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June 2016

What I Saw and Did Not See About the Macroeconomic Situation Eight Years Ago: Hoisted from the Archives

What I Saw and Did Not See About the Macroeconomic Situation Eight Years Ago: Hoisted from the Archives

Hoisted from the Archives from June 2008J. Bradford DeLong (June 2008): The Macroeconomic Situation, with added commentary:

Looking back, what did I get right or wrong back eight years ago when I was talking about the economy? I said:

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Procrastinating on June 30, 2016

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Over at Equitable Growth: Must-Reads:

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Liveblogging Postwar: June 30, 1946: China

China 1946 Google Search

George C. Marshall: To Harry S. Truman:

Top Secret

Dear Mr. President:

I saw Generalissimo for lengthy conference this morning in which exceedingly frank and lengthy statements were made by both of us, I principally reflecting on the plainly evident and tremendous pressure of military leaders (who also occupy powerful political positions) to pursue without delay a policy of force for which all plans have been made.[1] However drastically they reduce their application to Communist territorial holdings and territory occupied by Communist troops or eliminate local Communist governmental set ups of long standing, the Generalissimo laid great emphasis on the necessity of arrangements which would safeguard the Government against the uncertainties of agreements with the Communists or future hostile threats or actions by them to influence political negotiations.[2]

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Liveblogging Postwar: June 29, 1946: Eleanor Roosevelt

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Eleanor Roosevelt: My Day:

HYDE PARK, Friday—I was very much interested the other day to receive an article sent to me from Pageant Magazine on a New Jersey community which has changed its name from Jersey Homesteads to Roosevelt. This is one of the homesteads started in the days of the depression, and it has had a hard and discouraging career.

A small group of New York City garment workers originally moved out there from the slum areas of the city. Each contributed a small amount of money, and their plan was to run their own factory, live on small garden or farm plots, and have the stores municipally owned. It didn't work, partly because the experience was not there to run this type of community.

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Liveblogging the American Revolution: June 28, 1778: Battle of Monmouth

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Wikipedia: Battle of Monmouth:

On June 26, 1778, Washington chose to send 4,000 men as an advance force to strike at the British rear guard as they departed Monmouth Courthouse, in order to delay the British withdrawal until the main American force could give battle.

Charles Lee, as Washington's senior subordinate, was initially appointed commander of the advance force, but turned it down because of his doubts about the plan. However, when the force was increased to 5,000 and the command offered to the Marquis de Lafayette, Lee changed his mind and insisted on the command.

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Must-Read: Post-Brexit vote, in Europe at least: It is not the Great Recession. Odds are that it is not the Lesser Depression. Odds are that it is the Longer Depression...

Brad Setser: Follow the Money: "A few thoughts, focusing on narrow issues of macroeconomic management...

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Live from the Republicans' Self-Made Gehenna: It's grifting all the way down...

Ari Melber and Alexandra Jaffe: After Saying He Forgave Loans to Campaign, Trump Won't Release Proof: "When Donald Trump said last Thursday he was forgiving over $45 million in personal loans he made to his campaign...

...the announcement drew plenty of coverage. Many even reported Trump's statement as if the deal was done. But it's not.... The FEC has posted no record of Trump converting his loans to donations. The Trump Campaign... declined requests to share the legal paperwork required to execute the transaction...


Must-Read: If an intelligence vast, warm, and sympathetic from a planet orbiting a distant star were to scrutinize the United States today, it would be puzzled. Raising the next generation is one of two or three most important tasks any civilization that is going to survive must perform. Arranging society so that the proper resources are devoted to one task is thus one of the principal problems that any non-dysfunctional societal socio-economic system must address. Yet there has been a sharp drop over the past generation in the share of society's resources that flow to mothers of young children either through within-household or within-kin group transfers from those who have not given birth or through entitlements--e.g., AFDC--provided by society as a whole, with SCHIP and the expansion of EITC being the only factors cushioning the impact of other social and economic changes.

An intelligence vast, warm, and sympathetic from a planet orbiting a distant star would probably conclude that we have, collectively, gone mad in our decision that the raising of young children is a less important part of the collective work of society than was previously held to be the case:

Heather Boushey and Kavya Vaghul: Working Mothers with Infants and Toddlers and the Importance of Family Economic Security: "Over the past four decades in United States, the composition of families with children has changed markedly...

