In the Solow Growth Model, productivity is a powerful factor for raising income per person in a country. So it is important to maintain productivity growth if a country would like to have economic growth. I have written recently that there are ways to discipline the market in order to achieve greater productivity and thus […]

Dow Jones stock index continues downward. Why? The future will be disappointing. So these future disappointments are already being priced in. Why wait for the bad data? We know its coming. Europe is in trouble. China is slowing. Oil prices are going to low for many producers. Retail sales are weak due to capital income […]

Paul Craig Roberts says, “All the discipline is gone.” (Boom-bust video at 8-minute point) He is referring to the corrupt environment of deregulation that led to larger and larger banks with “untouchable” power.  He gives the example of “National Branch Banking” that developed in the late 80’s. Banks were given incentives to siphon savings from […]

The more the Fed postpones raising of the Fed rate, the chances increase that it won’t rise at all before the next recession. Worry will mount about global growth. Worry will mount that the US is vulnerable. Pressure will build to keep the Fed rate low as the profits of more firms become increasingly vulnerable. […]

I am gaining respect for Tim Duy. He is seeing something that I have been saying for some time. The Fed rate is behind the curve and will not be able to normalize. Yes, Tim Duy makes great analyses of the economy to determine the future path of monetary policy, but he has always been […]

Comments are requested for this post. Please give your opinions below… Looking out 5 years from now, what average inflation rate is the market perceiving? (link to graph) The market’s perception of inflation over the next 5 years has declined to near 1.5%. Why are 5-year inflation expectations steadily dropping so much? Is it oil […]

Brad DeLong has a post on whether a persistently ultra-low interest rates leads to financial instability. Pointing to financial instability is pointing in the wrong direction. It is better to point toward net social benefits. A persistently low Fed rate will lead to decreased net social benefits. Here is what Keynes said in chapter 22 […]

Today at 2 pm Eastern time, the minutes of the September FOMC meeting were made public. And the stock markets shot up like a rocket. The minutes basically show that the Fed is concerned about Europe and other overseas economies and the strong dollar. Why would the stock market shoot up on bad news? The […]

I have written that the Dow will orbit around the 16,800 level and not go much higher from there. My view is based on Effective Demand causing profit rates to peak and decline. Today we see the Dow back down to 16,719 on worries of global growth and profits which start coming out tomorrow. As […]

I was reading today Paul Krugman’s article, Why Weren’t Alarm Bells Ringing? He is painting a picture of how the crisis formed and secular stagnation followed. It seems that he is trying to paint a complete picture so that anyone could understand the crisis completely just from reading his post. However, he is missing an […]