The exemplary nature of Irish monetary statistics
Economists like to talk about concepts they can’t measure, like the ‘natural rate of interest’. And they do not talk enough about the things they can and do measure like the stocks and flows of money and debt and the connection of these variables with asset prices (see also the new Eurostat data on house prices which clearly show the 2005-2007 bubble on an European Union level – essential new information!).
Even the very institutions which measure this information, like the Eurozone central banks, generally do not pay enough attention to this information, probably as the people at the helm are influenced by monetarist ideas which state that money is interesting but which do not even mention debt (read Otmar Issing) or by neo-classical ideas which first define real money and monetary transactions away and subsequently introduce another ‘something’ which is called money but which does not bear resemblance to any kind of money or money like asset anybody ever encountered (Robert Lucas). See, however, this ECB publication which shows that the moderate level of money growth in the Eurozone has to be explained (net!) by people and companies which drawing down their savings accounts and not by lending and borrowing.
Economists should talk more about stocks and flows of money – and debt. See, about the relation between the stocks and flows of debt and money and the implicit concept of money inherent in these statistics Remco Schrijvers, Erwan Mahé and me at the Political Economy of Economic Metrics conference. We argue in favor of monetary statistics which, among other things, pay more attention to household indebtedness. Bad debts are often a larger problem than bad assets!
The quarterly Central Bank of Ireland financial statistics summary chart pack is an admirable example of how such statistics should look like (including bad debts)! And remember – these the basic data are available for all Eurozone countries but which are misunderstood and neglected by neo-classical economists. The other Eurozone central banks have to follow the Irish example, shed their emphasis on banks, read some scientific economics and improve their statistics – all basic data are available.