The Roaring 20s II : This Time It’s Fiscal

In the Washington Post David Lynch (no not that David Lynch) reports that “Falling inflation, rising growth give U.S. the world’s best recovery.”

lternative titles

Handling the blue team with velvet gloves

(not used as it alleges bias when the article merely reports the facts without Ballance (TM) for once)

Twin Peaks (inflation and GDP not used as it might invite a downturn and I am superstitious)

The excellent article (just click the link) is mostly straight reporting with some discussion of the advantages of FIscal Policy relative to monetary policy. As a QEx skeptic (for x>1) I am very pleased by “Congressional actions can affect the economy faster than the lagged impact of a change in borrowing costs and are more certain than the results of other, less conventional Fed policies designed to spur growth.” I do want to write on just how uncertain the alleged benefits of QE are (but not here).

I am less pleased by “the national debt to a new high of $34 trillion, or more than 120 percent of annual economic output, aggravating a long-term threat to the nation’s prosperity, some economists say.” Other economists including the oversigned assert that the national debt is a source not a sink of funds because r*>g (even though r and g are close right now – r definitely should be the safe real interest rate, g is the trend rate of growth of real GDP, the equation works just as well with nominal and nominal).

The aspect of the article which struck me the most is that Lynch quoted no chief macroeconomists at some investment bank. Instead I read “Claudia Sahm” hey I know here from the web especially Twitter, the one and only “Dean Baker” and, for balance, some guy at AEI who, like Sahm used to work for the Federal Reserve board.

I wondered what broke the financiers’ monopoly on macro commentary ?

scrolling down I read. “David J. Lynch is a staff writer on the financial desk who joined The Washington Post in November 2017 after working for the Financial Times, Bloomberg News and USA Today.”

Ohhhh ( think the word “Financial” in the title freed the Financial Times from the standard obligation to treat financiers as if they are experts on everything.