Janet Yellen gave a speach which has received a lot of attention and not just because she is one of the most powerful people in the world. I agree with Lorcan Roche Kelly that the best parts are footnotes 28 and 26. I got into a twitter debate with Andy Harless who was unconvinced by […]
Modern Monetary Theory has been revolutionary in economics, and its influence is — beneficially — ever-more pervasive. It has opened the eyes of a generation to a clear-eyed, accounting-based methodology that trumps dimensionless theory, and has brought a deep, nuts-and-bolts understanding of money, debt, and financial institutions to a discipline where that understanding has been inexcusably […]
There is a post by Dietz Vollrath, Labor’s Share, Profits, and the Productivity Slowdown. D. Vollrath has some math there for how a decline in labor share along with a rise in aggregate mark-ups can show that productivity growth is slowing. Mark-ups are the price over marginal cost. Normally in perfect competition, price is equal to […]
A new paper came out this month from the Board of Governors of the Federal Reserve System talking about how Potential Output is lowered after recessions. (link) They make a case that potential output is lower than people think and that the economy adjusts too slowly to that reality. At the end of the paper, […]
Stocks continue downward.. China is struggling… Commodity exporting countries are in trouble… industrial production is projected to be weak in September as it was in August… Could the US economy be forming a recession? First, I have had the opinion that there are hidden weaknesses in the economy partly due to the strange monetary policy […]
Or that is what is being thought by the Social Security Administration as we round out 2015 and head into 2016. And the culprit? “Persistently Low Inflation.” How could that be, didn’t the Fed just meet and there were concerns of looming inflation? Apparently not enough inflation to rock the CPI-W. The SS COLAs are […]
So the Fed has kept interest rates at their rock bottom. Will they ever be able to raise them? Let me take a closer look… Tim Taylor writes about the impact of low long-term interest rates. He ends his post with this quote… “The BIS report raises the uncomfortable question of whether we are riding […]
Should the Fed raise the base interest rate? They really shouldn’t at this point. Will they? They probably will because they still see years of growth. I do not see years of growth ahead… Let me explain. Almost one year ago I wrote that capacity utilization would start falling. (link) It has fallen since that […]
by Joseph Joyce Capital Flows, Credit Booms and Bank Crises Studies of the impact of capital inflows have established that debt inflows can lead to bank crises (see here and here). Unlike equity, payments on debt are contractual and can not be cancelled if there is an economic downturn, which intensifies any shocks to the […]
This is my usual post lamenting the fact that reasonable people allow supply side dynamic scorers to set the terms of debate. They confidently assert that tax cuts for the rich cause more rapid GDP growth and want to argue whether that means they pay for themselves . Jeb!’s economists admit that they don’t without […]