Now it's Kevin Hoover's turn to drop my jaw.  I got that reaction from   
Roger's previous post because most introductory texts in macroeconomics   
as well as texts in money and banking explain that households are the   
net savers whiles government and businesses are net borrowers.  Thus,   
when explaining the determination of interest rates by the loanable   
funds diagram, households take the supply side while businesses and   
government take the demand side.  I use that explanation in chapter 4 of   
my book, *Classical Macroeconomics: Some Modern Variations and   
Distortions* (Routledge, 2003).  If one believed Roger, and now Kevin,   
one would have to switch the designations: households on the demand side   
and government and businesses on the supply side.  No, not me.  
  
In my post yesterday, I directed attention to the forms of saving and   
borrowing and asked for evidence that the household sector was the net   
issuer of IOUs whiles businesses and government were the net holders of   
"demand, savings, time deposit, money market deposit, and money market  
mutual fund accounts, as well as purchasers of stocks and bonds."  
Roger doesn't answer my query but says "I included business depreciation  
accounts (over $900bn in 2003 -- see US Dept of Commerce, BEA, Table  
5.1, line 13; ...).  But without comparing that number to the total   
amount of financial assets held by households that year, the figure does   
not tell us what he thinks it does.  
  
I think had Kevin also followed my guide in reading the flow of funds   
matrix he might have concluded differently than to declare:  
"Well a quick look at the Federal Reserve's Flow of Funds Accounts  
(http://www.federalreserve.gov/releases/z1/Current/z1r-6.pdf) shows that  
Roger Sandilands is, in fact, correct.  In the United States, both  
  Nonfinancial and Financial Businesses are both gross and net savers.  
Why debate factual matters on the basis of one's memories and intuitions  
  when the facts are easily checked?"  
  
Not so fast.  In fact, on page 115 of that table, comparing the columns   
under "households and nonprofit organizations" vs "nonfinancial   
business" on the basis of the forms in which savings and borrowings are   
undertaken, one finds that businesses have more liabilities (borrowings)   
than assets (savings) whiles the reverse is true for households and   
nonprofit organizations.  Adding from line 11 through 33, I found that   
non-financial businesses had $13,717.1b in assets but $40,447.1b in   
liabilities.  For households and non-profit organizations, the assets   
amount to $41,784.8b while the liabilities are $23,432.4b.  
  
On page 41 of R. Glenn Hubbard's (2005) text that I used this spring   
quarter in my money and banking course, he reports data from the Flow of   
Funds Accounts published by the Fed.  There one finds that households'   
holdings of the liabilities of financial intermediaries in 2003 (that   
is, their stock of savings) amounted to $17,811.5b.  Their holdings of   
the liabilities of non-financial entities in 2003 also amounted to   
$12,174.2b.  These include $735.1b of U.S. government securities,   
$640.7b of state and local government securities, $862.8b of corporate   
bonds, $4165.9b of corporate equities, and $5068.7b of equity in   
unincorporated businesses.  
  
Of course, it is the change in these magnitudes that signifies the flow   
of savings.  But looking at the same table, we find that accumulation of   
the liabilities of non-financial entities increased by 148% between 1985   
and 2003 or about 8.2% at an average annual rate whiles the growth of   
savings through financial intermediaries was 273% or about 15% average   
annual rate.  
  
I am well aware of the popular talk these days that American saving rate   
has been declining or even negative of late.  One of such talk is what   
Alan Isaac refers me to (by Barry Bosworth).  But I think one of the   
reasons for this mis-characterization of savings arises from the modern   
definition of money whereby all sorts of the public's savings are   
included in M1, M2, M3, etc.  Thus, in 2003 bank deposits stood at   
$5234b, up from $2306.7b in 1985 (127%) and money market mutual fund   
shares were $1062.7b in 2003, up from $211.1b in 1985 (404%), but both   
of these would be buried under M2 or M3.  
  
Data also show that only about 10% of M2 in the US is currency, the rest   
thus constituting mostly households' savings (liabilities of financial   
intermediaries).  Thus when M2 grew at about 7% between 1995 and 2000   
whiles some people were claiming that American savings rate had turned   
negative during the 1990s, I appreciate the source of their problem.   
Most, like Barry Bosworth, merely rely on national accounts identities   
and the resulting data without considering the forms in which   
households' savings take place.  
  
So I wish Kevin hadn't done a "quick look" at the data but had   
undertaken a careful look, bearing in mind the sources and uses of funds   
by financial intermediaries as well as the issuers and purchasers of   
financial instruments on financial/capital markets.  Data do not speak   
for themselves.  They require careful interpretation.  I say this   
because I have had the impression that Kevin is a macro-monetary   
economists and probably teaches money and banking.  Perhaps I've been   
wrong all along.  
  
Delighted to see Mason Gaffney re-enter the discussion.  Since his   
scolding of me for having referred to Marxian analysis, I've read from   
Henry George the intent for arguing the single-tax proposal.  George's   
goal is "to unite the truth perceived by the school of Smith and Ricardo   
to the truth perceived by the schools of Proudhon and Lassalle; to show   
that laissez faire (in its full true meaning) opens the way to a   
realization of the noble dreams of socialism" (4th ed., p. xxi).  (Note   
that Proudhon considers private property to be theft.)  And like Marx   
who argued that all value derives from labor and not giving labor all of   
production amounts to exploitation, George argues that "private property   
in land always has, and always must, as development proceeds, lead to   
the enslavement of the laboring class" (p. xx).  It is from such   
reasoning that George sought to dispute the wages-fund explanation of   
wage rate determination and also denied the classical inverse   
wage-profit relation argument in chapter 1 of his book.  
  
Most mothers, I'm inclined to believe, tell their children to watch the   
company they keep.  Perhaps Mason and most advocates of land-rent tax   
just want to argue to motivating aspect of taxing land so its holders   
put them to their highest net income-earning uses.  But I think people   
who refer to themselves as Georgists must also bear in mind that Henry   
George had the goal of establishing socialism with his single-tax   
proposal.  I wish they would not get overly excited when that motivation   
is brought up.  
  
James Ahiakpor