Another edition of my diatribe on QE-II. Here I reply to Noah in comments who discussed debt deflation and also explain my guess about what happened going beyond the evidence. Why does expected inflation matter (so that we should be pleased at an increase in nominal interest rates not matched by an equal increase in […]

I think this article “GOP freshmen get a tough lesson in politics” by David Fahrenthold in the Washington Post perfectly illustrates everything which is wrong with US political journalism. The theme of the article is explained as follows “the same hoarse-throat tactics that helped them bring down incumbents last year — attacks on a health-care […]

Post stimulated by Steve Benen. Content due to John Quiggin. This is arithmetic “Arithmetic tells us there are two ways to achieve the goal: the government can bring in more money and put out less.”This isn’t “a combination of cuts and tax increases were necessary when the deficit got really big” Revenue doesn’t come from […]

How did the German hyperinflation end ? I think the best but totally biased source of information is The Stabilization of the Mark by Hjalmar Horace Greeley Schacht (just look at the price !?! to understand how German’s felt). The book could be entitled “How I Did It” but the point is that he did […]

At Balloon Juice, Doug Harlan J wrote I’ve seen posters around for Kaplan test prep where it lists a bunch of answers and says “if you think you have to know the question to know the answer, you need to visit Kaplan”. That is the correct answer. The question is after the jump. The question […]

What is wrong with this sentence ? It is true that making the headline corporate income tax rate lower would be a good idea since that might give us a less distortionary tax code,, but in light of the long-term budget crunch that means we need to make up for any rate cuts by closing […]

This is pure speculation (also called theory). I have no respect for economic theory definitely including my own efforts, so the post will all be after the jump. I will write about, sketch and definitely not write out a model in which Fed purchases of 7 year Treasury notes causes low investment. It happens to […]

I am not able to get anyone to debate me on monetary policy in a liquidity trap. Therefore I resort to crude provocation. I recall two claims about monetary policy which were not controversial until this year. First that the effects of a shift in monetary policy peak after roughly 6 months. Second that it […]

Paul Krugman To be fair, applying maximizing thinking has achieved some major successes even in macroeconomics. The permanent income/life cycle style of consumption theory does a much better job of accounting for the stylized facts about spending than the old, mechanical consumption function. The natural rate hypothesis, with its crucial implication that high inflation would […]

This is new. This post by Matthew Ygelsias isn’t about monetary policy, and I don’t find it convincing at all. He wrote if you raise high-end marginal rates while leaving deductions alone, what you do is massively increase the value of the deductions. The home mortgage interest tax deduction, for example, is both distributively regressive […]