Tom Hardy is amazing...
If you had asked me five years ago what iPads would be used for, I would not have said "cash registers"...
They tell me that it's $600 vs. $2000 upfront for an iPad vs. a conventional cash-register system, with similar transaction fees.
The seas rolled calmly, stirred by a gentle easterly wind, when the early risers of the morning watch rose for breakfast at three A.M. to relieve the midwatch at four. Aboard the destroyer Johnston, washrooms filled with boisterous morning energy, lockers slammed, and the galley came alive with the hissing of steam, the banter of cooks, the sizzle of eggs and bacon. Quartermaster striker Robert Billie went to the mess, poured himself a cup of coffee, and decided to forget going back to bed. There were only two hours until morning general quarters would be called at six. Any teasing hints of sleep he might get would only deepen his fatigue. Until he could sleep in earnest, he might as well fill the remaining time with useful work. He went to the chart room to update his charts. In previous campaigns, from the Marshalls to the Solomons to the Carolines, the Johnston’s crew had long ago proven their ability to function on a fractured sleep pattern.
Amid great fanfare, the statue of Andrew Jackson was dedicated in Lafayette Park on January 8, 1853, the thirty-eighth anniversary of the battle of New Orleans. An elaborate parade preceded the dedication. A distinguished group including General Winfield Scott, Senator Stephen A. Douglas of Illinois, and the mayor and city council of Washington marched to the entrance of the White House, where they were greeted by President Millard Fillmore and his cabinet. Through a crowd of more than twenty thousand, they marched ￼across he street to Lafayette Park for the dedication. Senator Douglas gave an address on the military accomplishments of General Andrew Jackson and then introduced Clark Mills. Mills was so overcome with emotion that he could not speak and only pointed to the statue, which was then unveiled amid cheers and the salute of General Scott’s artillery.
The inscription on the west side of the marble pedestal reads “Jackson” and “Our Federal Union: It Must Be Preserved,” Jackson’s toast at a banquet celebrating Thomas Jefferson’s birthday on April 13, 1830. The phrase related to the nullification crisis...
As a follow up to Politico's embrace of BP, a correspondent reminds me of Politico from two years ago. Scott Lemieux does the garbage cleanup:
I’ve Had Enough Of You Water-Drinking, Air-Breathing Urban Elitists: [M]y favorite part of the Politico’s war on Nate Silver. As others have pointed out, [Dylan Byers's] botched hack cliche is comedy gold:
For this reason and others--and this may shock the coffee-drinking NPR types of Seattle, San Francisco and Madison, Wis.--more than a few political pundits and reporters, including some of his own colleagues, believe Silver is highly overrated.
Look, I knew those snooty elitists in Seattle and San Francisco looked down on me and my kind, but now you tell me that they drink coffee? No real American would ever be caught dead consuming this obscure product. I tell you, every election cycle it becomes harder to be a regular American. White wine, Lipton Green Tea, orange juice, Grey Poupon, coffee--every day you discover some product that my relatives in rural Saskatchewan would always have in their pantry that marks you as an out-of-touch urban elitist in the eyes of D.C.-based Ivy Leaguers.
Wikipedia: Battle of Leyte Gulf:
As it sortied from its base in Brunei, Kurita's powerful 'Center Force' consisted of five battleships (Yamato, Musashi, Nagato, Kongō, and Haruna), ten heavy cruisers (Atago, Maya, Takao, Chōkai, Myōkō, Haguro, Kumano, Suzuya, Tone and Chikuma), two light cruisers (Noshiro and Yahagi) and 15 destroyers.
Hoisted from the Archives from Four Years Ago:
Nevertheless, Jeremy Siegel and Jeremy Schwartz think that we are in a bond bubble:
Must- and Shall-Reads:
And Over Here:
Stolen from http://unfogged.com
My quality of life is diminished by the fact that I am not a fluent reader of rot13. Is there a good online drill site?
On 12 October 1944, the US 3rd Fleet under Admiral Halsey began a series of carrier raids against Formosa and the Ryukyu Islands, with a view to ensuring that the aircraft based there could not intervene in the Leyte landings. The Japanese command therefore put Shō-Gō 2 into action, launching waves of air attacks against 3rd Fleet's carriers. In what Morison refers to as a 'knock-down, drag-out fight between carrier-based and land-based air', the Japanese were routed, losing 600 aircraft in three days, almost their entire air strength in the region. Following the American invasion of the Philippines, the Japanese Navy made the transition to Shō-Gō 1.
Thursday, October 23, 2014
1:00 - 2: 30 p.m. ET
Economic Policy Institute
1333 H St., NW
Washington, DC 20005
...when reporters brought up the topic on June 18. Kasich suggested anyone who opposes Medicaid expansion will have to answer for their opposition when they die. Gov. Kasich said he recently told a state legislator:
I respect the fact that you believe in small government. I do too. I also happen to know that you’re a person of faith. Now, when you die and get to the, get to the, uh, to the meeting with St. Peter, he’s probably not gonna ask you much about what you did about keeping government small, but he’s going to ask you what you did for the poor. Better have a good answer....
