James Ahiakpor writes:  
  
>Roger uses data indicating that "business depreciation" in 2003   
>amounted to over $900bn to buttress his claim that "Household saving   
>is mostly absorbed in residential investment" and that the "business   
>sector as a whole is usually a net saver."  He maintains the same   
>view of businesses as net savers even after I'd cited comparative   
>data in 2003 (from Hubbard 2005) showing that the savings of   
>households in bank deposits and holdings of corporate equities dwarf   
>the $900b in depreciation charges for business.  Not even after I've   
>tallied the entries in the Fed's "Flow of Matrix for 2005" (p. 115)   
>in which households are net holders of financial assets and   
>businesses are the net issuers.  And Kevin Hoover sides with   
>him.  What else can one say in the case of a refusal to admit an obvious error?  
  
Where is the obvious error on my part?  In his earlier post, James   
Ahiakpor conflated two things.  First, he claimed that firms are not   
net savers.  Second, he claimed that firms are net holders of   
financial liabilities.  While he treats these statements as if they   
were the same, they are not.  And it was only the first of these that   
I objected to.  And, I have not commented on other claims (for   
example, about depreciation, in the discussion).  While James   
Ahiakpor keeps referring to p. 115 of the Federal Reserve's Flow of   
Funds Accounts   
(http://www.federalreserve.gov/releases/z1/Current/z1r-6.pdf)   
entitled "Flow of Funds Matrix for 2005" and subtitled "Assets and   
Liabilities", the right page to look at for savings is p. 114, the   
"Flow of Funds Matrix for 2005" subtitled "Flows".  For after all,   
savings is a flow -- not a stock.  The flow table on p. 114 line 3   
("Net Savings") shows that nonfinancial firms (column 4) are net   
savers to the amount of $291.9 billion; financial sectors are net   
savers (column 14) to the amount of $167.7 billion.  In contrast,   
households (column 2) are net savers to the smaller amount $161.5   
billion (which, we should note, is substantially less than the   
savings of nonfinancial firms, and even more so of financial and   
nonfinancial firms taken together).  the only claim that I made was   
that businesses are net savers.  This is the claim that I took Roger   
Sandilands to be making originally.  It is not an obvious error, but   
one that is fully born out by the appropriate data.  
  
James Ahiakpor is apparently unwilling to make the elementary   
distinction between the flow of savings (which may be both real or   
financial) from the stock of financial assets (which ignores real   
assets).  On the question of stocks, the table on p. 115 would indeed   
be the correct one.  That table shows (comparing line 1 to line 3 for   
appropriate columns) that nonfinancial firms financial assets are   
less than their financial liabilities ($13,362.3 billion < $14, 560.1   
billion), financial sectors financial assets are greater that their   
liabilities ($50,729.4 billion > $49.647.1 billion).  Consolidating   
the two sectors leaves assets $115.5 billion below liabilities.  In   
contrast, households are net holders of financial assets:  $38,729.5   
billion > $11, 925.6 billion.  
  
All this is consistent with everything that I previously   
wrote.  There is no obvious error.  
  
I am sorry that James Ahiakpor thinks that it is productive to imply   
that I am incompetent, foolish, or willfully ignorant in not agreeing   
with his statements, I think that the facts fully support the   
specific claims that I made.  I regret the tone of implicit and   
explicit ad hominem in this thread.  If I don't reply to any future   
posts, however, it is because I will be offline for about a month,   
not because I am unwilling or unable to respond to legitimate arguments.  
  
Kevin Hoover