Relevant and even prescient commentary on news, politics and the economy.

Oil Price Over Time in Real Terms

We have been hearing about record oil prices. We all know how the press tends to ignore the nominal to real distinction so I decided to check out the excellent graphs from WRTG Economics. Their graph of real oil prices from 1947 to 2004 express oil prices in term of 2004$. For a brief period […]

Should the Federal Reserve Monitor the Capacity Utilization Rate?

John Tamny observes that the capacity utilization rate has reached 81.3% and wonders why the FED is raising interest rates. Mark Thoma reads Tamny’s argument that we should only worry about world aggregate demand as compared to world supply and says: This is wrong. OK, that statement was actually in response to the tired old […]

Nepal

King Gyanendra of Nepal is promising to restore power to the people, while KLo is under the illusion that George Bush has ousted another long standing tyrant: If I were Tony Snow, I’d totally give Bush credit for the freedom’s advance in Kathmandu. Maybe KLo should learn more about the history of Nepal: The declaration […]

Inflation Rampant?

We had a couple of data releases this week telling us something about inflation. Today’s release was the CPI data for March, which comes on the heels of yesterday’s PPI data release. Today’s news release showed surprisingly high inflation in non-energy consumer items. For some, this has raised alarm bells: WASHINGTON (MarketWatch) — U.S. core […]

The Yuan and the Hume Specie Flow Model

John Tamny wants to remind Lawrence Lindsey about the Hume Specie Flow Model: To begin, just as Chinese authorities fix the yuan’s value, so too do U.S. authorities fix the dollar’s value. As the Journal’s George Melloan noted in a recent editorial, “no currency actually ‘floats.’” As opposed to commodities set by market forces, currencies […]

$70 Oil

The spot price for Cushing, OK WTI just hit $70 per barrel. Edit: Spot prices were briefly above $70 last year due to Hurricane Katrina. Click on graph for larger image. Dr. Nouriel Roubini suggests that $70 oil may have a significant impact on the US economy: ” … if oil prices were to drift […]

Expenditure-Switching and Inflation – The National Review v. The New Economist

Thomas Nugent coins a new term – Graham-Schumer-push inflation only after he tells us that the labor market is wonderful: Heretofore, the gloom-and-doom crowd fixated on the slow creation of jobs during this economic cycle and on the idea that outsourcing and illegal immigration were combining to steal American jobs. But at the current unemployment […]

I Thought Slower Population Growth was a Good Thing

On March 31, David Altig discussed this paper by Stephanie Aaronson, Bruce Fallick, Andrew Figura, Jonathan Pingle and William Wascher: On balance, the results suggest that most of the decline in the participation rate during and immediately following the 2001 recession was a response to business cycle developments. However, the continued decline in participation in […]

The 2001 and 2003 Tax Cuts and the Economic Recovery

While I profess to being a Keynesian economist, I have never bought into the notion that fiscal stimulus is the only way to reverse a recession. Max Sawicky – who may be more Keynesian than yours truly – writes: My question in all this, which no conservatives are rushing to answer, is this: What sequence […]

A Milestone, of Sorts

This is one of those milestones (in some ways like the Dow breaching 10,000) that obviously means nothing from a strictly financial point of view, but is an important psychological threshold. If nothing else, this news draws our attention to the real story, which is the slow but steady upward march of interest rates that […]