Previous month:
July 2014
Next month:
September 2014

August 2014

Morning Must-Read: Kevin Drum: Welfare Reform and the Great Recession

Chart of the Day Welfare Reform and the Great Recession Mother JonesKevin Drum: Welfare Reform and the Great Recession "CBPP.... Welfare reform... in its first few years...

...seemed like a great success... but it was a bubbly economy that made the biggest difference. So how would welfare reform fare when it got hit with a real test? Answer: not so well. In late 2007 the Great Recession started, creating an extra 1.5 million families with children in poverty. TANF, however, barely responded at all. There was no room in strapped state budgets for more TANF funds.... This is why conservatives are so enamored of block grants. It's not because they truly believe that states are better able to manage programs for the poor than the federal government. That's frankly laughable. The reason they like block grants is because they know perfectly well that they'll erode over time. That's how you eventually drown the federal government in a bathtub. If Paul Ryan ever seriously proposes—and wins Republican support for—a welfare reform plan that includes block grants which (a) grow with inflation and (b) adjust automatically when recessions hit, I'll pay attention. Until then, they're just a Trojan Horse.... After all, those tax cuts for the rich won't fund themselves, will they?


Afternoon Must-Read: Paul Krugman: Core Inflation's Success

NewImagePaul Krugman: Core Success: "Cecchetti and Schoenholtz on core inflation...

reminds me that this concept, too, has been a huge success.... Those of us who looked at core inflation came in for a lot of abuse during the 'debasing the dollar' period of 2010-2011, when right-wingers were writing to Ben Bernanke to attack his policies and Paul Ryan was warning that rising commodity prices were the harbinger of runaway inflation. Assertions that fundamental inflation hadn’t gone up were met with ridicule and insults. But sure enough, the commodity price effect on inflation was a blip, and went away. And the inflation hawks learned their lesson, and revised their models. Hahahaha--just kidding."


Afternoon Must-Read: Binyamin Applebaum: On the Decline in Labor Force Participation: Long-Term Trends in Economy More Worrisome Than Sudden Crash - NYTimes.com

Binyamin Applebaum: On the Decline in Labor Force Participation: "Davis and Haltiwanger attribute... to the aging of the work force...

...as people get older, they tend to change jobs less frequently. The decline in the creation of new companies is also playing a role. In effect, companies are getting older, too. This has been particularly pronounced in the retail sector, where giants like Walmart and McDonald’s offer relatively stable employment.... The cost of training workers has increased, partly because the share of all workers who require government licenses has grown by one estimate from about 5 percent in the 1950s to 29 percent in 2008. This discourages hiring. So do legal changes that have made it more difficult to fire employees.... It also mentions health insurance as a reason that employees may stay put. In the view of Mr. Davis and Mr. Haltiwanger, the recession just made a bad situation worse....

But economists and policy makers will have to reconcile the assertion that these trends were the dominant factors with the reality that the employment rate rose in the years before the recession, then dropped sharply during the recession. The new paper, like others of its genre, basically requires belief in a big coincidence: that a short-term catastrophe happened to coincide with the intensification of long-term trends — that the economy crashed at the moment that it was already beginning a gradual descent.


Weekend Reading: Janet Yellen: Labor Market Dynamics and Monetary Policy

NewImageJanet L. Yellen: Labor Market Dynamics and Monetary Policy: "In the five years since the end of the Great Recession...

...the economy has made considerable progress in recovering from the largest and most sustained loss of employment in the United States since the Great Depression.[1] More jobs have now been created in the recovery than were lost in the downturn, with payroll employment in May of this year finally exceeding the previous peak in January 2008. Job gains in 2014 have averaged 230,000 a month, up from the 190,000 a month pace during the preceding two years. The unemployment rate, at 6.2 percent in July, has declined nearly 4 percentage points from its late 2009 peak. Over the past year, the unemployment rate has fallen considerably, and at a surprisingly rapid pace. These developments are encouraging, but it speaks to the depth of the damage that, five years after the end of the recession, the labor market has yet to fully recover.

Continue reading "Weekend Reading: Janet Yellen: Labor Market Dynamics and Monetary Policy" »


Lunchtime Must-Read: James Pethokoukis: Does the GOP Have a Policy or a Messaging Problem? Both

James Pethokoukis: Does the GOP Have a Policy or a Messaging Problem? Both "Byron York.... 'The reformers face resistance...

not just from the corners of the conservative world that disagree with them on taxes, immigration, and other, perhaps lesser issues. They are also under attack from those in the Republican establishment who see no need to reevaluate GOP policies. According to this faction, the party doesn’t have a policy problem; it has a messaging problem.

Obviously I think the GOP has a policy problem. But that aside, Rs should not underestimate just how bad their messaging problem is.... GlobalStrategyGroup.... While voters by a huge margin prefer candidates focused on 'more economic growth' versus 'less income inequality', voters also think... raising the minimum wage and guaranteeing a minimum wage--are better for growth than  business tax cuts or reducing top marginal income tax rates.... And... voters seem to have a much broader view of what policies qualify as 'pro-growth'. Whatever the economic argument the GOP is making, the party does not seem to be making it very well.


I Will Be on: SiriusXM 111: Business Radio 24/7 Business Talk from Wharton @ 1:00PM EDT Friday August 22, 2014....

In the email:

Professor DeLong--I’m the Program Director for a new channel that’s a partnership with the Wharton School. Read about us here: http://www.siriusxm.com/businessradio

Would you be available... between 1 and 1:30 pm ET to join us on our "Behind the Markets" program? Our host is Wharton Finance Professor Jeremy Siegel.

Yes! Jeremy Siegel is always worth talking to!!



1:00 pm - 2:00 pm: Behind The Markets:

Anyone can follow the ups and downs of Wall Street numbers—but on "Behind the Markets" get the insight you need to make the calls that will make or break your business. Host Jeremy Schwartz is joined each week by Wharton Finance Professor Jeremy Siegel, the author of Stocks for the Long Run, “the” book about stocks for market insiders. They’ll discuss the how and why behind the market’s performance, and talk with leading economists and market strategists about what’s ahead for the economy and your portfolio.


Morning Must-Read: Joe Blasi: An Easier Solution to Wealth Inequality?

Anne VanderMey: Joe Blasi's Easier Solution to Wealth Inequality?: "Joseph Blasi... along with... Richard Freeman and Douglas Kruse, wrote...

...The Citizen’s Share: Reducing Inequality in the 21st Century... corporate profit-sharing, employee stock ownership, and stock option plans.... The idea is rooted, he says, in the Founding Fathers’ original vision of widespread land ownership.... 'Why isn’t our plan radical?' Blasi asks. 'Because the founders of the American revolution had this view. That broad-based capital ownership was necessary for the republic to exist.'... 'We have to find a way for citizens to have some ownership of the technologies of the future.... We could have a future where technology creates a low feudal serf class—people with low wages or flat wages or high structural unemployment... or... a future where we have a smaller workweek and citizens broadly have more capital ownership'...


Noted for Your Morning Procrastination for August 22, 2014

Over at Equitable Growth--The Equitablog

Plus:

Must- and Shall-Reads:

  • Jesse Livermore: Fixing the Shiller CAPE: Accounting, Dividends, and the Permanently High Plateau
  • Mark Thoma: A Conversation with Peter Diamond
  • Carola Binder: Wage Inflation and Price Inflation

    1. Worse than the 1930s Europe s recession is really a depression The Washington PostMatt O'Brien: Worse than the 1930s: Europe’s recession is really a depression: "As I was arguing last week, it's time to call the eurozone what it really is.... Six and a half years later, Europe has distinguished itself by not having much of a recovery at all. And, as you can see above, that's about to make it worse than the worst of the 1930s.... It's a policy-induced disaster. Too much fiscal austerity and too little monetary stimulus have crippled growth like almost never before. Europe is doing worse than Japan during its "lost decade," worse than the sterling bloc during the Great Depression, and barely better than the gold bloc then—though even that silver lining isn't much of one. That's because, at this rate, it'll only be another year until the eurozone is well behind the gold bloc, too. So how is Europe making the Great Depression look like the good old days of growth? Easy: by ignoring everything we learned from it.... The euro is the gold standard with moral authority. And that last part is the problem.... Europe is stuck with a fixed exchange system that doesn't let them print, spend, or devalue their way out of a crisis. But, unlike then, Europe might never give it up. It's a fidelity to failure that even the gold bloc couldn't have imagined. And that leaves the ECB as Europe's only hope—which means they're probably doomed.... They have made a desert, and called it the eurozone."

    2. Scott Sumner: Black Swans: "Brad DeLong... is mildly critical of Shiller... in almost precisely the same way that I am.... DeLong and I think... the real mystery [is] not so much why stocks were so high in 1929, 2000, and now, but rather why they were so low 90% of the time. I think WWI is a great black swan example, but... I’d like to throw out another possible black swan—1968.... Switching to a permanent fiat system was much more inconceivable to people in the old days than you might imagine.... Even Keynes opposed a pure fiat regime, and viewed these historical examples as sort of pathological cases.... DeLong identifies three periods when stock investors did poorly over the following 10 years—right before WWI, the late 1960s and early 1970s, and the late 1990s. Even today I’m not sure exactly how much of the poor stock market performance of 1968-81 was due to the Great Inflation.... I am confident, however, that moving to a fiat money regime was a black swan for the US 30-year Treasury bond market, and pretty much every other bond market as well."

    3. Alex Tabarrok: Ferguson and the Modern Debtor’s Prison: "How does a stop for jaywalking turn into a homicide and how does that turn into an American town essentially coming under military control with snipers, tear gas, and a no-fly zone? We don’t yet know exactly what happened between the two individuals on the day in question but events like this don’t happen without a deeper context. Part of the context is the return of debtor’s prisons that I wrote about in 2012.... You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant 'low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay'..."

    4. Cardiff Garcia: Video and review: “The System Worked”, by Dan Drezner "I kept thinking of the well-publicised conversation... in January 2009.... Geithner: 'Your accomplishment is going to be preventing a second Great Depression.' Obama: 'That’s not enough for me. I’m not going to be defined by what I’ve prevented.' Geithner: 'If you don’t prevent a depression, you won’t be able to do anything else.' Obama: 'I know. But it’s not enough.' For global economic governance, as opposed to Presidential legacies, avoiding economic catastrophe when catastrophe was a non-trivial possibility is enough. That’s the case made by Drezner.... So, was it indeed good enough? Sluggish recovery in the US accompanied by lower median incomes. Double-dip recession in Europe.... Ongoing stagnation in Japan pending the outcome of Abenomics. Slowing growth in China.... A Bank for International Settlements that called for tighter money earlier than any reasonable analysis could justify. Currency wars. An IMF that pushed austerity before a later volte-face, not to mention its numerous mistakes in tackling the euro zone crises.... All of these items would suggest a deep failure....
      &nbsp
      "Drezner... begins by highlighting the scale of the global collapse.... And yet, despite important local exceptions, the worst global consequences of the Depression were avoided.... Later mistakes were inexcusable, especially the turn to austerity and premature monetary tightening in Europe. Yet many of these subsequent errors were national policy failures and 'had little or nothing to do with foreign economic policy or adherence to global governance structures'--admittedly a fine and not always obvious distinction.... I find the argument persuasive....
       
      "But 'good enough' is a tough sell, and my colleague Alan Beattie isn’t buying.... Alan writes: 'The truth, as both of us I think admit, is that the record of global governance is patchy, and its results even now uncertain'.... whether the system as a whole worked is probably less important than knowing how to distinguish between the parts that worked and the parts that failed. The forthcoming book by Barry Eichengreen, whose data Drezner cites, appears to split the difference. Beattie refers to the resilience of wrong-headed ideologies.... Consider how much commentary about the crisis has naturally focused on the long list of subsequent policy failures. It’s good to have at least one book emphasising that the list could have been much longer still..."

    5. Willem H. Buiter: The Simple Analytics of Helicopter Money: Why It Works – Always: "A permanent/irreversible increase in the nominal stock of fiat base money rate which respects the intertemporal budget constraint of the consolidated Central Bank and Treasury.... Three conditions must be satisfied for helicopter money always to boost aggregate demand. First, there must be benefits from holding fiat base money other than its pecuniary rate of return. Second, fiat base money is irredeemable – viewed as an asset by the holder but not as a liability by the issuer. Third, the price of money is positive. Given these three conditions, there always exists – even in a permanent liquidity trap – a combined monetary and fiscal policy action that boosts private demand – in principle without limit. Deflation, ‘lowflation’ and secular stagnation are therefore unnecessary. They are policy choices."

