I take on some questions from economists.

Nick Rowe asks:

Does the rise of barter indicate unmet demand for the medium of exchange?

The short answer is no, debt always seeks a constant and finite level of precision. When we plan far into the future, or far back into the production lines, we reduce precision at the retail level. The economy has only so much price variation is can distribute, and allocates precision at the point of production where bottlenecks are occurring.

Barter works via supply line deflation. We really do not barter apples and bananas in his example, what we do is combine apple and banana inventories between otherwise separate producers. Collateral swaps are another form of this type of barter. In both cases, some interfacing markets have gone away, replaced by larger purchase and fewer trips to the market. So we see the phenomena of pooling limited funds and sharing a trip to the wholesale grocer. We car pool more often. Sharecropping in its various forms resurface, where the landlord takes a take of the profits. Construction companies form joint ventures on project where previously they would compete in the market. Quid pro quo trade deals become normal between nations. Children move back home, bartering rent. Deflation reduces the stages of production, obtaining larger lot sizes for each of fewer transactions. In the end, each firm or household settle on larger inventory sizes internally and fewer market transactions.

Kling wants an opinion of why we maintain unsustainable budgets in government. The essential question of voters is, if experts tell us this government will crash, then why don't we fix it now?

The answer is that the moment of the restructuring is still too uncertain. The private sector has to deflate enough that the balance sheet effect of excess government reaches observability for the economy. Considering both the election of Brown and the tax increase in Oregon, both instances demonstrate that the next trade with Obama and Pelosi cost more than the gain. Hence, the moment of restructuring the Obama plan is upon us.