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Open thread March 20, 2014

Dan Crawford | March 20, 2015 7:04 am

Tags: open thread Comments (11) | Digg Facebook Twitter |
11 Comments
  • Spencer England says:
    March 20, 2015 at 9:10 am

    So the Fed removed the word patience from its’ statement.

    What did we know about Fed policy a week ago?

    The Fed probably would start raising fed funds rates in the third quarter, but it is still data dependent.

    What do we know about Fed policy now?

    The Fed probably would start raising fed funds in the third quarter,
    but it is still data dependent.

  • Anna Lee says:
    March 20, 2015 at 10:22 am

    Thanks Spencer, I just assumed I was too ignorant of econo-talk or fed-talk to appreciate the deep hidden implications of that word.

  • Joel says:
    March 20, 2015 at 6:59 pm

    The Fed removed the word *patience* from its statement.

    We’re the patients, it seems.

  • Kaleberg says:
    March 20, 2015 at 8:38 pm

    I hope they keep interest rates low. It’s great for the stock market. When people have nothing to invest in, they buy lots of stocks and drive up the prices. It isn’t exactly economic dogma, but it’s sound investment strategy.

  • Denis Drew says:
    March 20, 2015 at 8:48 pm

    Junking states: Republican style:
    Insofar as Right-to-Work legislation under-prices a state’s labor – extracts less than consumers would be willing to pay – it draws down the income a state receives from the other 49 states, either from exports or visitors.

    I understand there’s a lot of chicken/egg-six/half-dozen in economics – but before legislators agree to Right-to-Work legislation, I think this concept would be a good place to start wondering. If you build what they want, they will come and buy.
    * * * * *
    Another conundrum: states will yield billions in tax giveaways in the hope of drawing thousands of jobs – but the very same states refuse billions in Medicaid giveaways (to them!) from the federal government which would undoubtedly fund tens of thousands of high quality medical jobs – and bring unquestionably needed health care to their neediest.
    * * * * * *
    Illinois governor Rauner wants to squish the incomes of the bottom 50% of employees (keep the minimum wage low; wage war on unions public and private) who get 10% (or thereabouts) income share – to make the state more competitive (with where: Bangladesh?). Poorer people get less education, get a lot less competitive, more educated people want to get out of the unproductive milieu.

    Wisconsin governor Walker wants to cut straight to the chase on cutting education: $300 million off the state university.

    Both Republican governors want to turn their industrial states into South Carolina.

  • Bruce Webb says:
    March 21, 2015 at 2:52 am

    “patience” means or rather meant “not in the next two meetings”. Which in turn translated into “not before June”. Now that there is only one meeting between now and June and the Fed wants to keep the June option open they dropped “patience”.

    “patience” was like gossamer handcuffs. Which Janet et al simply blew away with a whiff. Or to be more prosaic with a one word (or so) edit.

    But this particular uncuffing from a negative policy (of doing nothing) does not entail shackling the Fed to a positive policy (of doing something). It just makes ‘nothing’ non binding when it comes to June.

  • Jack says:
    March 23, 2015 at 2:40 pm

    So what’s the general take out there in regards to the latest demagogic obstructionist throwing his hat into the Republican presidential nomination process and claiming to be the conservative candidate. Apparently one of the MSNBC discussants thinks Cruz is not all that smart. I can’t address that issue. There’s nothing in the public record that will allow an assessment of the Cruz intellectual capacity index. But there is plenty to indicate that this is one deceitful and self serving dirt bag. Are we back to a reconstruction era level of quality among the Congressional electees?

  • coberly says:
    March 23, 2015 at 3:11 pm

    Jack.

    yes.

  • coberly says:
    March 23, 2015 at 3:17 pm

    There is a book called All the Presidents’ Bankers, by Nomi Prins, from which I learn — perhaps, I don’t know enough to “learn” — that during the seventies when economists were talking about the NAIRU as though workers were sitting around employment offices waiting for jobs that would pay them more than they were worth… the banks were doing things that guaranteed inflation.

    I think economists need to take into account that their are actors powerful enough to drive the economy in ways that “free market competition, or lazy workers, would not predict.

    It might also be newsworthy that just as Carter might have arranged a hostage release Chase unilaterally refused to accept payment by Iran on their loan, and then declared the whole loan in default.

    Sounds a lot like what Well Fargo was doing just last year to people with a lot less power than the government of Iran.

  • Spencer England says:
    March 23, 2015 at 4:02 pm

    In the mid-1970s it became very common for firms to give 5% to 10% cost of living adjustments across the board.

    They did it to dampen down people jumping to another firm for a wage increase when inflation — or higher oil prices — was causing inflation that was accompanied by very high rates of labor turnover that was costing firms a lot of money. In May, 1974, I left government and joined a private firm and received a 10% cost of living adjustment in July, 1974.

    That was the problem Economists had in mind when they were talking about NAIRU. They were not really concerned about the unemployed demanding high wages Rather, they were more concerned with high labor turnover leading to higher labor cost.

    The labor turnover variable to look at in the 1970s was the voluntary quit rate.

  • coberly says:
    March 23, 2015 at 5:38 pm

    Spencer

    i think there are many points of view. i got my “explanation” for NAIRU from Paul Samuelson’s intro textbook.

    I also got a five percent raise during that time, when the inflation rate was 12 percent. The workers were not sitting around demanding higher wages… they were trying desperately to keep up with inflation. Maybe cause and effect got mixed up as often happens. But Samuelson didn’t say a word about what the banks were doing.

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