A Thousand Words, Version 3
A Thousand Words, Version 3
A Thousand Words, Version 3
Simon Wren-Lewis gets me going again He wrote Rational expectations do not prevent us understanding sustained periods of deficient demand when an inflation targeting central bank hits a lower bound. Indeed they help, because with rational expectations inflation targeting prevents inflation expectations delivering the real interest rate we need, as I have argued here. and […]
As part of my continuing series of Analogies that Should Be on the SAT, this is what Famous Entrepreneurs do (h/t Brad DeLong): In the IBM PC era, Steve drove innovation forward with the Macintosh. This, like the Apple II, was squarely aimed at expanding the use of PCs to everyone, the “computer for the […]
Pete Davis: Treasury Secretary Hank Paulson initially sold Congress in the fall of 2008 on emergency intervention to purchase “toxic assets,” but quickly reversed course in favor of direct capital injections. Those favored financial institutions revived more quickly than most thought possible and most of those injections have already been paid back. However, most of […]
This is taking longer than it should. For now, here is a “teaser” graphic, which I suspect is worth much more than 1,000 words: Meanwhile, other (mostly related) thing you may want to read: Brenda Rosser find that everything new is old again. Steve Randy Waldman tells the truth about banks, and Shames the Devil, […]
Down here it’s just winners and losersAnd don’t get caught on the wrong side of that line This will be a long post. Even with all the pictures above the fold. It started with a finger exercise during my daughter’s swim team practice: Just in case you thought I was picking on The Big C […]
Today’s release by the Federal Reserve Bank of Dallas of October’s Trimmed Mean Personal Consumption Expenditure gives us a chance to check this “alternative measure of core inflation.” The clearest thing is that it does what the FRB Dallas intends: generally reduces the measure of inflation: For the graphic above, any value above the line […]
Ken Houghton follows up on his previous post. One of the few honest statements that came out of the Reagan Administration was in late 1982, when the Volcker policies were working but the market was still spooked. “People expect that inflation will be higher than it will be.” The above compares the University of Michigan’s […]
Ken Houghton notes that playing with data is dangerous. Predicting the future tends to be easy. There are several ways to do it. First, you can predict that everything will grow as it did this year—or last year, or the mean of the past x years. Or you can predict that it will be great […]
D-Squared: Lots of people appear to be forgetting this one or getting it wrong…the central model of The General Theory of Employment, Interest and Money is a rational expectations model. The difference with the soi-disant “rational expectations” school is over the expectations-forming process with respect to the effect on price and output of monetary policy, […]