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Procrastinating on June 29, 2016

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Over at Equitable Growth: Must-Reads:

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Live from the Right-Wing's Self-Made Gehenna: WTF!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?

Martin Feldstein**: How EU Overreach Pushed Britain Out: "Although many officials and experts predict that Brexit will have dire economic consequences...

...this certainly is not inevitable. Much now depends on the terms of the future relationship between the EU and Britain. The UK is also now in a better position to negotiate a more favorable trade and investment treaty with the US.... The US would be negotiating with one country, not 28--many of which do not share Britain’s pro-market policies. The question of Britain’s EU membership has been decided. Now its economic future depends on what it does with its new independence.


Must-Read: If you have not been reading Dietrich Vollrath's weblog on economic growth, you should. He has been teaching the world a masterclass in understanding the patterns and determinants of economies' long-run growth trajectories:

The Persistence of Technology Dietrich Vollrath

Dietrich Vollrath: The Persistence of "Technology": "Diego Comin, Bill Easterly, and Erick Gong... 'Was the Wealth of Nations Determined in 1000BC?...

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Procrastinating on June 28, 2016

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Over at Equitable Growth: Must-Reads:

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Live from Berlin: Alan Beattie: Merkel, the Great Procrastinator, Could Be Britain’s Saviour: "When a situation calls for constructive delay and calculated dithering...

...she is a world beater. Germans have invented a verb, merkeln, meaning to postpone decisions indefinitely. While lesser politicians instinctively look for a rapid solution to problems, Ms Merkel specialises in finding previously uncharted stretches of road down which a can may be kicked...


Which Thinkers Will Define Our Future?: Live at Project Syndicate

Preview of Untitled 3

Over at Project Syndicate: Which Thinkers Will Define Our Future?: BERKELEY – Several years ago, it occurred to me that social scientists today are all standing on the shoulders of giants like Niccolo Machiavelli, John Locke, Adam Smith, Alexis de Tocqueville, Max Weber, and Émile Durkheim.

One thing they all have in common is that their primary focus was on the social, political, and economic makeup of the Western European world between 1450 and 1900. Which is to say, they provide an intellectual toolkit for looking at, say, the Western world of 1840, but not necessarily the Western world of 2016. What will be taught in the social theory courses of, say, 2070? What canon – written today or still forthcoming – will those who end their careers in the 2070s wish that they had used when they started them in the late 2010s? Read MOAR at Project Syndicate


Time to Play Whack-a-Mole with the Expansionary-Austerity Confidence-Fairy Zombie Once Again!

Whack a mole Google Search

Four readings on the expansionary austerity zombie:

Reading #1: Paul Krugman (2015):

Paul Krugman: Views Differ on Shape of Macroeconomics (2015): "The doctrine of expansionary austerity...

...the claim that slashing spending would actually boost demand and employment, because it would have such positive effects on confidence that this would outweigh the direct drag--was immensely popular among policymakers in 2010, as the great turn toward austerity began. But the statistical underpinnings of the doctrine fell apart under scrutiny: the methods Alberto Alesina used to identify changes in fiscal policy did not, it turned out, do a very good job, and more careful work found that historically austerity has in fact been contractionary after all. Moreover, the experience of austerity programs seemed to confirm what Keynesians new and old had warned from the beginning--that the negative effects of austerity are much larger under conditions where they cannot be offset by conventional monetary policy. So at this point research economists overwhelmingly believe that austerity is contractionary (and that stimulus is expansionary)....

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George Orwell: Wells, Hitler and the World State: Hoisted from Three Years Ago

George Orwell: Wells, Hitler and the World State: Paul Krugman sends us to George Orwell writing in the summer of 1941:

Wells, Hitler and the World State: All sensible men for decades past have been substantially in agreement with what Mr. Wells says; but the sensible men have no power and, in too many cases, no disposition to sacrifice themselves. Hitler is a criminal lunatic, and Hitler has an army of millions of men, aeroplanes in thousands, tanks in tens of thousands. For his sake a great nation has been willing to overwork itself for six years and then to fight for two years more, whereas for the common-sense, essentially hedonistic world-view which Mr. Wells puts forward, hardly a human creature is willing to shed a pint of blood.

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Must-Read: How poor were the bulk of our post-Neolithic pre-Commercial Revolution Agrarian-Age ancestors, anyway?

Jared Diamond: Agriculture: The Worst Mistake in the History of the Human Race: "One straight forward example of what paleopathologists have learned from skeletons...

