This is a *demand side* argument in favor of Fama’s claim that deficit spending crowds out private spending one for one. My earlier effort was to argue that the aggregate supply curve can be vertical (real aggregate supply is not affected by nominal aggregate dmeand) even when there is involuntary unemployment. I think I get […]

OK It’s Hopeless. Capitalism can’t be saved from investor idiocy Wall Street rallied on Tuesday with the kind of gusto that can only come from the starving. Citigroup (nyse: C – news – people ) Chief Executive Vikram Pandit released a memo on Tuesday saying that the bank had been profitable in the first two […]

by Bruce Webb Andrew Biggs references an editorial from the Charleston SC Post and Courier Advance Entitlements Reform However, President Obama’s major entitlement-reform offensive strikes on the Medicare front. He proposed, in his speech to Congress, to deliver “quality, affordable health care for every American” while also bringing runaway costs under control. That challenging goal […]

By Spencer Required reading: Christina D. Romer of the Council of Economic Advisers Lessons from the Great Depression for Economic Recovery in 2009 I really like her comments on gold, treasury operations and money supply. (hat tip Greg Mankiw)

rdan The St. Louis Fed includes the review on monetary policy. Figure 1 shows ‘currency in circulation’ to be basically flat at this time, which indicates much of the new money is in excess reserves and has not entered the broader money supply. This also begins to address in a clear way the concerns and […]

rdan Movie Guy, in comments, provides a beginning glimpse at trends in the realms of retirement funding: Retirement funds in danger for millions of Americans By Mike Bryan 6 March 2009 WSWS EXCERPT: Between October 9, 2007, and October 9, 2008, equity assets in retirement plans dropped by about $4 trillion in value, according to […]

Robert Waldmann Two quotes about liquidity. An anonymous TPM reader it is in everyone’s interest that markets be as liquid as possible. One of the factors increasing the risk of downward-spiraling markets is illiquidity – i.e., the possibility that assets may be difficult or impossible to sell when necessary either because there is no ready […]

Robert Waldmann The word “liquidity” is slippery, since there is not a single solid agreed definition. “Liquidity” refers to different things each of which is very important. I have long been fighting the suspicion that confusion of the various meanings influences the policy debate. I have lost the fight and now express the suspicion. Briefly, […]

For those wanting a slightly shorter version of the post below, here’s 11:15 of video dealing with how the Bad Banks got that way:

rdan A well done 59 minute description of the basics of part of the current financial crisis and actually no one yelling. Nice. Podcast of Bad Banks. Transcript of This American Life.