This post is a message to the Federal Reserve if they are serious about maximizing employment. Yesterday I posted a model for labor share plotted against labor (Qty.) in response to a post by Simon Wren-Lewis. The model suggests that there is an ideal level of labor share that will employ the most amount of […]
Simon Wren-Lewis wrote about Aggregate Demand and the Labour Market. He shows that an aggregate demand constraint can keep employment from reaching its natural rate. He is essentially describing Keynes’ effective demand in his post. So I have made 2 changes to his title in the title of this post. I have changed aggregate demand […]
Paul Krugman wrote today about Life Without Cars. This subject strikes home for me. I have lived without a car since 2005. I lived 5 of the past 9 years in Chile and used the bus system there. I came back to the United States and have used a combination of walking, a bike and […]
The video presents safe voyages to space. “people… first-hand viscerally get that we live on a planet suspended in space … and this planet is all that we have.” Yet we could assume that only rich people from around the world will take the ride. How many of them will get a vision that the […]
“… the fundamental law of capitalism must be: If workers have more money, businesses have more customers.” Nick Hanauer Keynes wrote that insufficient effective demand could “bring the increase of employment to a standstill before a level of full employment has been reached”. We may have this problem. So… What is effective demand? I base […]
Lance Roberts has a piece called Not Seeing Signs of Market Exuberance? Look Closer. He talks about the psychology of gamblers to expect winning even when the news is bad. He makes the connection to the stock market that traders keep pushing the market higher in spite of less-than-good news. He then makes the connection […]
In a piece yesterday called High Asset Prices, the Savings Glut, Secular Stagnation, and Unemployment, Dean Baker wrote… “The idea that the economy could be subject to an ongoing problem of inadequate demand used to be grounds for eviction from the realm of serious economists. But anyone who is willing to look at the evidence with […]
David Weidner wrote an article today called, Dow 17,000 is on the wrong side of history. It is a must read. Here is a brief recap… “But more than any modern bull market, this one stands alone in that it’s squarely out of step with economic growth. It’s being driven higher by just a few […]
Paul Krugman is making a case that asset prices are not high once you realize that interest rates are not artificially low. So why are interest rates not artificially low? He states… “Once you accept the possibility that rates belong where they are, or even a bit lower, to correspond to the Wicksellian natural rate, […]
Unemployment dropped to 6.1% in June and down to 6.2% for the 2nd quarter. Unemployment is dropping faster than many economists expected. I would explain the fast drop as a reaction by firms to maintain their profit rates as labor share and productivity are both stationary now. The recent drops in unemployment are evidence that […]