...concerns historical changes in height. Skeletons from Greece and Turkey show that the average height of hunger-gatherers toward the end of the ice ages was a generous 5’9″ for men, 5’5″ for women. With the adoption of agriculture, height crashed, and by 3000 B. C. had reached a low of only 5’3″ for men, 5’ for women. By classical times heights were very slowly on the rise again, but modern Greeks and Turks have still not regained the average height of their distant ancestors.

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Must-Read: As I periodically say, there are two rules that would have made me much smarter had I adopted them back in, say, 1996:

  1. Paul Krugman is right.
  2. If you think Paul Krugman is wrong, consult rule #1.

May I have unanimous consent on the proposition that Paul Krugman was right back at the start of 2015 on this issue?:

Paul Krugman (2015): Insiders, Outsiders, and U.S. Monetary Policy: "I ran into Olivier Blanchard over breakfast... in Hong Kong...

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Must-Read: That the Brexit crisis would happen was unforeseeable. That the odds were strongly that some negative shock would hit the global economy was very foreseeable indeed. And yet the Fed since 2014 has been actively making sure that it is unprepared.

10 Year Treasury Constant Maturity Rate FRED St Louis Fed

Starting with Bernanke's abandonment in 2013 of a policy bias toward further expansion and acceptance of a need for interest rate normalization and the resulting Taper Tantrum, there has been a dispute between the markets and the Fed. The markets have expected the Federal Reserve to try to normalize interest rates and fail, as the economy turns out to be too weak to sustain higher rates. The Federal Reserve has always expected to be able in less than a year or so to successfully liftoff from zero and embark on a tightening cycle, raising interest rates by about one percentage point per year.

The markets have been right. Always:

Tim Duy: Fed Once Again Overtaken by Events: "A July hike was already out of the question before Brexit, while September was never more than tenuous...

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Must-Read: Ummm... But aren't the objections to expansionary fiscal policy today all that they involve governments taking on interest rate risk--that that is not a risk governments today ought to bear? And so isn't the fact that helicopter money extinguishes that risk and is a more stable fiscal policy than bond-financed spending the entire point?

So I don't understand...

Steve Cecchetti and Kermit Schoenholtz: A Primer on Helicopter Money: "Helicopter money is not monetary policy...

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Monday DeLong Smackdown: Olivier Blanchard on How the Eurozone Can Be Strengthened After Brexit

GBP to USD Exchange Rate Bloomberg Markets

A high-quality DeLong smackdown! Keep 'em coming, please...

Olivier Blanchard: How the Eurozone Can Be Strengthened After Brexit: "Brexit raises fundamental questions.... Meanwhile, Europe must continue to function...

...In this context that a large number of prominent economists from different European countries, ranging from those who desire more political integration to those who are more skeptical, have written what they see as the essential next steps to reinforce the architecture of the eurozone.... The purpose of the project, which started long before Brexit, was twofold. First, assess the nature of the challenges and the progress to date.... Second, assess the degree of agreement among ‘experts’ about the remaining challenges and solutions. If you look at the diversity of people on the list, the answer to the second question is that, in contrast to the often strident disagreements in the press, there is, indeed, surprisingly large agreement among experts....

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Live from the British Conservatives' Self-Made Gehenna: I must say, were I mayor of Hamburg today, I would generate some good press by offering reciprocal citizenship of Hamburg to inhabitants of London by virtue of Hanseatic League connections...


No. Not Every Single Person in Western Kansas Loves All the Immigrants...

Kansas gubernatorial election 2014 Wikipedia the free encyclopedia

Live from WTF?!?!: James Fallows is very good. But. Um. No. #NotEverySinglePerson:

Nancy LeTourneau: The Other Story About White America and Immigrants: "Fallows is reporting from western Kansas... Dodge City and Garden City...

