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 […]

“Poor people today have air conditioners and smart phones!” You hear that a lot. “You should be looking at poor people’s consumption, not their income. By that measure, they’re doing great.” The basic point is very true. If poor people today have more and better stuff, can buy more and better stuff each year, maybe we […]

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 […]

In a move with potentially enormous implications, Good Jobs First reports that the Government Accounting Standards Board (GASB) will soon issue new draft rules for Generally Accepted Accounting Principles (GAAP) for governments. Don’t fall asleep; this could be awesome! As regular readers know, one of the things bedeviling subsidy debates is the lack of transparency […]

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 […]

The title of this post describes the main message of Pavlina Tcherneva’s research. This video is a “must see”. If her message becomes part of the policy approach for the next recovery, we will see much better net social benefits for society after the next recession. (video link)