    6. 3rdMoment: On Bob Shiller and CAPE: "While I have great respect for Shiller, I don’t understand his confidence that the CAPE is likely to return to it’s historical average of around 16.... 1. The average levels of CAPE in most of the last century appear, with hindsight, to have been puzzlingly low.... 2. There has been a large shift in corporate payout mix, from virtually all dividends in the past, to a roughly equal mix of dividends and share repurchases today. This by itself will add a couple of points to CAPE.... 3. Some other accounting changes... might raise the CAPE.... 4. Lower information and transaction costs and the rise of index investing have dramatically lowered the cost of maintaining a globally diversified portfolio.... 5. The real 'risk free' return on treasuries seems to be very low.... This lowers the return stocks need to be attractive by comparison.... Some of these reasons are more certain than others, but taken together they seem to show that we have good reason to expect CAPE levels significantly above the historical average going forward. Are there any countervailing reasons offsetting the list above, factors that would tend to make CAPE lower than in the past? I can’t really think of any. And I haven’t seen anybody else offering any."

    7. Scott Lemieux: "Textualists" Decline to Cite Inconvenient Text "The premise... is that if close attention to isolated textual clauses produces an outcome that will cause millions of people to lose health care coverage, 'with reluctance' these people must be sacrificed to... 'textualism'. Never mind that your theory... produces an absurd result inconsistent with what everyone understood the statute to mean.... Needless to say, this theory has less than no chance of convincing anybody who doesn’t share the fanatical opposition to the ACA of the people who developed it. Fortunately, there’s a remedy... the en banc rehearing.... The architects of the Halbig litigation are desperate to avoid this outcome.... An obvious problem for these 'textualists'... is that not... the relevant textual passage of the Federal Rules of Appellate Procedure specifically cites circuit splits as an example of... the 'exceptional importance' that merits en banc review.
       
      "So how do the Halbig architects in their deep reverence for textual language deal with this? Briane Gorod[:]... 'Funnily enough, these ostensible textualists declined to cite—even once—the text of the rule.... The law’s challengers try to distract... by pointing to a number of cases in which the D.C. Circuit (and other courts) declined to grant en banc review.'... Parody is killed again. Now, you might say that this is flagrantly unprincipled. But, to borrow Mark Tushnet’s line, it is simultaneously 0% and 100% principled. Obviously, they don’t really care about their particularly unattractive and unworkable version of 'textualism'. The principle of 'we must pursue any ad hoc legal theory that has a chance of sabotaging the Affordable Care Act', though--they’re deeply committed to that one."

    8. Failed to open pageOn wages and inflation: jeers for fears: "We live in disinflationary times. Technological innovation in uniquely labour-saving sectors and globalisation holding down goods prices and wages. Aging populations. Stagnationist trends combined with inadequate crisis response policy, resulting in persistent global economic slack.... US headline PCE inflation has averaged 1.6 per cent since the start of the recession--a tremendous demand fail given the severity of the downturn and the ensuing sluggishness in real growth during the recovery. Deflation is still a legitimate worry in Europe, where inflation expectations have just tumbled again.... An uptick in wage growth from its currently weak pace wouldn’t necessarily be inflationary, at least not right away. We’ve recently come across two helpful items--one from a BCA Research note and another from an article by Chicago Fed economists--explaining why. Martin Barnes.... 'If wage trends are going to be a key determinant of Fed policy, then there is a risk that policy could be tightened prematurely.... In some ways, the technological and global forces that are depressing employee compensation give support to the idea that the economy may struggle to return to more normal growth rates. At the extreme, it even supports the secular stagnation thesis. If that is the case, then the Fed would be justified in taking a cautious approach to tightening--even if wage growth picks up.'... [Cleveland] Fed economists [Edward S. Knotek II and Saeed Zaman].... 'Connections among wages, prices, and economic activity are more akin to a tangled web than a straight line.... We document evidence of a more stable wage Phillips curve than a price Phillips curve, which is consistent with the idea that subdued wage growth is symptomatic of the existence of slack in the labor market. But given wages’ limited forecasting power, they are but one piece in a larger puzzle...'"

And Over Here:

Continue reading "Noted for Your Morning Procrastination for August 22, 2014" »


Liveblogging World War II: August 22, 1944: A Photographer’s Story

NewImageLIFE at the Liberation of Paris: A Photographer’s Story:

LIFE photographer Ralph Morse, now 94 years old, recalls being outside Paris in a press camp — he was covering George Patton’s Third Army and its sweep toward the Rhine for LIFE — when, he says, Ernest Hemingway, who was also in the camp, offered a suggestion. “I knew Hemingway pretty well because his later wife, Mary, had worked for LIFE, and she had reported with me on a few stories,” Morse told LIFE.com. “So, we’re in this camp, waiting, and Hemingway says, ‘You know, the Germans can’t possibly have mined every road into Paris. Why don’t we find a back road? We can be at the Champs-Élysées before the troops get there.’ Of course, we did make it into Paris . . . but not the way Hemingway wanted.”

Continue reading "Liveblogging World War II: August 22, 1944: A Photographer’s Story" »


#FF: The Best of Daniel Davies: Over at Equitable Growth: Friday Focus for August 22, 2014

NewImageOver at Equitable Growth: Robin: Stock and flow: "Flow is the feed...

...It’s the posts and the tweets. It’s the stream of daily and sub-daily updates that remind people that you exist. Stock is the durable stuff. It’s the content you produce that’s as interesting in two months (or two years) as it is today. It’s what people discover via search. It’s what spreads slowly but surely, building fans over time. I feel like flow is ascendant... but we neglect stock at our own peril...

A Baker's Dozen of keepers for the stock from the excellent but (and?) highly irascible Daniel Davies... READ MOAR

Continue reading "#FF: The Best of Daniel Davies: Over at Equitable Growth: Friday Focus for August 22, 2014" »


WTF Are the Police on the Other Side of Missouri Doing?: Live from The Roasterie CCCXIV: August 22, 2014

Mark Frauenfelder: Buttle/Tuttle mixup: Cops tell innocent woman she is dead, then throw her in jail "Shannon Renee McNeal... has filed a lawsuit against St Louis police and court personnel...

...after they falsely arrested her on felony drug possession charges that were meant for Shannon Raquel McNeal... 13 years younger. The booking officer at the jail acknowledged that Shannon Renee McNeal's fingerprints didn't match the wanted woman's (who, incidentally, had been dead for three months before the warrant was approved) but jailed her anyway, using the "not my problem" excuse.

A county clerk also allegedly confirmed the officer’s mistake, but Shannon Renee McNeal was still transferred to the city’s department of corrections and assigned a caseworker. After the caseworker also confirmed she was not the suspect, McNeal was allegedly told to retain her own attorney--which she could not afford--or notify prosecutors herself. The suit states that McNeal was kept in jail for two days despite the multiple confirmations of her innocence, during which time she was sprayed with pesticides that burned her stomach and back, before being released on the orders of Circuit Judge Thomas Frawley. McNeal was fired from her job from the mistake and has to pay to get her named expunged from public databases that falsely claim she has a criminal record.


Nighttime Must-Read: Matt O'Brien: Worse than the 1930s: Europe’s Recession

Worse than the 1930s Europe s recession is really a depression The Washington Post

Matt O'Brien: Worse than the 1930s: Europe’s recession is really a depression: "As I was arguing last week, it's time to call the eurozone what it really is....

Six and a half years later, Europe has distinguished itself by not having much of a recovery at all. And, as you can see above, that's about to make it worse than the worst of the 1930s.... It's a policy-induced disaster. Too much fiscal austerity and too little monetary stimulus have crippled growth like almost never before. Europe is doing worse than Japan during its "lost decade," worse than the sterling bloc during the Great Depression, and barely better than the gold bloc then—though even that silver lining isn't much of one. That's because, at this rate, it'll only be another year until the eurozone is well behind the gold bloc, too. So how is Europe making the Great Depression look like the good old days of growth? Easy: by ignoring everything we learned from it....

The euro is the gold standard with moral authority. And that last part is the problem.... Europe is stuck with a fixed exchange system that doesn't let them print, spend, or devalue their way out of a crisis. But, unlike then, Europe might never give it up. It's a fidelity to failure that even the gold bloc couldn't have imagined. And that leaves the ECB as Europe's only hope—which means they're probably doomed.... They have made a desert, and called it the eurozone.

IIRC, it was after 2010 that I decided that this was no longer the Great Recession, but rather the Lesser Depression. It is now starting to look as though that, too, is inadequate, and that in five years I will be calling what started in 2007 "The Greatest Depression"...


Jeb Bush Tells Michael Barbaro: "I'm Not Like My Brother": Live from The Roasterie CCCXIII: August 21, 2014

This is, in my opinion, laying it on much too thick: both Michael Barbaro and whoever is flacking for Jeb Bush (why is a Connecticut-Maine Yankee named after a Confederate cavalry general who rounded up free Blacks in Pennsylvania and sent them south to be sold as slaves rather than scouting the location of the U.S. army before Gettysburg, anyway?) should be working harder...

Michael Barbaro: Jeb Bush Gives Party Something to Think About: "As governor of Florida, Jeb Bush flew in Ivy League social scientists for daylong seminars...

...with his staff and carved out time for immersive brainstorming sessions he called “think weeks.” A voracious reader, he maintains a queue of 25 volumes on his Kindle (George Gilder’s “Knowledge and Power” among them, he said) and routinely sends fan mail to his favorite authors. A self-described nerd, he is known to travel with policy journals and send all-hours inquiries to think tanks....

Continue reading "Jeb Bush Tells Michael Barbaro: "I'm Not Like My Brother": Live from The Roasterie CCCXIII: August 21, 2014" »


A Note on Understanding the Debate Inside the Federal Reserve: Afternoon Comment

Over at Equitable Growth: Paul Krugman sends us to Binyamin Applebaum, who writes:

Binyamin Appelbaum: Fed Dissenters Increasingly Vocal About Inflation Fears: "An increasingly vocal minority of Federal Reserve officials...

...want the central bank to retreat more quickly from its stimulus campaign.... One committee member, Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia, dissented at the July meeting, arguing that there was already reason enough for the Fed to change course. The minutes said officials also were 'increasingly uncomfortable with the committee’s forward guidance' that the Fed expects to maintain its key short-term rate at its low level for some time.

And Paul comments:

Paul Krugman: Hawks Crying Wolf: "Is this really true?...

...Of course, they are being very vocal--but when didn’t they call for monetary tightening? The article highlights Charles Plosser.... You know that Plosser has been warning about imminent inflation since the beginning of the crisis. He did it in 2008; he did it in 2009; he did it in 2010; he did it in 2011... you can easily find him doing the same in 2012 and 2013.... The real story here is the remarkable resilience of inflation panic: people who worry about inflation never seem daunted in the least by the repeated failure of their predictions. It’s an interesting question why...

Let me strengthen Paul's comment:

As those of us who--like Binyamin Applebaum--have been reading the Federal Reserve transcripts and minutes know that, Charles Plosser has, ever since he became President of the Federal Reserve Bank of Philadelphia in August 2006, consistently:

  • Feared increases in inflation that have-so far--not happened.
  • Expected rebounds in growth and employment and employment that have--so far--not happened
  • Expressed strong skepticism of the Federal Reserve staff's modeling exercises in a direction that would ex post have made its assessments of the state and direction of the economy even more optimistic and less accurate than they have turned out to be.
  • Remained uncurious--in meeting transcripts released so far, at least--about why his assessments about the state of the economy and its future direction had been so far off.

It seems to me that when writing--as Binyamin Applebaum is--for readers who have not been reading the minutes and transcripts of FOMC meetings, one's first duty in referring to Charles Plosser is to situate his views in this proper context.

Binyamin Applebaum does not do this.

It would be very, very easy to do.

Simply replace:

Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia, dissented at the July meeting, arguing that there was already reason enough for the Fed to change course...

with:

Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia, continued the pattern he established when he joined the FOMC in 2006 of arguing that there was already reason enough for the Fed to pursue a tighter monetary policy than the bulk of the FOMC wished...

Why not do this?

FRB: Transcripts and other historical materials:

August 8, 2006: MR. PLOSSER: Right now I tend to be more concerned about inflation than I am about growth. I don’t view the second-quarter slowdown as necessarily a precursor to a significant weakening of the economy going forward.... The inflation picture... has not improved. Despite a slowing economy, price increases have been accelerating. The increases have been broadly based, as has been pointed out by Bill Poole and others. They are no longer confined to energy and other commodities. Indeed, in June the CPI rose less than did the CPI excluding energy. Core inflation is above the range I consider to be consistent with price stability, and to my mind, inflation risks remain tilted to the upside.... Given this persistence in inflation, unacceptably high inflation seems likely to be around for a while....