...where Hispanics are now a majority... big meat-packing plants... Mexico... Guatemala, El Salvador, Honduras, Cuba and more recently Somalia.... You’d think this area would be a hotbed of tension where the forces of immigration meet up with small town American nativism. But you’d be wrong:

Every single person we’ve met here--Anglo and Latino, African and Burmese and other, old and young, native-born and immigrant, male and female, well-educated and barely literate, working three jobs and retired and still in school—of all these people, we’ve asked the same questions. Namely: how has Kansas handled this shift in demography? And how does it sound, in this politically and culturally conservative part of the country, to hear the national discussion about ‘building a wall,’ about making America ‘a real country again,’ of the presumptive Republican nominee saying even today that Americans are ‘angry over borders, they’re angry over people coming into the country and taking over, nobody even knows who they are.’ And every single person we have spoken with--Anglo and Latino and other, old and young, native-born and immigrant, and so on down the list--every one of them has said: We need each other! There is work in this community that we all need to do. We can choose to embrace the world, or we can fade and die. And we choose to embrace it...

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Live from the British Conservatives' Self-Made Gehenna: Can this be true? WTF!?!?!?

Wikipedia: Ali Kemal: "Ali Kemal Bey (1867 – 6 November 1922)...

...was a liberal Ottoman journalist, newspaper editor, and poet who was for some three months Minister of the Interior in the government of Damat Ferid Pasha, Grand Vizier of the Ottoman Empire. He was murdered during the Turkish War of Independence. Kemal Bey is the paternal grandfather of the British politician Stanley Johnson and [paternal] great-grandfather of the former Mayor of London Boris Johnson...

How come I did not know this?


Monday Smackdown: Doug!: She Caught the Katie

Live from the Republicans' Self-Made Gehenna: Karma as a real, tangible force rather than just a wish and a hope!

The Republicans have in Trump what they deserve--and now they are going to try their damnedest to force him on the rest of us, who in no way deserve him.

It's going to be bad: "Hell among the yearlings and the Charge of the Light Brigade and Saturday night in the backroom of Casey's Saloon rolled into one, and when the smoke cleared away not a picture still hung on the walls. And there wasn't any American political establishment. There was just (we hope) Hillary, with her hair in her eyes, and her shirt sticking to his stomach with sweat. And she had a meat ax in her hand and was screaming for blood...”

But let's not let those who paved the way by pretending that Sarah Palin had any business as a Republican nominee--and before her W, and before him Quayle, and even the Ronnie who became the plaything of factions within the administration whose arguments he could not follow, or the Barry who was our very own Boris Johnson back in the day...--pretend that this is not something that they did their damnedest to will into being. Megan McArdle, Chuck Lane, Clive Crook: the extremely sharp and no-bullshit Doug! is looking at you...

Doug!: She caught the Katie: "The Trumpocalypse appeared first as farce, with Sarah Palin in 2008...

...There shouldn’t be any debate about that. Palin was everywhere for about five years, but now that her logical conclusion has come to pass, establishment media is acting like there was no precedent for Trump, that he came out of nowhere. Every now and then, I like to go back and revisit the mash notes establishment journalists were writing to Palin before the disastrous interview with Katie Couric.

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Live from the British Conservatives' Self-Made Gehenna: The Full English Brexit:

  • George Soros: Brexit: "All of us who believe in the values and principles that the EU was designed to uphold must band together to save it by thoroughly reconstructing it. I am convinced that as the consequences of Brexit unfold in the weeks and months ahead, more and more people will join us."
  • Chris Patten: Brexit: "one of Churchill’s more famous aphorisms: ‘The trouble with committing political suicide is that you live to regret it’.... Many ‘Leave’ voters may not.... But the young Britons who voted overwhelmingly to remain a part of Europe almost certainly will."
  • Ken Rogoff: Brexit: "This isn’t democracy; it is Russian roulette for republics. A decision of enormous consequence--far greater even than amending a country’s constitution (of course, the United Kingdom lacks a written one)--has been made without any appropriate checks and balances."
  • Mark Leonard: Brexit: "Handing power back to the masses through direct democracy... is a nightmare... for democratic governance.... California’s experience... has shown the public will often vote for contradictory things.... [And] for the EU, this dynamic is exponentially more challenging."
  • Harold James: Brexit: "The vote for Brexit was driven by the sense that political and economic the ‘elites’ were both corrupt and wrong about the likely consequences. That hypothesis is about to be tested--and against a background of mistrust and division, no less."
  • Carl Bildt: Brexit: "the UK’s national political landscape is in ruins.... The Labour Party is inert under a nostalgic leftist leadership; and the Liberal Democrats have... left the scene.... Nicola Sturgeon, the first minister of Scotland... has said that another referendum on Scottish independence is ‘highly likely,’ calling the removal of Scotland from the EU ‘democratically unacceptable.’"

Links for the Week of June 26, 2016

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