamics Report, March 28

Our oil price decomposition, reported weekly, examines what’s behind recent fluctuations in oil prices: demand factors, supply factors, or some combination of the two?

(from the Federal Reserve Bank of New York)

Highlights

Oil prices increased over the past week, mostly owing to lower supply.

Read the full report [Archived PDF].

View the data [Archived Excel XLS].

Emerson on Education

The entire approach to education or re-education presented here can be fruitfully thought of in terms of this journal entry (dated July 15? 1831) from the journals of Ralph Waldo Emerson:

“The things taught in schools & colleges are not an education but the means of education…”

(Emerson in his Journals, 1982, selected and edited by Joel Porte, Harvard University Press, page 79)

This insight on education comports well with the approach we are taking here: courses and majors, lectures and tests, grades and discussions are “raw material” for a more composite understanding or perhaps understandings “in motion” as one goes through life. This is true whether you major in English lit. or polymer chemistry.

This Emersonian insight is what is missing from campuses and schoolyards and what we are exploring here. Pedagogy can’t be on the right track without this sense of “parts and wholes” where the raw material of school is a “component” of something that includes the larger context of your life as a person as well as student and paradoxically, the whole “surround” of global commerce and the techno-commercial world which cannot be hidden away in specialized schools such as business schools (say, Harvard Business School). You are “in” all of these dimensions and storms and some tentative integration must be attempted.

Every student is a a person who is born, lives, and dies. This takes place in a world-system of global finance, technology, trade, tensions.

Deep education shows the student that the ongoing “amalgamation” of all of these dimensions is where real and deep education lies. Everything else (ie as done now) is a kind of “perfect myopia.”

This is how we implement Emerson’s point from his Journals, given above.

Education and “Then and Now” Thinking: Zola’s Novel L’Argent

It is amazing to see how certain nineteenth century phenomena, such as Émile Zola’s novel L’Argent (“Money”), eerily echo with our own times. The novel has fundamentalist evangelical Christianity, international financial chicanery, anti-Semitism, the signs of full-blown “casino capitalism” convulsing the whole of society, global technical innovations. The historical background as all this unfolds is explosive and complex.

L’Argent is the eighteenth novel in the Rougon-Macquart series by Émile Zola. It was serialized in the periodical Gil Blas beginning in November 1890, before being published in novel form by Charpentier et Fasquelle in March 1891.

The novel focuses on the financial world of the Second French Empire as embodied in the Paris Bourse and exemplified by the fictional character of Aristide Saccard. Zola’s intent was to show the terrible effects of speculation and fraudulent company promotion, the culpable negligence of company directors, and the impotency of contemporary financial laws. (Think of Dodd-Frank in our time and how insiders have “noiselessly” dismantled it.)

The novel takes place in 1864-1869, beginning a few months after the death of Saccard’s second wife Renée (see La Curée). Saccard is bankrupt and an outcast among the Bourse financiers. Searching for a way to reestablish himself, Saccard is struck by plans developed by his upstairs neighbor, the engineer Georges Hamelin, who dreams of restoring Christianity to the Middle East through great public works: rail lines linking important cities, improved roads and transportation, renovated eastern Mediterranean ports, and fleets of modern ships to move goods around the world.

Saccard decides to institute a financial establishment to fund these projects. He is motivated primarily by the potential to make incredible amounts of money and reestablish himself on the Bourse. In addition, Saccard has an intense rivalry with his brother Eugène Rougon, a powerful Cabinet minister who refuses to help him after his bankruptcy and who is promoting a more liberal, less Catholic agenda for the Empire. Furthermore, Saccard, an intense anti-Semite, sees the enterprise as a strike against the Jewish bankers who dominate the Bourse. From the beginning, Saccard’s Banque Universelle (Universal Bank) stands on shaky ground.

In order to manipulate the price of the stock, Saccard and his colleagues in the syndicate, which he has set up to jumpstart the enterprise, buy their own stock and hide the proceeds of this illegal practice in a dummy account fronted by a straw man.

While Hamelin travels to Constantinople to lay the groundwork for their enterprise, the Banque Universelle goes from strength to strength. Stock prices soar, going from 500 francs a share to more than 3,000 francs in three years. Furthermore, Saccard buys several newspapers which serve to maintain the illusion of legitimacy, promote the Banque, excite the public, and attack Rougon.

The novel follows the fortunes of about 20 characters, cutting across all social strata, showing the effects of stock market speculation on rich and poor. The financial events of the novel are played against Saccard’s personal life. Hamelin lives with his sister Caroline, who, against her better judgment, invests in the Banque Universelle and later becomes Saccard’s mistress. Caroline learns that Saccard fathered a son, Victor, during his first days in Paris. She rescues Victor from his life of abject poverty, placing him in a charitable institution. But Victor is completely unredeemable, given over to greed, laziness, and thievery. After he attacks one of the women at the institution, he disappears into the streets, never to be seen again.