MR. PLOSSER: Reasonable people at this stage doing sound economic analysis could come down one way or the other on this. But at this point, my inclination is to favor a 25 basis point increase.... I don’t think raising rates 25 basis points is going to have a significant effect on the real economy in the near term either, but it can help reinforce the public’s perception of our commitment to price stability.... Longer-term expectations remain contained because the markets and people expect the FOMC to contain actual inflation.... If the Committee chooses not to raise rates, does it risk sending the message that we are willing to tolerate inflation above an acceptable level for a significant period of time?...

MR. PLOSSER: I’m new to these language nuances about housing. It occurs to me, however, that one question you ought to ask is whether by including housing or continuing to include housing the Committee is putting itself in a position where it can’t raise rates until housing comes back. Are we unfairly locking ourselves in, or at least are the markets going to interpret it that way?...

MR. PLOSSER: I think there are a number of things that the FOMC could and should communicate, but its current expectation about the future path of the fed funds rate is not one of them. I don’t think that’s a very good practice in general...

September 20, 2006: MR. PLOSSER: What we do know is that core inflation has been above 2 percent for two and a half years and is expected to be there, according to the forecast, for another two years.... I see two inflation scenarios as being plausible.... In the first scenario, core inflation is elevated primarily because of transitory factors.... Even in this most desirable of scenarios... we have to recognize that we will have essentially ratified a higher price level driven by oil price increases, and we should ask ourselves whether or not we are comfortable with that. In the other scenario, stimulative monetary policy during the past five years has been a major contributor to the rise in core inflation... then our credibility is seriously at risk if we fail to take further steps to curtail price increases. We might be lucky. But we might risk finding ourselves in a situation in which inflation expectations become unhinged, making it more costly to bring inflation back down...

MR. PLOSSER: I do not think that a 25 basis point change in interest rates one way or the other will have much effect on the housing market at this point, and I do not believe that we should stand in the way of the adjustment to the housing sector to move to a more sustainable level of activity.... My concern... is that the longer we tolerate inflation above our comfort zone, the more risk we have that those expectations will become unhinged...

October 24-25, 2006: MR. PLOSSER: We’ve had some hopeful news on the inflation front over the intermeeting period, but the level of inflation continues to concern me.... Although the twelve-month change in core CPI actually edged up to 2.9 percent, a rate that I consider well above price stability, it may be beginning to stabilize. But, frankly, a lot of uncertainty remains, and it is dangerous, to my mind, to rely too heavily on one month’s numbers.... To the extent that some of the acceleration in inflation was fueled by very accommodative monetary policy over the past five years, we still need to consider whether monetary policy has firmed enough to remove the cumulative effects of the past policy accommodation to get inflation back down to a level consistent with price stability in a reasonable time so that our credibility is not at risk. The longer we allow that deviation from price stability to persist, the higher the risk to our credibility and the higher the risk that recent high inflation readings will raise longer-term inflationary expectations...

MR. PLOSSER: Inflation continues to be higher than I’d like to see, and I still believe there are larger risks on the inflation side than on the growth side.... If growth bounces back more strongly than the Greenbook forecasts, which I believe is a likely outcome, we may have to consider additional increases in the fed funds rate going forward. Thus, from that standpoint, I really don’t view the prospective policy path as particularly symmetric...

MR PLOSSER: Robert Gordon in recent work estimated that the bias in the headline CPI is about 0.8 percent per year.... If we decided and agreed upon a bias, let’s say it was 0.8, should that be our target? Yes, if price stability is our goal.... Many models of optimal monetary policy suggest, depending on the exact formulation of the model, that the optimal rate of inflation falls in a range of slightly negative to slightly positive. Thus, price stability may be desirable, but it may not be optimal in some circumstances.... There seems to be a disconnect between the market’s view of long-run inflation, which according to surveys and financial markets seems to remain around 21⁄2 percent, and the statements made by many of us on this Committee who seem to be comfortable with 1 to 2 percent.... Are we really committed to the goal of 2 percent or below? By publicly committing to a specific target, we might, I hope, obtain greater congruence of our goals and the market’s expectations....

The last thing I’d like to comment on relates to the so-called dual objective.... We need to try to communicate to the public that, although we may have a dual mandate in some respects, our ability to achieve certain objectives is very, very limited...

December 12, 2006: MR. PLOSSER: I also want to mention some anecdotal information that I find interesting. Last week I met with a number of mostly manufacturing CEOs from my District. An observation that one of them made, which many agreed with, was that from their perspective money was almost free. This observation is consistent with what some others have been saying around the table. They thought that there was plenty of liquidity and that interest rates were not limiting them particularly in any way. This observation is also consistent with the views that mortgages rates are still relatively low and that credit spreads show less stress on businesses at this point. I take these observations to indicate that monetary policy is not particularly restrictive at this point...

MR. PLOSSER: inflation continues to be higher than I’d like to see it and is forecast to remain so for longer than I’d like to see, thus putting our credibility at risk. I am more optimistic than the Greenbook about the possibility for a quicker rebound to potential. But even if you take the staff’s Greenbook forecast, with growth expected to be below trend for at least several more quarters before returning to trend, I’m comfortable with maintaining the current federal funds rate and the implicit firming that doing so would imply as the economy slows down.

Although I don’t think we should raise the fed funds rate today, I do want to put on the table and reemphasize, as several people have, that we need to acknowledge that if real growth rebounds quicker toward trend than is currently forecast, whether in the fourth quarter of this year or the first quarter of next year, then we must be in a position to raise the fed funds rate at that time. I happen to put more probability on that being the case than perhaps some do. A failure to do that or to signal that we will do that would put considerable upward pressure on the inflation outlook and on the public’s perception of our commitment to price stability. Of course, if we begin to see much larger spillovers from housing corrections or from other sectors, which I don’t think we will, we may want to allow the nominal funds rate to decline as the equilibrium market rates decline—again, not to exploit a Phillips curve type of tradeoff but to drive the real rate down at the appropriate time. But that would also be signaling that we are content with the current level of inflation, and I don’t think we are at this point...

January 30-31, 2007: MR. PLOSSER: I’ve become increasingly confident that the national economy has a positive underlying momentum... stronger underlying growth that has been temporarily weakened by housing and autos. There is little, if any, evidence that the housing and auto corrections are spilling over into the other sectors of the economy.... Although I didn’t talk to the chairman of Disney, I did talk to a small manufacturing firm with total revenues that come to $2 million. He has been very positive about the outlook.... The downside risks to growth have receded.... In my view, core inflation will not come back down until monetary conditions, which I believe have been very accommodative over the past few years, have tightened sufficiently.... I’m less convinced that price stability will be achieved without further action on our part some time later this year...

MR. PLOSSER: The appropriate policy here... is one in which the fed funds rate goes up somewhat from where it is today, perhaps to 5 1⁄2 or 53⁄4 percent. But then by the end of ’07 and into ’08, it’s coming back down again to more of a steady-state level, and then we can talk about what the real neutral rate is...

MR. PLOSSER: I am not confident that core inflation will continue to decelerate in the coming quarters, and that could risk our credibility. The level of inflation continues to be higher than I’d like to see, and in my forecast we may not see a return to price stability unless monetary conditions are tightened further. Although I don’t think today is the day to do it, I do want us to consider tightening if we see growth accelerating back to trend more quickly than in the Greenbook...

March 20-21, 2007: MR. PLOSSER: There are signs of increased pressures on wages and salaries.... Employers in a number of industries have said they had to raise salaries much more this year than they did last year in order to hire and retain workers in certain professional and managerial occupations as well as high-skilled workers in a variety of jobs.... I’m less convinced that inflation is moderating and that we’re making sufficient progress toward price stability. Perhaps I really should say that I am more concerned that we are not. The twelve-month change in the core CPI was 2.7 percent, and the three-month change has reaccelerated. I find the upward trend in core inflation over the past year, from 2 to 2 3⁄4 percent, troubling...

MR. PLOSSER: The earlier signs of moderating inflation seem to have ebbed somewhat, and inflation still seems to be higher than I’d like to see. So I am still concerned about the upside risk to inflation.... Cutting rates at this time, it seems to me, is inappropriate as it’s unlikely to have a significant effect on the weakness in real output or investment in the short run in that the absolute levels of long-term real rates remain relatively low. Moreover, a cut in the rates is likely to signal to the markets that we are much less concerned about inflation than we previously indicated and that we are willing to forgo our inflation objective in search of modest increases in real growth...

MR. PLOSSER: For the headline CPI, I would specify and announce a target of 1 percent. That’s consistent with our goal of price stability and the estimated measurement bias of the CPI.... I take seriously our mandate for price stability.... I recognize that some may feel that a 1 percent target is too low as the risk of deflation or zero bound restrictions on nominal interest rates might call for a greater cushion. I understand those arguments, and they are certainly plausible. But... I’m less concerned about our ability or the economy’s ability to deal with those issues, both of deflation and zero bounds.... I think a two-year horizon would be appropriate and, indeed, achievable given the typical shocks that hit the economy and the volatility of the CPI...

May 9, 2007: MR PLOSSER: On the national level, since the last meeting I have actually become a bit more comfortable with the economic situation. While I say that I am more comfortable, that’s a relative not an absolute statement. The most recent month’s readings on core inflation were welcome, but I think that caution and vigilance are still the order of the day. Indeed, the Greenbook authors, as we’ve noted, seem to have been revising their forecast of core inflation upward slightly over the past several months rather than downward, and that to me is a bit disturbing.... On the inflation front, I’m a bit less worried than last time but far from sanguine.... I believe inflation is still too high. Inflation expectations are stable, but they are too high as well, and we need to bring that rate down. Thus, we need to be vigilant here and continue with a somewhat restrictive policy...

June 27-28, 2014: MR. PLOSSER: Interestingly enough regarding building, I had two observations from CEOs. One is CEO of a building supply company that manufactures throughout the United States and has sales of almost $10 billion. He said that, remarkably, even with what is going on with homebuilding, his sales are holding up very, very strongly and they are doing very, very well this year. Another CEO, whose company produces products mostly for residential cabinetry and other types of things, one of the largest in the country, says that, while new home sales for his work are way down, they have largely been offset by remodeling activity—people have substituted remodeling for buying a new home.... Despite the problems in subprime lending markets, however, I think the financial sector remains healthy—healthier now than it was perhaps in the early ’90s with the previous housing boom....

On the inflation front, higher energy prices have led to an acceleration of headline inflation, but there has been some improvement in core inflation measures.... Although these developments in inflation are encouraging, I remain cautious about extrapolating too much from recent data.... So I remain concerned that our core inflation rates may not continue their recent drift down. I would also caution that headline inflation, as I noted earlier, has remained stubbornly high.... Given my outlook on the underlying strength of the economy and an inflation goal of 1.5 percent for the PCE, it should not be surprising that my forecast incorporates a slightly tighter policy path... the federal funds rate rises 50 basis points, to 5.75 percent, by early ’08...

MR. PLOSSER: We have to be very careful about the fact that headline inflation has not been very cooperative recently. Inflation expectations remain somewhat high from my perspective, and based on our previous discussions, that is a worry for me. I do tend to favor our announcing an inflation target. I am not yet convinced that we will see inflation expectations where they need to be to achieve my goal by the end of 2009.... If my own goal were 2 percent, I might be more comfortable with a flat fed funds rate going forward.... In the absence of agreeing on a numerical long-run inflation objective, we, as individual members, face increasingly difficult choices in arriving at an appropriate policy stance in any given meeting and even greater difficulty conveying our Committee’s decision to the public in an informative and transparent manner...

August 7, 2007: MR. PLOSSER: On the positive side, employment and income growth remain solid.... The biggest economic news headlines since our last meeting have focused on the volatility of the financial markets and the repricing of risk. I am inclined to put minimal weight on the current financial conditions for a slowdown in the pace of economic activity going forward.... This news was reinforced to me by my conversations with area bankers, as I mentioned earlier, who say that they have plenty of money to lend to good credit risks.... I expect the economy to return to near potential real GDP growth in the first or the second quarter of 2008. I expect the housing correction to continue through the first half of 2008, but the drag lessens over the year...

