Barry Ritholtz is talking about the Bull market coming to an end. It is no surprise to me. My equations of effective demand may finally be cracking the code of the business cycle. But I want to say that knowing where the business cycle ends is the ultimate transparency in capitalism. Barry, as usual, makes […]
John Quiggin provides an excellent discussion of macroeconomics. It is much too good to summarize. Just click the link and read. Paul Krugman is also (as usual) brilliant. In particular, I fear he understands the sociology of the profession. I have some comments on Quiggin.
If inflation starts to rise or the economy overheat, how can the Federal Reserve raise their Fed rate? One might think it would be impossible with $4 trillion in reserves, but the Fed does have a way. They can simply raise the floor under the Fed rate. What is the floor? The interest on reserves. […]
This is one of my usual boring posts on the same things I often type about. I have nothing much new to say and certainly won’t present any new evidence. There is no good reason to click “more.” In case anyone hasn’t guessed my answer, it is that I know of no good reason to […]
by Robert Waldmann Choosing sides not Sides Booman wants me to set up an account to comment at his tribune. Like hell. He debates John Sides about 2016. I want to pile on. Associate Professor of Political Science at George Washington University, John Sides, attempts to rebut Dan Balz’s fine analysis yesterday that the Republican […]
David Beckworth made a determination of nominal interest rates using the Output Gap from this paper…Measuring potential output: Eye on the financial cycle, by Claudio Borio, Piti Disyatat, Mikael Juselius. Determining the output gap correctly in real-time is very important for determining the nominal interest rate and many other factors. It is not good to […]
Jared Bernstein is saying that the unemployment rate is actually higher than 6.7%… “Based on numbers I’ve written about in greater detail, I think a more representative rate would be about 9 percent.” His reasoning is based on the fall in labor force participation. But I do not agree with his logic. 6.7% is a […]
Via Economist’s View is Mark Thoma’s new column in Financial Times Why is the Recovery so Agonizingly Slow? Why is the Recovery so Agonizingly Slow?, by Mark Thoma: Friday’semployment report underscored just how slow the recovery from the Great Recession has been. When the recession officially ended in June of 2009 the unemployment rate stood at […]
As the Euler equation begins its descent into history, where will we go from here? Well, we must understand the social psychology impacting consumption. It is not always true that higher interest rates leads to less consumption and more saving. Just look at the financial repression in China, where higher returns to savings increase consumption. […]
Noah Smith wrote a GREAT! post about how the data does not support the Euler equation. His post strikes at the heart of why economics and monetary policy is failing. Hopefully, we will see a revolution in thought about interest rates and monetary policy. The one sentence from his post that empowers the rebels is… […]