Eventually, the Banque Universelle cannot sustain itself. Saccard’s principal rival on the Bourse, the Jewish financier Gundermann, learns about Saccard’s financial trickery and attacks, losing stock upon the market, devaluing its price, and forcing Saccard to buy millions of shares to keep the price up. At the final collapse, the Banque holds one-fourth of its own shares worth 200 million francs. The fall of the Banque is felt across the entire financial world. Indeed, all of France feels the force of its collapse. The effects on the characters of L’Argent are disastrous, including complete ruin, suicide, and exile, though some of Saccard’s syndicate members escape and Gundermann experiences a windfall.

History itself is of course “bubbling along” and does not go away:

Because the financial world is closely linked with politics, L’Argent encompasses many historical events, including:

By the end of the novel, the stage is set for the Franco-Prussian War (1870–1871) and the fall of the Second Empire.

The twentieth century world and the twenty-first century one do resonate with Zola’s novel. That tells you, the student, that there are deep structures underlying endless changes.

The arrival of cars and planes, computers and lasers, internet and AI have not altered these substructures entirely and that is educational, since “then and now” thinking is part of a meta-intelligent (i.e., perspectival) education process.

Education and the “Knowability” Problem

There was a wonderful PBS Nature episode in 2006 called “The Queen of Trees” [full video, YouTube] which went into details about the survival strategy and rhythms and interactions with the environment of one tree in Africa and all the complexities this involves:

This Nature episode explores the evolution of a fig tree in Africa and its only pollinator, the fig wasp. This film takes us through a journey of intertwining relationships. It shows how the fig (queen) tree is life sustaining for an entire range of species, from plants, to insects, to other animals and even mammals. These other species are in turn life-sustaining to the fig tree itself. It could not survive without the interaction of all these different creatures and the various functions they perform. This is one of the single greatest documented (on video) examples of the wonders of our natural world; the intricacies involved for survival and ensuring the perpetual existence of species.

It shows us how fragile the balance is between survival and extinction.

One can begin to see that the tree/animal/bacteria/season/roots/climate interaction is highly complex and not quite fully understood to this day.

The fact that one tree yields new information every time we probe into it gives you a “meta” (i.e., meta-intelligent) clue that final theories of the cosmos and fully unified theories of physics will be elusive at best and unreachable at worst. If one can hardly pin down the workings of a single tree, does it sound plausible that “everything that is” from the electron to galaxy clusters to multiverses will be captured by an equation? The objective answer has to be: not particularly.

Think of the quest of the great unifiers like the great philosopherphysicist Hermann Weyl (died in 1955, like Einstein):

Since the 19th century, some physicists, notably Albert Einstein, have attempted to develop a single theoretical framework that can account for all the fundamental forces of nature–a unified field theory. Classical unified field theories are attempts to create a unified field theory based on classical physics. In particular, unification of gravitation and electromagnetism was actively pursued by several physicists and mathematicians in the years between the two World Wars. This work spurred the purely mathematical development of differential geometry.

Hermann Klaus Hugo Weyl (9 November, 1885 – 8 December, 1955) was a German mathematician, theoretical physicist and philosopher. Although much of his working life was spent in Zürich, Switzerland and then Princeton, New Jersey, he is associated with the University of Göttingen tradition of mathematics, represented by David Hilbert and Hermann Minkowski.

His research has had major significance for theoretical physics as well as purely mathematical disciplines including number theory. He was one of the most influential mathematicians of the twentieth century, and an important member of the Institute for Advanced Study during its early years.

Weyl published technical and some general works on space, time, matter, philosophy, logic, symmetry and the history of mathematics. He was one of the first to conceive of combining general relativity with the laws of electromagnetism. While no mathematician of his generation aspired to the “universalism” of Henri Poincaré or Hilbert, Weyl came as close as anyone.

Weyl is quoted as saying:

“I am bold enough to believe that the whole of physical phenomena may be derived from one single universal world-law of the greatest mathematical simplicity.”

(The Trouble with Physics, Lee Smolin, Houghton Mifflin Co., 2006, page 46)

This reminds one of Stephen Hawking’s credo that he repeated often and without wavering, that the rational human mind would soon understand “the mind of God.”