August 10, 2007: MR. PLOSSER: [NO STATEMENTS]

August 16, 2007: MR. PLOSSER: It’s a bit of wishing and hoping. It may work. It may work through the signaling device, if nothing else, to signal our commitment. That brings me to the second question I have, which is how the markets will respond to this. Will they respond in a way that basically says that we will end up having to lower the fed funds rate at our next meeting or at some point? To what degree are we now or might we be locked into a fed funds rate decision?...

September 18, 2007: MR. PLOSSER: On the inflation side, I see that recent readings on core inflation have moderated. Headline inflation remains quite elevated. I don’t think that we can afford to be sanguine. I continue to see underlying inflation pressures.... I’m concerned as we go forward with potential rate cuts. I’m concerned about their remaining stable, particularly when we may be lowering rates without being clear about what our inflation goals are.... I believe that we might find ourselves in a position sometime during ’08 in response to rising inflation of having to raise the fed funds rate back up...

MR. PLOSSER: On the inflation side, I see that recent readings on core inflation have moderated. Headline inflation remains quite elevated. I don’t think that we can afford to be sanguine. I continue to see underlying inflation pressures, as has already been articulated. Long-range inflation expectations have been stable, but I’m concerned as we go forward with potential rate cuts. I’m concerned about their remaining stable, particularly when we may be lowering rates without being clear about what our inflation goals are. Indeed, I think the current situation clearly shows the benefit of having an explicit inflation goal. By anchoring those expectations, an explicit goal would mean less of a tradeoff between our two goals and so might make this policy decision easier and even perhaps more effective. Thus, while my forecast has built in some near-term policy easing partly to offset the anticipation of tighter credit conditions, I believe that we might find ourselves in a position sometime during ’08 in response to rising inflation of having to raise the fed funds rate back up.

MR. PLOSSER: My outlook for the economy has changed sufficiently for me to support a cut in the fed funds rate at this meeting.... My view that the equilibrium real rate has declined and its forecast has declined somewhat leads to my view that the funds rate needs to follow that real rate down. Also, given the current behavior of inflation, I am more comfortable moving toward what I would consider to be a more neutral rate. If we do cut the funds rate today, however, I believe that how we communicate that is far more important than anything that we may do in a long time....

I won’t be revising my forecast just because the September employment report comes in weak. It’s only when we accumulate sufficient evidence that the economy is veering from our new projected path that we would want to revise our forecast and perhaps our policy,... We might find that we’ve been too optimistic about inflation if inflation expectations rise.... I think it would be a mistake, as President Hoenig suggests, to set up expectations with our language that the rate cut today is necessarily or even likely the start of a series of rate cuts...

October 30-31, 2007: MR. PLOSSER: I suspect that at the end of our last meeting—certainly I can speak for myself—many, if not most, of us probably would not have anticipated that we would cut again at this meeting.... We wouldn’t have anticipated cutting unless we thought that the outlook for the economy had noticeably deteriorated. So what has really happened since the last meeting? Well, the collective forecasts that we submitted—in terms of risk assessments, ranges, medians, and however you want to look at them—hardly budged.... Based on that forecast and on the data that came in, I’m in a very troubled position in figuring out how to justify in my mind additional rate cuts at this meeting

December 6, 2007: MR. PLOSSER:

December 11, 2007: MR. PLOSSER: Just a quick comment. I have talked to one of the large mortgage insurance companies in some detail, and their view is that their pricing power actually is improving—that their own ability to work their way out of this thing is getting better all the time right now. Even though they are taking some very large hits in the near term, their outlook actually has improved in recent months, partly because of this...

MR. PLOSSER: We have started to see evidence of increased price pressures.... I will note that the core PCE inflation rate for March to June was 1 1⁄2 percent; and in every three-month window subsequently, the inflation rate has risen monotonically, now reaching 2.26 percent for the latest three-month period from August to October.... It appears that firms are beginning to be more interested in increasing prices and are more able to do so than they were just a few months ago.... The economy is weak but only slightly more so than I anticipated. Volatility in the financial markets continues.... Nevertheless, the spillovers from the financial turmoil seem geographically concentrated.... I view inflation expectations as fragile and see evidence that price pressures are growing and that more and more firms feel that price increases are coming and are supportable. I think we will have to be very careful not to presume that just because price expectations and prices have remained contained that they will continue to be so...

January 9, 2008: MR. PLOSSER: I am certainly open to the idea that we will have to reduce rates at our next meeting at the end of the month. I am not necessarily opposed to that.... I don’t think an intermeeting cut is either wise or appropriate at this point. As a general proposition, I oppose the idea of intermeeting cuts unless a really immediate action is necessary to deal with some severe crisis such as September 11.... Nor do I want us to be perceived as responding to near-term numbers or other pressures from the market.... I would not like to see us do something today...

January 21, 2008 MR. PLOSSER: I certainly appreciate and am sympathetic with the point of view that markets are fragile.... But at the same time I also am very concerned about the expectations this sets.... I am very concerned that we are going to be interpreted as reacting to the stock market declines.... It is not clear to me that the fragility that exists in the market in fact will be solved by rapid cuts in the funds rate.... I nonetheless would certainly be supportive of a very dramatic action at our regularly scheduled meeting. Frankly, I am very torn right now as to whether to support this intermeeting cut. My gut instinct tells me “no”.... I have a lot of concern and caution about this move. I think it is going to affect expectations of us as we move forward, and I think we need to be realistic about what it is we are buying with this...

January 29-30, 2008: MR. PLOSSER: Once the real economy is stabilized, the FOMC must act aggressively to take back the significant easing it has put in place in order to ensure that inflation is stabilized in 2010. Employment is a lagging indicator, so we will likely have to act before employment growth returns to trend, should output growth pick up in the second half of the year as forecasted. Thus, I expect we will need to begin raising rates by the fourth quarter of this year and perhaps aggressively so...

MR. PLOSSER: The current level of the fed funds rate is clearly accommodative and that we have taken out insurance against downside risk. When do we stop taking out more insurance?... Lowering rates too aggressively in today’s situation would seem to me a risky strategy, fueling inflation; possibly setting up the next boom-bust cycle, which I worry about; and delaying the recognition of losses on bank’s balance sheets but not eliminating them.... I think we need to be very cautious not to get carried away in our insurance strategies with lowering rates too much.... We are on the verge of overshooting, and I worry about the broad range of consequences for our credibility....

I believe that the Committee must undo the accommodation as aggressively as we put it in play. We need to determine what indicators we will be looking at to determine when that process should begin. When we know ourselves, we want to help the markets and public understand what our process will be as well. I strongly believe that we must be both credible and committed policymakers...

March 10, 2008: MR. PLOSSER: I am not terribly confident that this will have the effect we desire. I thought I heard Governor Kohn saying that the ECB actually does take this sort of risk and collateral and it’s not working particularly well. So I’m not sure we ought to hold out a whole lot of hope that it will have the desired effect here. That doesn’t mean we shouldn’t try it, but I’m a little dubious. I am concerned with the comments that President Lacker and Governor Kohn made about crossing a line. However, having said that, I can go along with this proposal; but to be honest, I am concerned about the exit strategy here. Mr. Chairman, you said that we would stop when the markets were no longer impaired. I’m not exactly sure how we would define that at some point. I wonder whether it might be worthwhile thinking about putting this facility in place and doing it for a fixed period of time...

March 18, 2008: MR. PLOSSER: I struggled coming into this meeting with a growing level of discomfort.... I... have responded to the incoming data with downward revisions to our forecast for certainly the first half of 2008. But our changes are considerably smaller than the revisions in the Greenbook.... I am not wholly comfortable with the Greenbook’s forecast, which I think incorporates a number of judgmental adjustments that are responsible for taking it pretty far away from where private-sector forecasts now are.... If inflation expectations become unhinged, we will face an even more difficult problem as monetary policy will feed more quickly and directly into higher inflation outcomes. The ensuing loss of credibility will be costly to regain.... We have to look for early warning signs so we can take appropriate action to ensure that expectations remain anchored, and I am concerned that we are seeing those warning signs.... Our business and consumer contacts are consistently stressing price pressures as a concern.... We have reduced the targeted funds rate by 225 basis points since August and 125 basis points in just the last six weeks.... The Greenbook suggests that the real funds rate can be negative over the next two years and inflation will continue to decelerate as upside inflation pressure is offset by greater slack in product and labor markets. I am skeptical...

April 29-30, 2008: MR. PLOSSER: I remain concerned, however, about inflation and our calibration of the appropriate level of the fed funds rate consistent with our goals. Inflation readings have abated marginally since our last meeting; but as the Greenbook suggests, there is reason to believe that this is a temporary reprieve... year-over-year CPI inflation was 4 percent in March, and year-over-year PCE inflation was 3.4 percent—well above their 2007 levels.... Markets question our willingness to take actions consistent with sustained and credible price stability. Now, we have often alluded to the idea that near-term weakness will help mitigate some of the inflation pressures. However, I would just like to remind us that this critically depends on inflation expectations remaining well anchored.... I believe that the FOMC’s commitment to price stability remains credible at this time, but just barely.... Now, I know that talking about money in the context of monetary policy is not very fashionable these days. But I would like to note that the monetary aggregates as measured by M2 and MZM have exploded...

MR PLOSSER: What I would like to do... is to make the case for why we should stand pat today.... Easing policy is appropriate in a weaker economy, but continuing to cut rates for as long as the economy remains weak is not appropriate.... A further 25 basis point cut in the funds rate at this point will do nothing to change the near-term outlook of the economy.... We are currently running a very accommodative monetary policy.... Monetary aggregates as measured by M2 and, to some extent, MZM have expanded very rapidly.... Inflation is high, unacceptably high in my view, and has been that way for a sustained period.... The FOMC’s stated goal of price stability cannot remain credible independent of our actions.... I think a pause today would send a strong signal of our commitment to price stability, which could further help anchor inflation expectations, which I consider to be very fragile.... Cutting 25 basis points won’t help the outlook for the economy very much.... I think a cut today will not be a disaster but will contribute to a further eroding of our credibility...

June 24-25, 2008: MR. PLOSSER: Despite the soft economic conditions, the most prominent concern that we have heard from our business contacts across a variety of industries is the run-up in commodity prices and other prices.... Inflation expectations cannot remain in check indefinitely in this current environment. In June, the prices-paid index in our business outlook survey of manufacturers rose to the highest level it has been since 1980.... The continued price increases, particularly in oil and commodities, have been a very unpleasant development. Certainly, economic conditions remain weak, and the recent positive news may prove to be transitory. From the financial side, credit spreads have fallen, bond issuance has risen, and it appears that financial market functioning has at least improved... the tail risk of a very bad outcome has clearly been diminished....

My concerns about the inflation outlook have increased since our last meeting. I am not alone. Inflation has become a predominant concern for many businesses and consumers.... Contributing to the increase in inflation risk is not only the surge in energy and other commodity prices; it is supported also by our own accommodative stance of monetary policy.... Can we really expect inflation expectations to remain anchored?... I have been troubled by stories in the press suggesting that we can be less concerned about inflation than we were in the 1970s because wages haven’t risen and labor unions are less prominent.... The key... is maintaining the credibility that the Fed has worked so hard to achieve.... Our credibility rests on more than just words. We must act in a way that is consistent with our hard-earned reputation.... We should take actions and take back some of the insurance we have put on in the context of elevated downside tail risks....

It seems pretty clear to me that, if the economy continues to evolve as it has over the past couple of months, we should move to raise the funds rate.... I assume that the funds rate will reach 2.75 percent by the end of 2008 and move up to 4.5 percent by the end of 2009. This steeper funds rate path is necessary, in my view, to deliver inflation that is declining back toward our goal...

July 24, 2008: MR. PLOSSER: "I’ll pass, except for just a brief comment. I agree with what President Lacker was saying about the options. If we are going to create new specialized facilities, the hurdle for the problem we think we will be solving ought to be a little higher than just, well, we think it might help a little. That’s all...

August 5, 2008: MR. PLOSSER: If we think about the phrase... “financial headwinds”.... I can also think of the financial sector as having been hit by a very significant productivity shock.... If you think that type of shock is driving potential output down... it is going to affect your estimates of the gaps and therefore your estimates of inflation [and raise them]...

MR. PLOSSER: For some time my business contacts have expressed concern about rising energy and commodity and transport prices.... On the national level, the incoming data since our June meeting have been mixed but largely in line with my expectations.... The strength is a remarkable testament to the ability of this economy to weather shocks from financial market disruptions.... My outlook for the economy is little changed, although the financial market developments since our last meeting have marginally increased the uncertainty.... I read the conditions in the financial markets and the wide spreads on selected assets as having improved.... We should not use such spreads as the primary criteria for assessing the fragility of the financial markets.... We must be cautious in using monetary policy or other tools at our disposal as a form of forbearance that delays the necessary adjustments in the pricing of various financial claims....

