Grasping Reality on TypePad, by Brad DeLong

• John McDermott Reads Branco Milanovic on the Changing Shape of the World Income Distribution Over the Past Generation:
• Duncan Black: Geniuses, They Are
• Christina Romer: Monetary Policy in the Post-Crisis World
• Paul Krugman: Why Is Obamacare Complicated?
• James K. Galbraith (2007): Exit Strategy
• Antonio Fatas: Dealing with a sudden stop
• Ashok Rao: Feed the Beast: The Inevitable Growth of the Government Share of GDP

And:

1. "The Credit Suisse European economics team are growing concerned about Mario Draghi’s disinflation problem": Izabella Kaminska: Draghi on the edge of deflation
2. ">Understanding, describing, and addressing this problem of complexity and incoherence is the next great American political challenge. But you cannot come to terms with such a problem until you can properly name it. While we can name the major questions that divide our politics — liberalism or conservatism, big government or small — we have no name for the dispute between complexity and simplicity in government, which cuts across those more familiar ideological divisions. For lack of a better alternative, the problem of complexity might best be termed the challenge of 'kludgeocracy'": Steve Teles: Kludgeocracy in America
3. "Three years from now, the Fed reckons, America will be back at full employment with a jobless rate very close to its long-term level of about 5.5%. Yet monetary policy will still be exceptionally easy, by historical standards. Fed officials reckon the federal-funds rate will be just 2% by the end of 2016, zero in real terms.... The central bank may tweak rates from month to month but, in the long run, deeper factors determine the “natural” rate of interest, and the central bank defies them at its peril.... Policy rates, low as they seem, are not out of line with their natural level. If the Fed were to tighten, demand and investment would sink, and, as Mr Bernanke warned in March, 'perversely serve to extend the period of low long-term rates'. Shortly after that speech, he inadvertently proved his own point. When he said the Fed might soon slow quantitative easing (QE, buying bonds with newly printed money), bond yields shot up and investors began pricing in much quicker increases in short-term rates than the Fed had intended. The housing market has since weakened and job growth has slowed. This is not all due to higher bond yields. Nonetheless, the Fed has since put off the date when it slows QE, and low real rates look likely to be around even longer": Economist: Free exchange: A natural long-term rate
4. "The IMF notes that eurozone internal adjustment requires two types of price change in crisis countries. First, the prices of non-tradeable goods--a haircut in Madrid--will have to fall relative to those of tradeable goods such as a Seat car. Second, the prices of Spanish tradeable goods would have to fall against those of non-Spanish tradeable goods elsewhere in the eurozone.... Put bluntly: the scale of necessary adjustment is absolutely enormous. The IMF does not believe that this is going to happen.... Adjustment remains possible in theory, but a scenario in which the eurozone adjusts is inconsistent with stated policy.... In a monetary union adjustment is hard without any transfers and without a fiscal union. I know of no plausible plan how the eurozone can manage the dual feat of economic adjustment and debt sustainability within the straitjacket of official policy. And as long as such a plan does not exist, the crisis is not over": Wolfgang Munchau: Optimism about an end to the euro crisis is wrong