Lunchtime Must-Read: Paul Krugman: Switzerland and the Inflation Hawks
For the Weekend...

Noted for Your Nighttime Procrastination for December 19, 2014

Screenshot 10 3 14 6 17 PMOver at Equitable Growth--The Equitablog


Must- and Shall-Reads:

And Over Here:

  1. Paul Krugman: Switzerland and the Inflation Hawks: "A lot of people have been predicting soaring inflation since 2009 if not earlier, and have refused to change their views.... Inflation truthers insist that the government is hiding the real numbers.... Normally sensible conservative economists... see the non-inflationary story as somehow the result of very special circumstances.... Martin Feldstein and others have claimed that it’s all about the 0.25 percent... interest rate the Fed has been paying on excess reserves. Without that... quantitative easing would indeed have produced... big inflation.... So, can we talk about Switzerland?... Never paid interest on reserves... [now] charging banks 0.25 percent.... So has the Swiss National Bank’s huge increase in the monetary base, which dwarfs what the Fed has done, produced inflation?... Monetary base up by a factor of eight. Money supply up by much less, because banks didn’t lend the funds out. And consumer prices flat, indeed flirting with deflation. This is all exactly what a basic liquidity trap model--the one I laid out in 1998--predicted..."

  2. David Jolly: Swiss National Bank to Adopt a Negative Interest Rate: "Switzerland is introducing a negative interest rate on deposits held by lenders at its central bank, moving to hold down the value of the Swiss franc amid turmoil in global currency markets and expectations that deflation is at hand. The Swiss National Bank said in a statement from Zurich on Thursday that it would begin charging banks 0.25 percent interest on bank deposits exceeding a certain threshold, effective Jan. 22..."

  3. Alan Blinder: ‘What’s the Matter with Economics?’: An Exchange: According to both Jeff Madrick and Arnie Packer, I claim ‘that except for some right-wingers outside the ‘mainstream’…little is the matter’ with economics.... But it’s not true. I think there is lots wrong.... My review explicitly agreed with Madrick that (a) ideological predispositions infect economists’ conclusions far too much; (b) economics has drifted to the right... and (c) some economists got carried away by the allure of the efficient markets hypothesis. I also added a few... we economists have failed to convey even the most basic economic principles to the public; and that some of our students turned Adam Smith’s invisible hand into Gordon Gekko’s ‘greed is good.’... the propensity to elevate modeling technique over substance... [and others that] (a) are not germane to policy, (b) are only slightly related to Madrick’s complaints, and (c) are very much ‘inside baseball’ stuff—and hence boring to readers of this Review..."

  4. Edward Luce: Too big to resist: Wall Street’s comeback - "It was right to let Citigroup stay in business in 2009, even though it was effectively bankrupt. But should it be so much larger than it was six years ago? Is it healthy that Citi lobbyists wrote the clause, almost word for word, that was tucked into last week’s spending bill? The question answers itself. It also points to two glaring deficiencies that will come back to haunt Washington when the next crisis strikes.... There has been no improvement in Wall Street’s culture--or in Washington’s revolving door habits. Bankers dismiss Elizabeth Warren, the Democratic senator from Massachusetts, as a populist. Perhaps they should listen to Bill Dudley, president of the New York Federal Reserve and a former Goldman Sachs partner.... At some point there will be another Wall Street crisis. It could be a decade away, or maybe next year. Markets run in psychological cycles in which fear gives way to greed and then hangover. Greed is once more in the ascendant. No law can stop the next bomb from detonating. No regulator can foresee it. But they could do much more to be ready for it when it comes. Here Mr Geithner’s moral fundamentalists have a point..."

  5. Jim O'Neill: The Economic Consequences of Drug Resistance: "By 2020, if we allow resistance to rise by 40%, global GDP will be 0.5% smaller than it otherwise would have been. By 2030, it will be 1.4% smaller. By 2050, the economic shortfall will reach 3%. The accumulated loss of global output over the next 35 years will total $100 trillion.... Already, 60,000 people die every year from causes related to antimicrobial resistance in the United States and Europe.... By 2050, if the problem is allowed to continue to grow, antimicrobial resistance will kill more than ten million people per year..."

Should Be Aware of:


  1. Ryan Gantz: Bad community is worse than no community: "All the best conversation is happening in GroupMe, Slack, WhatsApp, private email lists, or over drinks after work. People feel comfortable analyzing, debating, and joking in these places, where they can express themselves without fear of judgment, unwanted notifications, or death threats. We can’t say the same about many discussion platforms or public comment sections.... Medium fights Godwin’s Law by rethinking comments as something closer to distributed annotations.... Reddit’s upvoting system gives its most engaged users control over what’s amplified. Metafilter reinforces community guidelines and cultural norms thanks to a highly engaged readership, 24-hour moderator coverage, and tools developed over 15 years. On most Vox Media sites, authors and moderators regularly stay engaged.... That’s the sort of work required to keep those spaces respectful, safe, and rewarding for participants, and it’s not always easy or successful. In a year when Pacific Standard and Popular Science shuttered their comments, launched with none.... Twitter is broken and downright toxic.... By coupling a format that encourages intimacy with a network design that encourages out-of-context amplification, Twitter has evolved into something fundamentally volatile. It’s fun, fast and powerful, but remains highly risky for anything approaching honest conversation, or even satire..."

  2. James Pethokoukis: The oil price collapse may end the 'Texas Miracle': "The energy sector gives, and the energy sector takes. The stunning drop in oil prices looks like bad news for the 'Texas Miracle'.... Michael Feroli: 'As we weigh the evidence, we think Texas will, at the least, have a rough 2015 ahead, and is at risk of slipping into a regional recession'. So perhaps a minor key replay of what happened in the Lone Star State back in 1986.... The oil patch bust caused Texas unemployment to rise, housing prices to fall, and, eventually, a nasty banking crisis..."

  3. Elizabeth Stoker Bruenig: Property Theories & the Buffered Self: "The ‘buffered self’ is a form of identity which is closed off from other persons.... Proprietary theories that view justice as a matter of your personal, individual rights being fulfilled play into this isolated self by remaining totally agnostic to the good of the community... do not view justice as a matter of total community outcomes, only individual ones, and only in terms of particular discrete rights.... Property theories that view property as an instrument for the communal good militate against this ‘buffered identity’ by contextualizing individual actions and procedures... in the impact on the community.... It’s pretty hard... to think to yourself, ‘doesn’t matter if I wind up with 500 million times the wealth of everyone else in my county due to this transaction, because I did it fair and square, and it’s my right.’ Instead you think, ‘so long as there are a lot of people without much who aren’t able to live good lives because I’ve got all this money to myself, I’m not actually entitled to all of it.’... [The] liber[tarian] property rights theories you hear... are not only bad because of what they produce materially (see: inequality), but also because of the ideology they factor so seamlessly into: namely, the idea that justice is merely a matter of individual procedural rights and protections, and that we have no need to factor the flourishing of our communities into the question of justice..."