The inflation outlook remains a cause of concern. Headline inflation is higher, and there is evidence of modest pass-through to core inflation measures.... Markets are uncertain about the long-run path of inflation. This is not terribly comforting. It suggests that our credibility may be waning.... I remain uncomfortable with the longer-term inflation outlook. Indeed, the focus of monetary policy must be on the intermediate to longer term, and we must resist the temptation to act as if our funds rate decisions can manage the outcomes over the very near term. Year-over-year inflation, headline CPI and PCE inflation, have now been consistently above 3 percent since October 1987.... Near term, we might get some moderation in headline inflation.... The real source of intermediate-term to longer-term inflationary pressures comes from our own accommodative policy, whose consequences for inflation will be felt only over time.... Should we maintain our accommodative stance for too much longer, my view is that we are likely to see higher trend inflation in the intermediate term and a ratcheting up of inflation expectations....

To be sure, shifting policy to a less accommodative stance will be a difficult decision to make, given the continued volatility in financial markets and the projected near-term weakness.... I do not believe that we can wait until employment growth and the financial markets have completely turned around to begin to reverse course. But by our aggressive attention to short-term risk to growth and financial turmoil, we do put at some risk our ability to deliver on our intermediate- and longer-term goals of both price stability and sustainable growth...

MR. PLOSSER: We’re unlikely, in my view, to get confirming or convincing evidence about whether expectations have become unanchored until well after the fact. I agree there has been very little wage–price pressure to date. But that will be the last shoe to drop in this sequence of raising expectations, and by the time we get to that, I’m afraid it will be too late.... Monetary policy is accommodative, and with all due respect, Mr. Chairman, when I look at the data comparing the levels of borrowing rates of consumers and businesses, both the levels in real and nominal terms and the spreads, what we see in this period looks remarkably similar to what we’ve seen in lots of other recessionary, slow growth periods.... I think it’s important that we begin to prepare the markets for an impending shift to a tighter policy....

I’m pleased with a lot of the discussion around the table. We are actually beginning to talk, I think, about what our exit strategy is going to be from this.... I can accept leaving the funds rate unchanged today as long as our language is sufficiently strong about inflation...

September 16, 2008: MR. PLOSSER: I appreciate the memo that the staff produced.... According to the memo, the current stance of policy is not unusually accommodative. However, I would like to note that that conclusion depends critically on the specific forecast and the nature of the FRB/US model. A different model, one that says that inflation expectations are more forward looking, may well lead to a very different conclusion.... I continue to believe that monetary policy at its current level is accommodative and that, if this current stance is sustained, the economy will experience faster inflation in the medium term.... It is my view that the current stance of policy is inconsistent with price stability in the intermediate term.... Now, I acknowledge that there are risks to economic growth going forward.... Now is probably not the time to shock markets by raising rates. But neither is it a time to panic and lower rates. A cut today may be reassuring to some in the financial markets, but it also may serve to scare markets.... I am uncomfortable with the current Greenbook baseline path that has the funds rate remaining unchanged well into the second half of next year. In my view, that will not deliver an acceptable path of inflation outcome.... At some point, before the unemployment rate begins to improve substantially, I believe this Committee will need to raise rates in order to deliver on our inflation objectives...

September 29, 2008: MR. PLOSSER: [NO STATEMENTS]

October 7, 2008: MR. PLOSSER: I do not like intermeeting cuts. I think they signal more panic than they do stability.... I am reluctantly or modestly comfortable with this... because I don’t think that anything that we do today—cutting the funds rate 50 basis points or whatever—is going to make the next couple of months in terms of the overall economy any less painful.... I like in the statement the stressing of the point that... this is based on a deteriorating economic outlook... as opposed to just volatility in the financial markets.... I’d just like to make an observation about the sentence on inflation. It reads, “Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have materially reduced the upside risks to inflation.”... I would put on the table for discussion that we change the phrase “materially reduced” to these things have “mitigated near-term upside risks to inflation.”... I’m not necessarily convinced—and it’s very model dependent—as to what inflation might do in the latter part of ’09... October 29, 2008: MR. PLOSSER: On the governance side, I continue to believe that the FOMC is the appropriate body for making monetary policy decisions and that replacing monetary policy with credit policies that are unconstrained by this Committee is to violate both good governance and the spirit of the operating understanding of the FOMC. Yesterday and in my memo to the Committee earlier this week, I argued that the directive and the statement should clearly state that we are in a new regime and should articulate how that new regime will operate going forward.... The proposed language... say[s] that the Board of Governors will continue credit market interventions.... The implicit message is... that the FOMC has ceded monetary policy decisions to the Board of Governors, and I think that will be damaging.... Once the Committee sets the precedent that the Board of Governors can assume sole responsibility for monetary policy, we run the risk of losing the strength and the diversity of views that the System has always brought...

MR. PLOSSER: We may well have to do more, but I think we are near the end of what we can do with monetary policy. Of course, it’s difficult to determine the appropriate level of the funds rate, and I want to draw your attention to the Greenbook, which showed that, whether we cut today or don’t cut today, the paths of GDP, employment, and inflation over the next year or two are not much different. In fact, in most models, cuts of that magnitude do not show up very heavily in real variables. I would also note that, according to the Greenbook, we could cut the rate to zero and have no effect on inflation, apparently, for the next four years. However, given the fact that rate cuts don’t have much effect, even in the Greenbook simulations, we have cut rates. It may not make much difference, as President Hoenig was saying. My preference at this meeting would be to stand pat and see how the data and financial markets improve.... Now, delaying necessary rate cuts is not desirable. But given the considerable uncertainty around our forecast, it is not clear that further cuts are either necessary or desirable or are going to be effective. And doing so for purely psychological reasons, from my standpoint, is a dubious way to conduct policy...

MR PLOSSER: The forecast... is really the result of very large adjustments to the financial constraints piece.... Those spreads... can rise very quickly, as we’ve seen. They also can fall very quickly sometimes.... If our facilities are successful, they actually may fall further—knock on wood; that would be very nice. But I get a little nervous making our forecast be driven so much by something that’s potentially very, very volatile.... The “more rapid financial recovery” scenario is what the forecast would look like had we not done the additional add factors in October.... The real data... have driven the forecast down a little, but not a whole lot...

MR. PLOSSER: I expect the economy to contract during the second half of this year and perhaps in the first quarter of next year—but that’s less clear.... By the end of 2009 we’re getting back toward what might be considered trend growth.... I expect the unemployment rate to peak around mid- ’09 at about 7 1⁄4 and then to decline gradually to its long-run rate of about 5 percent by the end of 2010.... I expect core inflation to decline gradually from the current levels to my goal of about 1.7 percent by 2010.... My overall forecast... is similar to what we talked about as the “more rapid financial recovery” scenario.... The risks around the Greenbook baseline forecast are to the upside.... It’s very risky to base monetary policy, which ought to be taking a longer-term perspective, on week-to-week movements in such volatile variables...

December 15-16, 2008: MR. PLOSSER: If we hope to affect expectations, we need to explain our policies in a way that the public can understand.... Optimal policy in these circumstances would involve price-level targeting, as I said, and it would be very difficult to explain, particularly since the FOMC has never formalized its inflation target, let alone a price-level target. I think we would be better off trying to communicate something simpler. First, we need to tell the public that we have lowered the funds rate as low as we think it is beneficial to go.

I do have some concerns about lowering the target rate all the way to zero. We still do not understand why having interest rates on reserves isn’t working to keep the funds rate at its target.... I do not want to go all the way to zero. But I think we do need to communicate clearly to the public that, when we reach whatever that effective zero rate is, we are done.... There are two additional practical advantages I see that argue for bounding our target rate above zero. First, it will allow additional time for banks to become more proficient at managing their reserves.... Second, I believe that when the time comes to raise rates, even by modest amounts, we will be in a better position to do so from a non-zero position.... We certainly need to communicate that we do not wish deflation in a very weak economy. We also may wish to convey that we are going to keep the nominal funds rate low for some period of time because we desire higher inflation....

Regarding the use of nonstandard policy tools—in my view, we are already there. With the funds rate trading below target, we are effectively conducting monetary policy through quantitative easing.... I believe we need to publicly convey that we have entered a new regime. Otherwise, it may look as though we have lost control of monetary policy.... My preference is for the directive to specify objectives in terms of asset quantities rather than the level of non-funds-rate interest rates or interest rate spreads.... Setting a quantity limit on the size of the balance sheet is more familiar—similar to our experience with operating a reserves-based target.... I would prefer to see us purchasing Treasuries rather than riskier assets, as I would favor the purchases of long-term Treasuries over new 13(3) facilities....

We also need to recognize that, as the economy begins to recover, these programs will need to be unwound, and this may occur before all financial institutions are fully recovered.... We need to be concerned about the health of our balance sheet so that we can ensure that we can finance the interest rates on reserves and pay them...

MR. PLOSSER: Although I’m still not quite as pessimistic as the Greenbook, I admit that the Greenbook is no longer an outlier as I am used to thinking about it. The forecasts for output are nearly as bad as or are worse than the economy experienced in 1974-75. Inflation has moderated significantly, and near-term inflationary expectations have also moderated.... With the growth prospects so weak and inflation expectations decelerating, the appropriate real funds rate obviously will probably decline, raising the possibility as we discussed yesterday that the zero bound on nominal rates will pose a problem for us....

I believe that we need to acknowledge publicly that we are now in a new regime.... The Board of Governors and the FOMC will have to decide how they will handle the governance issues surrounding this new regime. It seems clear to me that monetary policy determinations should remain in the purview of the FOMC regardless of whether we are using standard or nonstandard policy tools.... We need to be explicit and to communicate that monetary policy remains under the purview of the FOMC....


Morning Must-Read: Willem H. Buiter: The Simple Analytics of Helicopter Money: Why It Works--Always

Willem H. Buiter: The Simple Analytics of Helicopter Money: Why It Works – Always: "A permanent/irreversible increase in the nominal stock...

...of fiat base money rate which respects the intertemporal budget constraint of the consolidated Central Bank and Treasury.... Three conditions must be satisfied for helicopter money always to boost aggregate demand. First, there must be benefits from holding fiat base money other than its pecuniary rate of return. Second, fiat base money is irredeemable – viewed as an asset by the holder but not as a liability by the issuer. Third, the price of money is positive. Given these three conditions, there always exists – even in a permanent liquidity trap – a combined monetary and fiscal policy action that boosts private demand – in principle without limit. Deflation, ‘lowflation’ and secular stagnation are therefore unnecessary. They are policy choices.


Morning Must-Read: Cardiff Garcia: “The System Worked”, by Dan Drezner

Cardiff Garcia: Video and review: “The System Worked”, by Dan Drezner "I kept thinking of the well-publicised conversation... in January 2009....

Geithner: 'Your accomplishment is going to be preventing a second Great Depression.' Obama: 'That’s not enough for me. I’m not going to be defined by what I’ve prevented.' Geithner: 'If you don’t prevent a depression, you won’t be able to do anything else.' Obama: 'I know. But it’s not enough.' For global economic governance, as opposed to Presidential legacies, avoiding economic catastrophe when catastrophe was a non-trivial possibility is enough. That’s the case made by Drezner.... So, was it indeed good enough? Sluggish recovery in the US accompanied by lower median incomes. Double-dip recession in Europe.... Ongoing stagnation in Japan pending the outcome of Abenomics. Slowing growth in China.... A Bank for International Settlements that called for tighter money earlier than any reasonable analysis could justify. Currency wars. An IMF that pushed austerity before a later volte-face, not to mention its numerous mistakes in tackling the euro zone crises.... All of these items would suggest a deep failure.....

Drezner... begins by highlighting the scale of the global collapse.... And yet, despite important local exceptions, the worst global consequences of the Depression were avoided.... Later mistakes were inexcusable, especially the turn to austerity and premature monetary tightening in Europe. Yet many of these subsequent errors were national policy failures and 'had little or nothing to do with foreign economic policy or adherence to global governance structures'--admittedly a fine and not always obvious distinction.... I find the argument persuasive....

But 'good enough' is a tough sell, and my colleague Alan Beattie isn’t buying.... Alan writes: 'The truth, as both of us I think admit, is that the record of global governance is patchy, and its results even now uncertain'.... whether the system as a whole worked is probably less important than knowing how to distinguish between the parts that worked and the parts that failed. The forthcoming book by Barry Eichengreen, whose data Drezner cites, appears to split the difference. Beattie refers to the resilience of wrong-headed ideologies.... Consider how much commentary about the crisis has naturally focused on the long list of subsequent policy failures. It’s good to have at least one book emphasising that the list could have been much longer still...


