The Federal Reserve Bank of San Francisco published a letter about the labor market. The letter is titled, Gauging the Momentum of the Labor Recovery, and written by Mary C. Daly, Bart Hobijn, and Benjamin Bradshaw. They observe 6 indicators to judge how well the labor market is improving. The 6 indicators are the insured […]
Since I write about effective demand quite a bit here, I just want to post some of its basic principles. What is Effective Demand? Effective demand is a measure of the potential demand for the output of an economy. This potential establishes a limit upon output. In simple terms, the output of the economy will […]
Just want to pass along this video from The Daily Conversation on the GOP changed a standing rule of the House to prevent the government from opening… This happened on October 1st… Link to video… What is happening to democracy…?
A comment by Arne in a previous post raised the idea that a tax transfer from capital to labor would raise the effective demand limit. So a video was made using the dynamic model for the circular flow to test his idea. As it turns out, the model shows that the natural real GDP equilibrium […]
In her acceptance speech for Fed Chair, Janet Yellen said… (at the 1:30 point in this video from The Daily Conversation) “The mandate of the Federal Reserve is to serve all of the American people” And then it appears as though she almost choked on those words. She must sense the rage and power seething […]
John Williams who is the president and chief executive officer of the Federal Reserve Bank of San Francisco published a letter yesterday explaining unconventional monetary policies. First I want to appreciate the clarity and simplicity with which John Williams is able to communicate complex ideas. His voice is honest, transparent and credible. What did he […]
The IS-LM model is built upon two markets, the goods market (IS) and the money market (LM). The alternative view in this post will incorporate the effective demand limit into the IS-LM model. Money Market First The money market is described by a plot of the interest rate (y-axis) and the quantity of money (x-axis). The […]
James Rickards wrote the book Currency Wars a few years back. (source video) He is supported by the Charles Koch Institute. He says the US wanted China to appreciate their currency, so that the dollar would depreciate, because the fed wanted to import inflation in order to meet their nominal GDP targets. His view is […]
One thing that is seen sometimes is a strange teaching in economics and business. The teaching says that lower costs of production will increase the natural level of real GDP output. Now the natural level of real GDP output is considered the limit at which the economy can produce. It is seen as the total […]
Even if inflation (CPI less food and energy) stays steady between 1% and 2%, there really is no problem. Prices are still rising. Paul Krugman would like to see inflation rise because that would lower real interest rates. But that is not going to happen, and he shouldn’t be expecting that it will. Is there […]