This WeylHawkingEinstein program of “knowing the mind of God” via a world-equation seems both extremely charming and beautiful, as a human quest, but potentially mono-maniacal à la Captain Ahab in Moby-Dick. The reason that only Ishmael survives the sinking of the ship, the Pequod, is that he has become non-monomaniacal and accepts the variegatedness of the world and thus achieves a more moderate view of human existence and its limits. “The Whiteness of the Whale” chapter in the novel gives you Melville’s sense (from 1851) of the unknowability of some final world-reality or world-theory or world-equation.

Education and Intuition

The 2014 PBS TV series, How We Got to Now is a good miniseries on improvements in glass-making, sewage, water management, etc. that serve as the material/organizational basis for this modern world.

At one point in the series, the host Steven Johnson, a kind of historian of innovation, reveals his idea of how innovation occurs and he focuses on mavericks whose breakthrough is not a sudden “Eureka!” moment, but rather what Johnson calls “a slow hunch.” In other words, the innovators struggle along with a partially understood sense of possibility, very inchoate in the beginning, that comes into better focus with the passage of years and decades, via missteps and boondoggles.

The science writer Arthur Koestler shines a different “flashlight” on this problem of intuitive creativity and its bearing fruit:

Arthur Koestler, CBE (UK: 5 September 1905 – 1 March 1983) was a Hungarian British author and journalist. Koestler was born in Budapest. His masterful book, The Sleepwalkers, is a kind of defense of the way people in the past benefited from a productive sleepwalking on their journeys to scientific advance.

The Sleepwalkers: A History of Man’s Changing Vision of the Universe is a 1959 book by Arthur Koestler. It traces the history of Western cosmology from ancient Mesopotamia to Isaac Newton. He suggests that discoveries in science arise through a process akin to sleepwalking. Not that they arise by chance, but rather that scientists are neither fully aware of what guides their research, nor are they fully aware of the implications of what they discover.

A central theme of the book is the changing relationship between faith and reason. Koestler explores how these seemingly contradictory threads existed harmoniously in many of the greatest intellectuals of the West. He illustrates that while the two are estranged today, in the past the most ground-breaking thinkers were often very spiritual.

Another recurrent theme of this book is the breaking of paradigms in order to create new ones. People—scientists included—hold on to cherished old beliefs with such love and attachment that they refuse to see the wrong in their ideas and the truth in the ideas that are to replace them.

The conclusion he puts forward at the end of the book is that modern science is trying too hard to be rational. Scientists have been at their best when they allowed themselves to behave as “sleepwalkers,” instead of trying too earnestly to ratiocinate.

Add to this overview the “creativity” discussion on The Charlie Rose Show in The Brain Series (2010), where Professor Eric Kandel, the Nobel-prize physiologist, states forthrightly that brain research has no idea about creativity and the prospect of explaining creativity in terms of the brain is very distant indeed.

The arrival of a “slow hunch” (Steven Johnson) and “productive sleepwalking,” as opposed to unproductive kinds of woolgathering (Arthur Koestler), are mind, personality and spirit issues, although they do have brain-chemical “correlations” that cannot be explained mechanistically.

Mysteries all have physical/chemical “correlations” but cannot be simplistically reduced to biochem or genomics.

Education and the Pursuit of Improved Overviews

Professor Sherman Stein was a prominent mathematician and popularizer, and his book, Mathematics: The Man-Made Universe, is a modern classic. The subtitle “The Man-made Universe” already tells you that you’re looking at a clear exposition of “humans made math” in contrast to the “mathematics fundamentalism,” à la Professor Max Tegmark of MIT, whose tone seems to say mathematics allowed for reality and us.

This is of course a perfect “argument without end.” This is the kind of argument that should help a student to rethink their assumptions and not obsess about some once-and-for-all final understanding which can become an “idée fixe” (i.e., fixed idea in French, indicating being overly rigid or stuck).

In the preface to Professor Stein’s mathematics survey classic, he writes:

“We all find ourselves in a world we never made. Though we become used to the kitchen sink, we do not understand the atoms that compose it. The kitchen sink, like all the objects surrounding us, is a convenient abstraction.

Mathematics, on the other hand is completely the work of man.

Each theorem, each proof, is the product of the human mind. In mathematics all the cards can be put on the table.

In this sense, mathematics is concrete whereas the world is abstract.”

(Sherman Stein, Mathematics The Man-Made Universe, Dover Publications, “Preface” Third Edition, page XIII, 1999)

Meta-intelligence tells you if views of what is real, what is concrete, what is abstract, what is man-made, what is mathematical, are so radically different depending on the interpreter or analyst, it makes prudent sense to keep various views in one’s mind and modify them or juggle them as you go along. Our ability as a species to nail down for eternity what the nature of mathematics, humans and kitchen sinks are and how they all interrelate, is elusive and tangled up in language, as Wittgenstein keeps saying.