Liveblogging World War II: August 21, 1944: The Polish Home Army in Warsaw

NewImageWorld War II Today: 21 August 1944: Poles seek help as they battle on in Warsaw:

The Warsaw Uprising had been intended as a short sharp insurrection which would, if wholly successful, see off the last of the retreating Germans and allow the Poles themselves to welcome the advancing Red Army into the city. At the very least the underground Home Army – Armia Krajowa – would be able to assist the Russian to take the city.

Neither scenario had come about. On Stalin’s orders Soviet forces had halted some distance from Warsaw and were doing little to assist. Meanwhile the Germans had shown a determination not only to to cling on to the city but fight back with a relentless savagery, sparing none of Warsaw’s civilians.>

Continue reading "Liveblogging World War II: August 21, 1944: The Polish Home Army in Warsaw" »


Morning Must-Read: Alex Tabarrok: Ferguson and the Modern Debtor’s Prison

Alex Tabarrok: Ferguson and the Modern Debtor’s Prison: "How does a stop for jaywalking...

...turn into a homicide and how does that turn into an American town essentially coming under military control with snipers, tear gas, and a no-fly zone? We don’t yet know exactly what happened between the two individuals on the day in question but events like this don’t happen without a deeper context. Part of the context is the return of debtor’s prisons that I wrote about in 2012.... You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant 'low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay'...


Nighttime Must-Read: Scott Sumner: DeLong on the Mother of All Black Swans

Scott Sumner: Black Swans: "Brad DeLong... is mildly critical of Shiller...

...in almost precisely the same way that I am.... DeLong and I think... the real mystery [is] not so much why stocks were so high in 1929, 2000, and now, but rather why they were so low 90% of the time. I think WWI is a great black swan example, but... I’d like to throw out another possible black swan—1968.... Switching to a permanent fiat system was much more inconceivable to people in the old days than you might imagine.... Even Keynes opposed a pure fiat regime, and viewed these historical examples as sort of pathological cases.... DeLong identifies three periods when stock investors did poorly over the following 10 years—right before WWI, the late 1960s and early 1970s, and the late 1990s. Even today I’m not sure exactly how much of the poor stock market performance of 1968-81 was due to the Great Inflation.... I am confident, however, that moving to a fiat money regime was a black swan for the US 30-year Treasury bond market, and pretty much every other bond market as well.


Over at Equitable Growth: Naive Keynesianism to Keep You from Believing Macroeconomic Idiocy of Various Kinds: A Useful Graph for Jackson Hole Weekend: Thursday Focus for August 21, 2014

NewImageOver at Equitable Growth: Lots of people are going to be saying lots of things in and around the Federal Reserve Bank of Kansas City's Annual Jackson Hole Conference this weekend. To help me (and you) keep your thoughts from being buffeted by the noise and drifting off into various forms of macroeconomic idiocy, here is an updated version of a graph I have found useful since 2009 in keeping my thoughts clear, coherent, and (I hope) correct.

It plots four major components of real aggregate demand: exports, business investment in equipment and software, Government purchases, and residential construction. All are measured as shares of potential GDP. And all are measured as percentage-point-of-potential deviations from the values they attained at the last business cycle peak. And it teaches nine lessons. READ MOAR

Continue reading "Over at Equitable Growth: Naive Keynesianism to Keep You from Believing Macroeconomic Idiocy of Various Kinds: A Useful Graph for Jackson Hole Weekend: Thursday Focus for August 21, 2014" »


Noted for Your Morning Procrastination for August 20, 2014

Over at Equitable Growth--The Equitablog

Plus:

Must- and Shall-Reads:UP TO BELOW "PLUS" AND BEFORE "AND OVER HERE")

  1. Graeme Wearden: Bank of England split 7-2 over interest rates: "The Institute of Directors, which represents Britain’s bosses, is delighted to see two hawks emerge at the Bank of England. The IoD suggested that the seven MPC members who voted for no-change are wrong to focus their attention on weak wage growth (!), and should crack on with raising rates--ideally before Christmas.... The British Chambers of Commerce believes the UK economy isn’t strong enough to support higher interest rates.... Professor Danny Blanchflower, a former (dovish) member of the MPC, reckons the two hawks have blundered.... Jonathan Pryor, head of FX dealing at Investec Corporate and Institutional Treasury, says the 7-2 split is a surprise, given how dovish the Bank’s Inflation Report was last week: 'This vote is likely to leave UK businesses scratching their heads about the direction of sterling and the best way to guard against potential volatility over the coming weeks and months.'"

  2. Europe pessimistic on income equality as Americans cling to dream FT comStefan Wagstyl: Europe pessimistic on income equality as Americans cling to dream: "Most Europeans think their societies are far less equal than they are, while Americans are unusual in believing that their country is somewhat more equal than it really is.... Judith Niehues is due to present her findings this week at Germany’s Lindau economic conference.... People in Europe underestimate the proportion of middle-income earners and overestimate the proportion of the poor.... Only the US has a more unequal income distribution than its citizens imagined..."

  3. Rajiv Sethi: The Agent-Based Method: "It's nice to see some attention being paid to agent-based... models, but Chris House has managed to misrepresent the methodology so completely that his post is likely to do more harm than good.... 'Probably the most important distinguishing feature is that, in an ABM, the interactions are governed by rules of behavior that the modeler simply encodes directly into the system individuals.'... [House is,] to say the least... grossly misleading.... We could start from the premise that our high-frequency traders want to maximize profits.... Agents can be as sophisticated and forward-looking in their pursuit of self-interest in an ABM as you care to make them.... What you cannot have in an ABM is the assumption that, from the outset, individual plans are mutually consistent. That is, you cannot simply assume that the economy is tracing out an equilibrium path. The agent-based approach is at heart a model of disequilibrium dynamics, in which the mutual consistency of plans, if it arises at all, has to do so endogenously through a clearly specified adjustment process.... In failing to understand this, House makes claims that are close to being the opposite of the truth..."

  4. Jonathan Chait: The Republican Party’s Geriatric Trap: "Frum’s essay actually understates the party’s failure.... The GOP’s old-person problem is on inadvertent display in a Wall Street Journal op-ed by Andrew Biggs.... Biggs is professionally committed to cutting Social Security... [and] finds himself dancing awkwardly around the reality that Obama is the one who has proposed to do the thing he advocates, and Republicans are the ones who stopped him. His excruciating contortions highlight the impossible predicament faced by Republican entitlement hawks trying to defend the party line.... At no point anywhere in his op-ed does Biggs mention Congressional Republicans, not to mention their repeated refusal to accept Obama’s deal that would have cut Social Security spending in return for closing tax deductions for the affluent.... The Republican Party constructed a geriatric trap for itself. Just how it will escape is hard to see. It is a small-government party whose base is wedded to the programs that constitute a large and growing share of government.... Frum, interestingly, identifies another side effect of the geriatric trap: It infuses the party and its public spokesmen with mournful sensibility..."

  5. Cullen Roche: More Thoughts on the CAPE and Valulations: "I’ve made my opinion on valuations and the use of CAPE pretty clear--these sorts of metrics don’t tell us much.... If investors are willing to pay more for stocks today than they were in 1950 then maybe a CAPE of 15 has no bearing on what a CAPE of 25 means [today].... I don’t know what the “value” of stocks are today. And I don’t think anyone else really does. And I think trying to put a value on them through these sorts of metrics is just a big waste of time that leads some people to believe they’ve been able to pinpoint... 'value'... when... they’ve simply tried to calculate, with  precision, something that is very imprecise..."

  6. Adam Posen: Keep rates low until the hidden jobless return to work "[In] any decision by the Federal Open Market Committee to hold off raising interest rates... two... judgments are involved. The first concerns the relative costs of erring in one direction or another.... Under conditions of persistent low inflation and slow growth... [inflation] expectations are well-anchored... [while] long-term unemployment... does lasting damage.... [Will] keeping interest rates low will do some other form of harm[?]... Financial imbalances can be tackled directly using macroprudential tools.... By contrast, increasing interest rates has little effect on asset price booms.... This is the conclusion that ought to emerge from Jackson Hole. The Fed should hold off raising rates, for the sake of fuller employment."

  7. Esther Inglis-Arkell: Ancient Roman Tech Cache Shows How Horror Movies Would Really Play Out: "In 1961... Professor Ian A. Richmond of Oxford University happened on a trove that no Briton was meant to discover hidden by... the most powerful and technologically innovative empire the world has ever seen. Forced into retreat by the Kelts, a Roman legion had hidden this incalculably valuable technology. They'd gone to great lengths, picking it out of the remains of their destroyed fort, and burying it deep underground, where no one could ever find it. That is, until one archaeology professor, searching for knowledge, uncovered a weapon so powerful it might have changed the face of the Earth.... The artifacts were nails. They were steel nails, and thus incredibly valuable and dangerous. Steel is an alloy of iron and carbon. Getting one's hands on a great deal of iron is hard enough. Processing it into a material with just the right amount of carbon--over 4% will render the alloy brittle and useless--is another long learning process.... The eventual success of the project didn't just lead to stronger weapons. It led to the ability to make superfortresses--like the one that held the 5,000 men in the legion.... The fort contained seven tons of nails, which is quite a cache of versatile tech to be left in the hands of the enemy. The legion picked through the ashes of the fortress to find their tech, and buried it. Until the archaeologists discovered it..."

And Over Here:

Continue reading "Noted for Your Morning Procrastination for August 20, 2014" »


Lunchtime Must-Read: Graeme Wearden: Bank of England Split 7-2 Over Interest Rates

Graeme Wearden: Bank of England split 7-2 over interest rates: "The Institute of Directors, which represents Britain’s bosses...

...is delighted to see two hawks emerge at the Bank of England. The IoD suggested that the seven MPC members who voted for no-change are wrong to focus their attention on weak wage growth (!), and should crack on with raising rates--ideally before Christmas.... The British Chambers of Commerce believes the UK economy isn’t strong enough to support higher interest rates.... Professor Danny Blanchflower, a former (dovish) member of the MPC, reckons the two hawks have blundered.... Jonathan Pryor, head of FX dealing at Investec Corporate and Institutional Treasury, says the 7-2 split is a surprise, given how dovish the Bank’s Inflation Report was last week: 'This vote is likely to leave UK businesses scratching their heads about the direction of sterling and the best way to guard against potential volatility over the coming weeks and months.'

This is astonishing to me--both the two MPC members who see inflation and bond market vigilantes on the horizon when I see none, and a group whose members are short the future debt factor and long the future capacity utilization factor calling for policies that raise the cost of taking on their debt and lower the sales that their corporations will make. Doesn't anybody know, not how to play this game, but what this game is? Either on the macroeconomic-forecasting or on the political-economy interest-group side


Over at Equitable Growth: Time to Change My Mind: The Quality of Medicare Advantage: Wednesday Focus for August 20, 2014

Over at Equitable Growth: I used to think (and say) that there was one clear place where low hanging fruit in healthcare cost control could be obtained: we had tried Medicare Advantage--putting Medicare patients into HMOs--and it turned out that they cost the federal government more money when we did that, and the patients were less satisfied and did worse. Medicare HMOs thus looked like a bad bet for the health care system of the future, and one that we should not make. READ MOAR

Continue reading "Over at Equitable Growth: Time to Change My Mind: The Quality of Medicare Advantage: Wednesday Focus for August 20, 2014" »


Hoisted from the Non-Internet from 80 Years Ago: H G Wells: “It seems to me that I am more to the Left than you, Mr Stalin”: (Late) Weekend Reading

H.G. Wells: “It seems to me that I am more to the Left than you, Mr Stalin”: "In 1934, Wells arrived in Moscow...

...to meet a group of Soviet writers. While there Stalin granted him an interview.... His deferential conversation was criticised by J M Keynes and George Bernard Shaw, among others, in the New Statesman.

Wells: I am very much obliged to you, Mr Stalin, for agreeing to see me. I was in the United States recently. I had a long conversation with President Roosevelt and tried to ascertain what his leading ideas were. Now I have come to ask you what you are doing to change the world...

Continue reading "Hoisted from the Non-Internet from 80 Years Ago: H G Wells: “It seems to me that I am more to the Left than you, Mr Stalin”: (Late) Weekend Reading" »


Grifters Gonna Grift: Live from La Farine CCCXII: August 20, 2014

Duncan Black: Eschaton: Grifters Gonna Grift If anyone in any way associated with "liberals" did this we'd still hear about it 50 years from now...

