Afternoon Must-Read: Danny Vinik: Richard Fisher Has Wrongly Warned of Inflation 5 Times Since 2011
Evening Must-Read: Emily Badger: How big cities that restrict new housing harm the economy

Noted for Your Evening Procrastination for July 28, 2014

Over at Equitable Growth--The Equitablog

Plus:

Should-Reads:

  1. Yuriy Gorodnichenko: MH17: "The separatists, or more appropriately terrorists, have by now killed hundreds of people in Slovyansk, Kramatorsk, Donetsk, Luhansk and many other cities in Eastern Ukraine. And their violence and brutality has only been escalating.... The separatists firmly believed that they had shot down another military airplane and quickly claimed credit for it in social media. However, slowly they realized that the airplane was a civilian one.... This would have never happened if Russia’s President Vladimir Putin did not give BUKs, tanks, guns and other arms to the terrorists.... This would also never have happened if the international community had not been so complacent about Putin’s aggression against Ukraine.... The time has come for the international community to show leadership and put together a united front to stop this evil. It could not be any more black and white than it is now."

  2. David Atkins: The four basic American reactions to record inequality: "Those on the progressive left understand that at some level the takings of the top 4% constitute a theft from the other 96% who have lost over a third of their net worth.... Those in the neoliberal/center-left camp do believe that modern inequality is a problem, but that this too shall pass and we can trudge along as usual after a recovery.... Then you have the center-right. They take rational market theory as an article of faith, believing with religious fervor that if the labor and capital markets are allowed to act unimpeded, then both labor and capital will find a comfortable, fair and balanced price. No amount of evidence can convince them that both human life and dignity are priced incredibly cheap on the open market, or that that late 19th century was not, in fact, the model of a moral or economically functional society.... Finally, there is the far right. These are the True Believers: the ones who not only buy into the center-right line, but also the raw Objectivism of Ayn Rand and Fox News that says that the only economic injustice in society is the one being perpetrated by the government itself, taking money from the 'deserving' and giving it to the 'undeserving'. In this view, the only inequality that matters to them is redistributive taxation to “others” in society..."

  3. Danny Vinik: Richard Fisher Has Wrongly Warned of Inflation 5 Times Since 2011: "This isn't the first time Fisher has been at odds with his colleagues. When the Fed undertook 'Operation Twist' in 2011, Fisher was one of three members of the Federal Open Market Committee... to dissent. He's... been the committee’s staunchest inflation hawk... Monday’s... was just the latest of many warnings.... April 8, 2011: 'Having done our job, I see many risks to the Federal Reserve overstaying its position...' September 27, 2011: 'I might conclude by sharing my concerns about the prospect of temporarily allowing more inflation as a means of unlocking expansion in final demand.... [O]nce unleashed, inflation combines with stagnation to make stagflation...' April 10, 2012: 'I’m just reporting what I hear on the street, which is a real concern that with our expanded balance sheet, we are just a little bit in an ember of what could become an inflationary fire.'  September 20, 2012: 'I do not see an overall argument for letting inflation rise to levels where we might scare the market...' 5. June 4, 2013: 'I argue that the Fed is, at best, pushing on a string and, at worst, building up kindling for speculation and eventually, a massive shipboard fire of inflation.' So take Fisher's predictions with a grain of salt. More than anyone else on the FOMC, he has been wrong about the economic implications of Fed policy...

And:

And Over Here:

Over at Equitable Growth--The Equitablog

Plus:

Should-Reads:

  1. Yuriy Gorodnichenko: MH17: "The separatists, or more appropriately terrorists, have by now killed hundreds of people in Slovyansk, Kramatorsk, Donetsk, Luhansk and many other cities in Eastern Ukraine. And their violence and brutality has only been escalating.... The separatists firmly believed that they had shot down another military airplane and quickly claimed credit for it in social media. However, slowly they realized that the airplane was a civilian one.... This would have never happened if Russia’s President Vladimir Putin did not give BUKs, tanks, guns and other arms to the terrorists.... This would also never have happened if the international community had not been so complacent about Putin’s aggression against Ukraine.... The time has come for the international community to show leadership and put together a united front to stop this evil. It could not be any more black and white than it is now."

  2. David Atkins: The four basic American reactions to record inequality: "Those on the progressive left understand that at some level the takings of the top 4% constitute a theft from the other 96% who have lost over a third of their net worth.... Those in the neoliberal/center-left camp do believe that modern inequality is a problem, but that this too shall pass and we can trudge along as usual after a recovery.... Then you have the center-right. They take rational market theory as an article of faith, believing with religious fervor that if the labor and capital markets are allowed to act unimpeded, then both labor and capital will find a comfortable, fair and balanced price. No amount of evidence can convince them that both human life and dignity are priced incredibly cheap on the open market, or that that late 19th century was not, in fact, the model of a moral or economically functional society.... Finally, there is the far right. These are the True Believers: the ones who not only buy into the center-right line, but also the raw Objectivism of Ayn Rand and Fox News that says that the only economic injustice in society is the one being perpetrated by the government itself, taking money from the 'deserving' and giving it to the 'undeserving'. In this view, the only inequality that matters to them is redistributive taxation to “others” in society..."

