Following up on my earlier post, about people swimming in a stream of economic change over which they have no control: As I often do, I was re-reading some old Steve Randy Waldman posts, and came across one that made the same point quite elegantly: “Stabilizing prices is immoral“. (If you want to understand how […]

If you’re a fish merrily swimming in a stream, is it your fault if a flood — say from a large release from the dam upstream — causes you to be washed out through the sluicegates? Or if a drought leaves you trapped in a shrinking pool from which you cannot escape? That’s the question […]

Discussing the failure of modern macro to incorporate the financial system into its models, Ben asks, why did the bursting of the housing bubble spank the economy so much harder than the dot bomb crash? He sez (courtesy Brad DeLong, emphasis mine): …the decline in wealth associated with the tech bubble bursting [in 2001] and […]

Imagine that all bank deposits — the dollars in your checking account — were 100% backed, one-for-one, by your bank’s reserve holdings at the Fed (the modern, fiat-money-world equivalent of gold reserves). Runs on bank deposits would be impossible, because the outfit that issues reserves and currency can’t run out of reserves and currency — […]

Update April 4: Steve Waldman kindly links to this post, and I’m rather abashed that he does because it’s wrong as written. As pointed out by Ramanan. (Though the spirit is right.) I should have said: Private Domestic Nonfinancial (i.e. households and businesses, a.k.a. the “real” economy in which people produce, sell, and buy goods […]

If Asymptosis has any tiny claim to any important influence, it might be that anonymous and magisterial commenter JKH used the comments section here to first bruit his insight (both tautological and profound) that S = I + (S – I). He revisited that construct and concept again recently, and I’ll leave it to you […]

I’m delighted to see the U Chicago IGM Forum ask a really useful, non-softball question. The panelists are evenly split on whether an increase to $9 would make it “noticeably harder for low-skilled workers to find employment.” A 4:1 majority thinks that weighing the costs and benefits, “this would be a desirable policy.” I note […]

Here’s what risk looks like: Having to tell your six-year-old son that you don’t have a birthday present for him because you didn’t have any money left after buying food for the week. Telling your daughter she has to attend the semi-shitty local community college instead of the awesome out-of-state school where she was accepted […]

If there’s one thing that distinguishes modeling by mainstream and neoclassical economists — and that is arguably their Achilles Heel — it’s their failure to come at the problem from a fundamental accounting, and monetary, standpoint. (That failure is understandable given the curricula in economics departments.) I know that many of my readers share with […]

Contrary to what you might think, this new survey says that 69% of Republicans think that climate change is a “somewhat” or “very” serious threat. Table 3. Perception that climate change is a threat among Democrats (N=377), Republicans (N=306), Independents (N=389), and overall U.S. population (N=1089) in January 2013. Columns may not add to 100 […]