Kim Barker: Exclusive: ‘Pro-Troop’ Charity Pays Off Tea Party Cronies Instead "Move America Forward has collected millions...

...to send care packages to U.S. troops. But its assets have been used to benefit conservative political consulting firms close to its Tea Party founder.... The charity later described the fundraising drive as a rousing success: In less than five weeks, all 800 Marines in a 1st Marine Division battalion nicknamed Geronimo were sent care packages and notes in Afghanistan, it claimed. But that couldn’t have been true. The Marines of Geronimo weren’t even in Afghanistan during Move America Forward’s fund drive. Instead, they were deployed more than 3,000 miles away, in Okinawa, Japan.

Move America Forward calls itself the nation’s “largest grassroots pro-troop organization,” and has recruited a bevy of Republican luminaries, including former Presidents George H.W. Bush and George W. Bush and former Vice President Dick Cheney, to support its efforts.... Last year, Move America Forward even solicited funds by claiming a partnership with Walter Reed National Military Medical Center...


Liveblogging World War I: August 20, 2014: The War on Belgium

From Barbara Tuchman: The Guns of August:

On August 20 Brussels was occupied. Squadrons of Uhlans moving with lances at the ready appeared suddenly in the streets. They were but the heralds of a grim parade, almost unbelievable in power and grandeur, that followed. It began at one o’clock with column after column of gray-green infantry, shaved and brushed with freshly shined boots and bayonets glinting in the sun and their ranks closed to eliminate the gaps left by the missing. The cavalry appeared in the same gray-green with black and white pennants fluttering from their lances like horsemen riding out of the Middle Ages. The phalanx of their innumerable hoofs clattering in close order seemed capable of trampling to death anything in their path. Heavy guns of the artillery thundered over the cobblestones. Drums pounded. Hoarse voices in chorus roared the victory song, “Heil dir im Siegeskranz,” to the tune of “God Save the King.”

Continue reading "Liveblogging World War I: August 20, 2014: The War on Belgium" »


Lunchtime Must-Read: Rajiv Sethi: The Agent-Based Method

Rajiv Sethi: The Agent-Based Method: "It's nice to see some attention being paid to agent-based... models...

...but Chris House has managed to misrepresent the methodology so completely that his post is likely to do more harm than good.... 'Probably the most important distinguishing feature is that, in an ABM, the interactions are governed by rules of behavior that the modeler simply encodes directly into the system individuals.'... [House is,] to say the least... grossly misleading.... Agents can be as sophisticated and forward-looking in their pursuit of self-interest in an ABM as you care to make them.... What you cannot have in an ABM is the assumption that, from the outset, individual plans are mutually consistent. That is, you cannot simply assume that the economy is tracing out an equilibrium path. The agent-based approach is at heart a model of disequilibrium dynamics, in which the mutual consistency of plans, if it arises at all, has to do so endogenously through a clearly specified adjustment process.... In failing to understand this, House makes claims that are close to being the opposite of the truth...


Morning Must-Read: Menzie Chinn: Implications of Procyclical Fiscal Policy: Wisconsin Edition

Menzie Chinn: Implications of Procyclical Fiscal Policy: Wisconsin Edition: "Recent actions have pushed the balances...

...in the 2015-17 biennium into deficit. But even the news for the 2013-15 biennium has turned dark. By June 2014, it was apparent that there were both tax revenue shortfalls and outlays in excess of planned.... The shortfall in revenues is not surprising. The administration has implemented a contractionary fiscal policy.... My predictions of what would occur have been borne out in actual developments in aggregate economic activity. Wisconsin has experienced substantially slower growth than it otherwise would have.... Note that a regional comparator, Minnesota, that embarked upon a different fiscal path has experienced substantially faster growth, as documented above. To sum up: A procyclical fiscal policy has been undertaken in the past three and a half years, with predictably counterproductive results. The depressed level of economic activity has resulted in a revenue shortfall.


Morning Must-Read: Stefan Wagstyle: Income Inequality--Americans Are Unique

Europe pessimistic on income equality as Americans cling to dream FT com

Stefan Wagstyl: Europe pessimistic on income equality as Americans cling to dream: "Most Europeans think their societies are far less equal...

...than they are, while Americans are unusual in believing that their country is somewhat more equal than it really is.... Judith Niehues is due to present her findings this week at Germany’s Lindau economic conference.... People in Europe underestimate the proportion of middle-income earners and overestimate the proportion of the poor.... Only the US has a more unequal income distribution than its citizens imagined...


Noted for Your Morning Procrastination for August 19, 2014

Over at Equitable Growth--The Equitablog

Plus:

Must- and Shall-Reads:

  1. Dean Baker: Stock Returns: Between Shiller and DeLong: "Stocks still look like a pretty good deal, since even if there is some decline in the profit share of income and also some reversion toward long-term trends in price to earnings ratios (my bet is that the ratio stays above 20), then the real returns are still likely to be well above 3.0 percent. In short, I can't see the basis for Shiller's big fears. On the other hand, the high price to earnings ratios in the stock market means returns will almost certainly be lower in the next decade or so than their long-term average. (There actually is a very good paper on this topic, see Baker, Delong, and Krugman, 2005.)"

  2. Humans Need Not Apply:

  3. Heidi Przybyla: Obamacare Losing Punch as Campaign Weapon in Ad Battles: "Republicans seeking to unseat the U.S. Senate incumbent in North Carolina have cut in half the portion of their top issue ads citing Obamacare, a sign that the party’s favorite attack against Democrats is losing its punch. The shift--also... in... Arkansas and Louisiana--shows Republicans are easing off their strategy of criticizing Democrats over the Affordable Care Act now that many Americans are benefiting from the law and the measure is unlikely to be repealed. 'The Republican Party is realizing you can’t really hang your hat on it', said Andrew Taylor.... Republican pollster Whit Ayres, who has advised U.S. Senate candidates including Marco Rubio.... 'Obamacare will not be the most important issue', and Republicans will have to 'target people very directly'... said Ayres, who co-wrote a memo this month for outside spending groups such as Crossroads GPS and the American Action Network..."

  4. Lawrence Summers (1982): The Nonadjustment of Nominal Interest Rates: A Study of the Fisher Effect: "There is no evidence that interest rates respond to inflation in the way that classical or Keynesian theories suggest, For the period 1860-1940, it does not appear that inflationary expectations had any significant impact on rates of inflation in the short or long run. During the post-war period interest rates do appear to be affected by inflation. However, the effect is much smaller than any theory which recognizes tax effects would predict. Furthermore, all the power in the inflation interest rate relationship comes from the 1965-1971 period.... The relationship between inflation and interest rates remains weak even at low frequencies.... Cyclical factors or errors in measuring inflation expectations cannot account for the failure of the results to bear out Fisher's theoretical prediction. Rather, comparison of real interest rates and stock market yields suggests that Fisher was correct in pointing to money illusion as the cause of the imperfect adjustment of interest rates to expected inflation."

  5. Andrew Brown: The Great Chinese Exodus: "Recently, Ms. Sun flew to San Francisco to shop for a school for her daughter, browse for property and handle the paperwork for permanent U.S. residency. She insists that she's not leaving China forever—-a sentiment expressed by many on their way out who see a foreign passport as an insurance policy in case things go badly wrong in China. 'I'm just giving my family another option', she says. A college professor, who insisted on anonymity... takes a darker view of China's prospects as he prepares to emigrate to the U.S., joining his two children.... In China, he pronounces, 'Once you get rich, they arrest you'.... His real concern is that to get ahead, he's had to make compromises with his principles... and now he worries that it could all be snatched away. In China, a weak, corrupt legal system may sometimes work in favor of entrepreneurs while they're clawing their way up, cutting corners along the way, but it is almost always a liability once they've made it.... China, he concludes, is still 'a very backward country'.... Beijing takes an intense pastoral interest in the Chinese diaspora. It has some 48 million members—-about double the number of Indians living outside their country.... And the outflow has only just begun.... The Chinese government has no desire to slow the flow of students.... Not even Deng could have imagined the human torrent his 'open door' reforms would eventually unleash. Try 100 million—and counting."

  6. Roger Farmer: The Treasury and the Fed are at Loggerheads over QE: "How successful was operation twist at changing the maturity structure of Treasury securities held by the public? In Figure 4, I break down Treasuries held by the public as a fraction of total debt outstanding. This figure shows that although the Fed switched its holdings from yields of three months to two years to yields in the two to ten year range (Figure 3) this operation was swamped, after November of 2008, by Treasury operations that increased the supply of maturities in the two to ten year range (Figure 4). The end result was that the public ended up holding more of these two to ten year bonds in 2010 than before the recession hit. Could we have a little coordination here guys?"

And:

And Over Here:

Continue reading "Noted for Your Morning Procrastination for August 19, 2014" »


Morning Must-Read: Heidi Przybyla: Obamacare Losing Punch as Campaign Weapon in Ad Battles

Heidi Przybyla: Obamacare Losing Punch as Campaign Weapon in Ad Battles: "Republicans seeking to unseat the U.S. Senate incumbent...

...in North Carolina have cut in half the portion of their top issue ads citing Obamacare, a sign that the party’s favorite attack against Democrats is losing its punch. The shift--also... in... Arkansas and Louisiana--shows Republicans are easing off their strategy of criticizing Democrats over the Affordable Care Act now that many Americans are benefiting from the law and the measure is unlikely to be repealed. 'The Republican Party is realizing you can’t really hang your hat on it', said Andrew Taylor.... Republican pollster Whit Ayres, who has advised U.S. Senate candidates including Marco Rubio.... 'Obamacare will not be the most important issue', and Republicans will have to 'target people very directly'... said Ayres, who co-wrote a memo this month for outside spending groups such as Crossroads GPS and the American Action Network...


Robert Skidelsky's Superb Biography of John Maynard Keynes: From the Archives from a Decade Ago

NewImageOver at Equitable Growth: Robert Skidelsky's Biography of John Maynard Keynes: Archive Entry From Brad DeLong's Webjournal: August 06, 2004:

Sitting next to Lord Skidelsky in the Sala Maggioranza of the Italian Treasury (after they turned off the air conditioning, I took off my tie when he took off his jacket) impelled me to reread his Keynes biography.

And, after rereading, I find that I cannot improve on what I wrote about them three years ago: my thoughts then were totally enthusiastic and totally adulatory. And my thoughts are the same now. (I haven't yet reread volume three). In his first two volumes, Skidelsky gives us John Maynard Keynes's life, entire. And he does so with wit, charm, control, scope, and enthusiasm. You read these books and you know Keynes--who he was, what he did, and why it was so important. READ MOAR

Continue reading "Robert Skidelsky's Superb Biography of John Maynard Keynes: From the Archives from a Decade Ago" »


Liveblogging World War I: August 19, 2014: The War on Belgium

NewImageFrom Barbara Tuchman's The Guns of August:

The Belgians even more than von Bülow tried von Kluck’s temper. Their army by forcing the Germans to fight their way through delayed the schedule of march and by blowing up railroads and bridges disrupted the flow of ammunition, food, medicine, mail, and every other supply, causing the Germans a constant diversion of effort to keep open their lines to the rear. Civilians blocked roads and worst of all cut telephone and telegraph wires which dislocated communication not only between the German armies and OHL but also between army and army and corps and corps. This “extremely aggressive guerrilla warfare,” as von Kluck called it, and especially the sniping by franc-tireurs at German soldiers, exasperated him and his fellow commanders. From the moment his army entered Belgium he found it necessary to take, in his own words, “severe and inexorable reprisals” such as “the shooting of individuals and the burning of homes” against the “treacherous” attacks of the civil population.

Continue reading "Liveblogging World War I: August 19, 2014: The War on Belgium" »


Ferguson, MO: Black Town, White Power: Live from La Farine CCCXI: August 19, 2014

NewImageJeff Smith: In Ferguson, Black Town, White Power: "St. Louis County contains 90 municipalities...

...most with their own city hall and police force. Many rely on revenue generated from traffic tickets and related fines. According to a study by the St. Louis nonprofit Better Together, Ferguson receives nearly one-quarter of its revenue from court fees.... With primarily white police forces that rely disproportionately on traffic citation revenue, blacks are pulled over, cited and arrested in numbers far exceeding their population share....

Continue reading "Ferguson, MO: Black Town, White Power: Live from La Farine CCCXI: August 19, 2014" »


Self-Aggregation and Curation for August 18, 2014: Equity Prices, Secular Stagnation, Smackdowns, NAFTA, and Such...