  3. Danny Vinik: Richard Fisher Has Wrongly Warned of Inflation 5 Times Since 2011: "This isn't the first time Fisher has been at odds with his colleagues. When the Fed undertook 'Operation Twist' in 2011, Fisher was one of three members of the Federal Open Market Committee... to dissent. He's... been the committee’s staunchest inflation hawk... Monday’s... was just the latest of many warnings.... April 8, 2011: 'Having done our job, I see many risks to the Federal Reserve overstaying its position...' September 27, 2011: 'I might conclude by sharing my concerns about the prospect of temporarily allowing more inflation as a means of unlocking expansion in final demand.... [O]nce unleashed, inflation combines with stagnation to make stagflation...' April 10, 2012: 'I’m just reporting what I hear on the street, which is a real concern that with our expanded balance sheet, we are just a little bit in an ember of what could become an inflationary fire.'  September 20, 2012: 'I do not see an overall argument for letting inflation rise to levels where we might scare the market...' 5. June 4, 2013: 'I argue that the Fed is, at best, pushing on a string and, at worst, building up kindling for speculation and eventually, a massive shipboard fire of inflation.' So take Fisher's predictions with a grain of salt. More than anyone else on the FOMC, he has been wrong about the economic implications of Fed policy...

And:

And Over Here:


Should Be Aware of:

  1. Peter Beinart: Paul Ryan and the Cycle of Compassionate Conservatism: "1. A Democrat wins the presidency and expands the size of government. 2. Republicans mobilize to prevent big government from destroying the American way of life. 3. Republicans take Congress. 4. Congressional Republicans battle the Democratic president over the size of government. They cut spending and reduce the deficit, but in the process become wildly unpopular. 5. The Democratic president uses the unpopularity of the Republican Congress to help win reelection. 6. Republican presidential candidates ditch their assault on big government and become compassionate conservatives. We’re now back at Stage Six.... Potential GOP presidential candidates are falling over one another to run as Bush did in 2000: as compassionate conservatives. Rand Paul is arguing for shorter prison sentences. Republican Governors John Kasich and Mike Pence are expanding Medicaid. Marco Rubio recently said it was time for Republicans to stop trying to balance 'the budget by saving money on safety-net programs'. Even budget cutter extraordinaire, Paul Ryan, wants to 'remove it [the fight against poverty] from the old-fashioned budget fight'.... If history is any guide, stage seven of the Republican cycle is that a presidential candidate professing compassionate conservatism loses the popular vote by a half-million votes but is handed the presidency by the Supreme Court..."

  2. D.R. Tucker: Tyson’s Knock-Out: "Tell me, what did Neil DeGrasse Tyson do to be targeted by the wingnuts at National Review?... Cooke’s demonization of Tyson is reminiscent 'of recent remarks by Jeb Bush that scientists and those that believe in what science says, are "sanctimonious"'. Of course, there’s another pretty influential motivating factor. For years, National Review has been heavily dependent on advertising from the fossil fuel industry..."

  3. Maria Grazia Attinasi and Alexander Klemm: The Growth Impact of Discretionray Fiscal Policy Measures: "18 EU countries... 1998-2011... a dataset of fiscal measures based on the yield of actual legislative and budgetary measures, rather than approximations.... We find that fiscal consolidation can be a drag on economic growth in the short-term... expenditure-based adjustment tends to be less harmful than revenue-based adjustment.... Reductions in government investment and consumption are found to be growth reducing... indirect tax increases are found to have a particularly strong negative impact..."

  4. Walter Jon Williams: Amazonia: "Now remember that Amazon’s business plan is to Conquer the World. And once they’ve succeeded... you won’t be nearly as useful.... They could chop your royalty from 70% to 35% (which they’ve already done in Japan and India).... If you’re in the writing business, you should be aware that it’s a business. Amazon doesn’t love you any more than Macmillan or Hachette or HarperCollins. They’re in business to make money for stockholders, or to Rule the World, or for some other reason that seems logical to them. So it behooves us to make ourselves useful to as many publishing titans as possible.... Variety is good, options are good, competition is good. And our decisions on which options to take should be as ruthless and rational as those of anyone else in the business, because that’s in our interest, not in theirs..."

Already-Noted Must-Reads:

  1. Gabriel Chodorow-Reich: Financial stability and monetary policy: "In the winter of 2008, the Federal Reserve began an unprecedented campaign to combat the economic downturn.... A near zero federal funds rate, explicit communication regarding the forward path of the funds rate, and a balance sheet that ballooned to more than $4 trillion as of this writing. With memories of the 2008-09 financial crisis still fresh, the policies have prompted concern for their effect on financial stability.... The policies pursued by the Federal Reserve since late 2008 have... [had a] cumulative effect on life insurance companies appears to have been stabilising, as the benefit to legacy asset values and demand for new products outweighed any reaching for yield. While some money market funds did engage in reaching for yield in 2009-11, the compression in spreads in recent months has sharply limited the scope for such behaviour.... Financial-stability concerns for monetary policy should not stem from concerns about the riskiness of these sectors."

  2. Simon Wren-Lewis: Synthesis!? David Beckworth's Insurance Policy: "I really like David Beckworth’s insurance proposal against ‘incompetent’ monetary policy. Here it is.... 1) Target the level of nominal GDP (NGDP). 2) 'The Fed and Treasury sign an agreement that should a liquidity trap emerge... they would then quickly work together to implement a helicopter drop. The Fed would provide the funding and the Treasury Department would provide the logistical support to deliver the funds to households. Once NGDP returned to its targeted path the helicopter drop would end and the Fed would implement policy using normal open market operations. If the public understood this plan, it would further stabilize NGDP expectations and make it unlikely a helicopter drop would ever be needed.'... Jonathan Portes and I proposed something very like it.... Now this does not mean that Market Monetarists and New Keynesians suddenly agree about everything.... For David this is an insurance against incompetence by the central bank, whereas Keynesians are as likely to view hitting the ZLB as unavoidable if the shock is big enough. However this difference is not critical..."

  3. Web stanford edu group scspi media working papers pfeffer danziger schoeni wealth levels pdfFabian Pfeffer et al.: Wealth Levels, Wealth Inequality, and the Great Recession

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