Noah Smith posted a cartoon about how the minimum wage works. The cartoon came from Mark J. Perry at the American Enterprise Institute. Noah said that it is Econ 101ism and I totally agree. Now the cartoon is obviously a wrong way to look at minimum wage. (I use the word “obviously” to play upon […]

In May of 2015, I wrote about the relationship between Labor Share and Unemployment. The post basically said that lower labor share translated into a higher limit upon unemployment. Here is the original graph from that post… In the post, I wrote… “The graph implies that as labor share falls, labor is less inclined to […]

I woke up today to see oil below $27 a barrel, the US 10-year at 1.6% and the Dow down to 15,600. How quickly the economy is faltering. It is a crazy moment. Oil below $29 a barrel creates Geo-political tensions that can create attacks of aggression. Other countries have already tried to negotiate with […]

Here is the graph from FRED for FOMC Summary of Economic Projections for the Fed Funds Rate, Central Tendency, Midpoint. (link) 1.15% for 2016. 2.45% for 2017. 3.20% for 2018. LOL… lots of luck. “The projections for the federal funds rate are the value of the midpoint of the projected appropriate target range for the […]

This post will build upon my previous post with the Cobra equation. In that post, I gave a model showing that the Fed is completely behind the curve of the business cycle. The Fed should not be raising rates at this point in the business cycle. When to Normalize in Theory In the model, aggregate […]

Tim Duy, who is a cool economist, points out a difference between the labor market and output GDP… Labor market improving while GDP is slowing. He describes this difference for the Fed. “Now they have slow GDP growth and fast employment growth. That will make brains explode on Constitution Ave.” Yet, Brains need not explode. […]

I have been saying for more than two years that the Fed should have raised the Fed rate earlier. Now it is too late because the economy is over the top of the business cycle… or as I would say, against the effective demand limit. They should have raised the Fed rate when effective demand […]

Noah Smith posted an article about Zombie companies in Japan. He recognizes that creative destruction must take place. Zombies must die. So bail outs of inefficient businesses must stop. “Japan’s cycle of bailouts must end.” Noah Smith, January 20, 2016 I agree and have written in the past about the Zombie companies weighing down advanced […]

I wrote last summer that the Dow would not rise much above 17,300 and then eventually drop from that level into a recession. We see markets dropping now, but are they dropping into a recession or a resetion? What is a resetion? That is when the markets “reset”. Stock values have been high so at […]

Most economists do not put stock in the stock market. That is to say that they do not include the stock markets in their analyses. Yet, economists should have a sense of what the markets will do if they are actually good economists. Economists seem to think that the stock markets are ruled by psychology […]