Sent on Aug 18, 2014 at 08:34 pm http://tinyletter.com/braddelong/archive...

  1. VoxEU has produced an eBook on secular stagnation. I review it. And I am coming round to the conclusion that this is a macroeconomic weakness that has plagued the global market economy in all times of trend deflation or low inflation since at least 1895, and perhaps 1865.

  2. Robert Shiller writes about the mystery of high stock market elevations. I say the real mystery is why the average level of stock market valuations has been so low, given how attractive they are to patient capital and how much patient capital there ought to be.

  3. Well, it seems that my letting my neoliberal freak flag fly on NAFTA has annoyed Robert Scott and Jeff Faux of the EPI. Lots to think about here...

  4. The first good Brad DeLong Smackdown in months! Very welcome!! On adverse selection, and whether the health exchanges will in fact survive.

  5. Talking Points Memo publishes a section of Rick Perlstein's excellent The Invisible Bridge on America 1973-76. And the press corps and the New York Times--yes, we are looking at you, Alexandra Alter--fails to cover itself with glory by playing opinions-of-shape-of-earth-differ journamalism rather than saying that bogus plagiarism allegations are bogus.

  6. More on Making Sense of Friedrich A. von Hayek: A follow-up by me provoked by Lars Syll's sending me to Robert Solow's meditations; Milton Friedman, Friedrich Hayek, Augusto Pinochet, and Hu Jintao: Authoritarian Liberalism vs. Liberal Authoritarianism

  7. I confuse myself about why Obama's CEA believes the work of recovery is mostly done. And then I take a look at the mancession and mancovery, and see signs--perhaps--of peak male.

  8. Paul Krugman smacks me down for believing in the relative mental autonomy of even right-wing policy intellectuals.

  9. And I respond by noting that Milton Friedman, Herb Stein, and Arthur Burns could overcome the elective affinity between their libertarian instincts and Goldbugist doctrines. So why--with notably rare exceptions--can't their successors do the same?

  10. The 24-Year-Old Michael DeLong is campaign manager for Democrat Lianne Thompson in the mid-September CCC special election...

PLUS MOAR at the Equitablog and at Grasping Reality


Subscribe to the Email:

powered by TinyLetter


Male and Female Prime-Age Employment Rates since 2000

Over at Equitable Growth: Apropos of: In Which I Make Myself Very Confused About Cyclical Recovery: Monday Focus for August 18, 2014, Larry Summers emails: plot male and female prime-aged employment rates separately, and be afraid:

Graph Employment Rate Aged 25 54 Females for the United States© FRED St Louis FedGraph Employment Rate Aged 25 54 Males for the United States© FRED St Louis Fed READ MOAR

Continue reading "Male and Female Prime-Age Employment Rates since 2000" »


Reviewing Lawrence Summers's et al.'s VoxEU Ebook on "Secular Stagnation": The Honest Broker for the Week of August 23, 2014

Over at Equitable Growth: The Setup:

Let's start with Paul Krugman, who made me aware of this ebook by writing:

Paul Krugman: All About Zero: "Way back in 2008 I (and many others) argued...

...that the financial crisis had pushed us into a liquidity trap... in which the Fed and its counterparts elsewhere couldn’t restore full employment even by reducing short-term interest rates all the way to zero.... In practice the zero lower bound has huge adverse effects on policy effectiveness... [and] drastically changes the rules... [as] virtue becomes vice and prudence is folly. We want less saving, higher expected inflation, and more.... Liquidity-trap analysis has been overwhelmingly successful in its predictions: massive deficits didn’t drive up interest rates, enormous increases in the monetary base didn’t cause inflation, and fiscal austerity was associated with large declines in output and employment.... READ MOAR

Continue reading "Reviewing Lawrence Summers's et al.'s VoxEU Ebook on "Secular Stagnation": The Honest Broker for the Week of August 23, 2014" »


Lunchtime Must-Read: Dean Baker: Stock Returns: Between Shiller and DeLong

Dean Baker: Stock Returns: Between Shiller and DeLong: "Stocks still look like a pretty good deal...

...since even if there is some decline in the profit share of income and also some reversion toward long-term trends in price to earnings ratios (my bet is that the ratio stays above 20), then the real returns are still likely to be well above 3.0 percent. In short, I can't see the basis for Shiller's big fears. On the other hand, the high price to earnings ratios in the stock market means returns will almost certainly be lower in the next decade or so than their long-term average. (There actually is a very good paper on this topic, see Baker, Delong, and Krugman, 2005.)  


Noted for Your Lunchtime Procrastination for August 18, 2014

Over at Equitable Growth--The Equitablog

Plus:

Must- and Shall-Reads:

  1. Ethan Zuckerman: The Internet's Original Sin: "It's not too late to ditch the ad-based business model and build a better web. What we wanted to do was to build a tool that made it easy for everyone, everywhere to share knowledge, opinions, ideas and photos of cute cats. As everyone knows, we had some problems, primarily business model problems.... At the end of the day, the business model that got us funded was advertising... [the] revenue source is investor storytime: Investor storytime is when someone pays you to tell them how rich they’ll get when you finally put ads on your site.... The key part of investor storytime is persuading investors that your ads will be worth more than everyone else’s ads.... Demonstrating that you’re going to target more and better than Facebook requires moving deeper into the world of surveillance..."

  2. Wolfgang Münchau: Wolfgang Munchau: Draghi is running out of legal ways to fix the euro "The ECB is failing to deliver on its inflation target not because it has run out of instruments but because it has based its policy on a poorly performing economic model... [and so] has committed three errors.... The ECB should have embarked on large asset purchases and cut interest rates to zero early on.... Mr Draghi’s promise to buy eurozone government debt... made everybody, including the ECB itself, complacent... [and] ended all crisis resolution. The third mistake was to misjudge the dynamics of the fall in inflation rates late last year.... By pussyfooting around... the ECB has signalled that it is safe to bet against the inflation target.... To undo this would take some heavy lifting.... The ECB should start by ditching the inflation target and replacing it with a price-level target.... The ECB should starting buying equities and junk bonds. It should subsidise mortgages and consumer credit. It could fund an investment programme in transport infrastructure, energy networks and scientific research.... All these measures would be effective. Most would be illegal. The one thing the central bank can do without any legal problems would be to drop the silly macroeconomic model--known as the Smets-Wouters model, after its authors--on which it has been relying for too long. My guess is that the ECB will not do any of these..."

  3. Alon Levy: Zoning and Market Pricing of Housing: "The question of the effects of the supply restrictions in zoning on housing prices has erupted among leftist urbanist bloggers again. On the side saying that US urban housing prices are rising because of zoning.... On the side saying that zoning doesn’t matter and the problem is demand (and by implication demand needs to be curbed).... This is not a post about why rising prices really are a matter of supply. I will briefly explain why they are, but the bulk of this post is about why, given that this is the case, cities need to apportion the bulk of their housing via market pricing and not rent controls, as a matter of good political economy. Few do, which is also explainable in terms of political economy..."

  4. Nick Bunker: The downside of declining domestic migration: "Over the past 30 years or so, U.S. workers have become less likely to move.... An emerging hypothesis is that migration is declining because the benefits of migration are, too... structural changes in the labor market.... Research by economists at the International Monetary Fund shows a negative side to the decline in mobility. The paper considers migration as a way for workers to respond to a job loss.... Instead of moving on, workers drop out..."

  5. Mark Thoma (2011): Income Redistribution: The Key to Economic Growth?: "There is an equivalent of a Laffer curve for inequality, but the variable of interest is economic growth rather than tax revenue. We know that a society with perfect equality does not grow at the fastest possible rate.... We also know that a society where one person has almost everything while everyone else struggles to survive... will not grow at the fastest possible rate either.... We may be near or even past the level of inequality where growth begins falling.... But... why take a chance? I’d prefer to see policies implemented to reduce inequality--given the present, elevated level of inequality, a reduction is unlikely to have much of an impact on incentives. But at a minimum we should resist further increases.... I’ve never favored redistributive policies, except to correct distortions in the distribution of income resulting from market failure, political power, bequests and other impediments to fair competition and equal opportunity. I’ve always believed that the best approach is to level the playing field.... But increasingly I am of the view that even if we could level the domestic playing field, it still won’t solve our wage stagnation and inequality problems.... We’ve given the market economy 40 years to solve the problem of growing inequality, and the result has been even more inequality.... If we want to preserve a growing and socially healthy economy, and avoid moving to lower growth points on the inequality curve, then we will need to do much more redistribution of income than we have done over the last several decades..."

  6. Tim Harford: Monopoly is a bureaucrat’s friend but a democrat’s foe: "No policy can guarantee innovation, financial stability, sharper focus on social problems, healthier democracies, higher quality and lower prices. But assertive competition policy would improve our odds.... Such structural approaches are more effective than looking over the shoulders of giant corporations and nagging them.... As human freedoms go, the freedom to take your custom elsewhere is not a grand or noble one – but neither is it one that we should abandon without a fight."

  7. Kris James Mitchener and Kirsten Wandschneider: Great Depression recovery: The role of capital controls: "The IMF has recently revised its position on capital controls, acknowledging that they may help prevent financial crises.... During the Great Depression capital controls appear not to have been successfully used as tools for rescuing banking systems, stimulating domestic output, or for raising prices. Rather they appear to have been maintained as a means for restricting trade and repayment of foreign debts."

Continue reading "Noted for Your Lunchtime Procrastination for August 18, 2014" »


Over at Equitable Growth: In Which I Make Myself Very Confused About Cyclical Recovery: Monday Focus for August 18, 2014

Over at Equitable Growth: Will somebody please tell me that I have made a gross arithmetic error in what is below, and can be much more optimistic?

Let me start with this graph:

Graph Employment Rate Aged 25 54 All Persons for the United States© FRED St Louis FedREAD MOAR

Continue reading "Over at Equitable Growth: In Which I Make Myself Very Confused About Cyclical Recovery: Monday Focus for August 18, 2014" »


Morning Must-Read: Mark Thoma (2011): Income Redistribution: The Key to Economic Growth?

Mark Thoma (2011): Income Redistribution: The Key to Economic Growth?: "There is an equivalent of a Laffer curve for inequality...

...but the variable of interest is economic growth rather than tax revenue. We know that a society with perfect equality does not grow at the fastest possible rate.... We also know that a society where one person has almost everything while everyone else struggles to survive... will not grow at the fastest possible rate either.... We may be near or even past the level of inequality where growth begins falling.... But... why take a chance? I’d prefer to see policies implemented to reduce inequality--given the present, elevated level of inequality, a reduction is unlikely to have much of an impact on incentives. But at a minimum we should resist further increases.... I’ve never favored redistributive policies, except to correct distortions in the distribution of income resulting from market failure, political power, bequests and other impediments to fair competition and equal opportunity. I’ve always believed that the best approach is to level the playing field.... But increasingly I am of the view that even if we could level the domestic playing field, it still won’t solve our wage stagnation and inequality problems.... We’ve given the market economy 40 years to solve the problem of growing inequality, and the result has been even more inequality.... If we want to preserve a growing and socially healthy economy, and avoid moving to lower growth points on the inequality curve, then we will need to do much more redistribution of income than we have done over the last several decades..."


Morning Must-Read: Nick Bunker: The Downside of Declining Domestic Migration

Nick Bunker: The downside of declining domestic migration: "Over the past 30 years...

...U.S. workers have become less likely to move.... An emerging hypothesis is that migration is declining because the benefits of migration are, too... structural changes in the labor market.... Research by economists at the International Monetary Fund shows a negative side to the decline in mobility. The paper considers migration as a way for workers to respond to a job loss.... Instead of moving on, workers drop out..."


Monday DeLong Smackdown: The Wellsprings of Bad Monetary Economics in Goldbugism

Star Wars Episode IV A New Hope 1977 Darth Vader Enters YouTubeFinally! The Internet comes through with a high-quality DeLong smackdown! Hooray!

Paul Krugman: Inflation OCD: "Brad DeLong... falls short...

...trying to attribute it to bad models or just finding it incomprehensible.... There’s something deeper at work here.... Clinging to beliefs that have been wrong, wrong, wrong for so long--beliefs that would have cost you money if you acted on them--and remember, Eric Cantor, the lost white knight of the Reformicons, did in fact do just that--shows that there is some underlying reason those beliefs are a necessary part of the right-wing identity.

Continue reading "Monday DeLong Smackdown: The Wellsprings of Bad Monetary Economics in Goldbugism" »