Must- and Shall-Reads:
And Over Here:
Over at Equitable Growth: In the 60 years since 1954, the Federal Reserve has been moved to cut the 3-Mo. T-Bill rate when a recession threatens by 2.0%-points or more 13 times--once every 4.6 years. There have been eight cuts of 4.0%-points or more--once every 7.5 years. There have been five cuts of 5.0%-points or more--once every 12 years.
To me that suggests that the Greenspan-Bernanke policies--aim for 2.0%/year inflation, with a 300 basis-point "natural" short-term safe real interest rate on top of that when the economy is in the growth-along-the-potential-path phase of the business cycle--were already too restrictive. Once every 12 years is too often to run into ZLB problems, unless you are a strong believer in Coibion and Gorodnichenko arguments that price inertia is due to serious costs to businesses of altering price paths. READ MOAR
Note that these are the cities themselves--what lies within the municipal boundaries--not the metropolitan areas:
...published in American Political Science Review and written by MIT political scientists Chris Tausanovitch and Christopher Warshaw. (via Bruce Sterling):
A correspondent reminds me of this from a couple of years ago, that I now hoist from the archives:
Hoisted from the Archives:
Why oh why can't we have a better press corps?
This is really embarrassing, New York Times: really, really embarrassing:
The first joke comes in Casey Mulligan's first paragraph: the Fed does not lend money to banks on an overnight basis at the Federal Funds Rate. The Fed lends money to banks at an interest rate called the Discount Rate. The Federal Funds rate is the rate at which banks lend their Federal Funds--the deposits they have at the Federal Reserve--to each other. That's why it is called the Federal Funds rate.
The second joke comes in the second paragraph. Hansen and Singleton (1983) is 'new research'?
The third joke is the entire third paragraph: since the long government bond rate is made up of the sum of (a) an average of present and future short-term rates and (b) term and risk premia, if Federal Reserve policy affects short rates then--unless you want to throw every single vestige of efficient markets overboard and argue that there are huge profit opportunities left on the table by financiers in the bond market--Federal Reserve policy affects long rates as well. Note the use of the weasel word 'largely'.
The New York Times badly needs to clean house here.
There are lots of economists who would love to write for the New York Times for free, and who know the difference between the Federal Funds Rate and the Discount Rate:
Strategically located along the roads leading to the Channel ports in Belgian Flanders, the Belgian city of Ypres had been the scene of numerous battles since the sixteenth century. With the German failure at the Battle of the Marne in September 1914 and the subsequent Allied counter attacks, the 'Race to the Sea' began.
Yes, I am happy that I am able to postpone reading further in chapter 11 of David Graeber's Debt: My First 5000 Mistakes for another week...
Amity Shlaes: What triggered Krugman’s pulling some kind of imagined rank on Asness was that Asness, along with me and others, signed a letter a few years ago suggesting that Fed policy might be off, and that inflation might result. Well, inflation hasn’t come on a big scale, apparently. Or not yet. Still, a lot of us remain comfortable with that letter, since we figure someone in the world ought always to warn about the possibility of inflation. Even if what the Fed is doing is not inflationary, the arbitrary fashion in which our central bank responds to markets betrays a lack of concern about inflation. And that behavior by monetary authorities is enough to make markets expect inflation in future...
I will react by asking, to the air, one and only one four-part question:
Consider whether one should line up with Amity Shlaes--along with William Kristol, Niall Ferguson, James Grant, David Malpass, Dan Señor, and the rest of that motley company--against Ben Bernanke. Suppose that one has no special expertise on the issue. Suppose that Ben Bernanke has studied that issue for his entire adult life.
Wouldn't anybody with a functioning neural network greater than that of a moderately-intelligent cephalopod recognize that such a lining-up was an intellectual strategy with a large negative prospective α?
Wouldn't--after the intellectual strategy's large negative-α returns have been realized--anybody with a functioning neural network equal to that of a moderately-intelligent cephalopod recognize that it was time to perform a Bayesian updating on one's beliefs, rather than doubling down and claiming that: it's not over--the inflationary pressures are building minute-by-minute?
Wouldn't--when thinking about how to double-down on one's negative-α intellectual strategy, and placing even more of one's mental and reputational chips on the claim that expanding and keeping the Federal Reserve's balance sheet beyond $1.5T generates excessive and dangerous risks of inflation, and that any such expansion ought to be stopped and reversed--anybody with a functioning neural network even less than that of a moderately-intelligent cephalopod recognize that phrasing one's doubling-down in the voice of John Belushi on a very bad day would be unwise, would be likely to call forth mockery and scorn on the same rhetorical level that one had chosen, and would make one a figure of fun and merriment?
And, when the readily-predictable tit-for-tat responses at the rhetorical level one chose do in predictable and due course manage to arrive, that to respond by whinging and sniveling and feeling offense would be unwarranted--would demonstrate only that whatever functioning neural network one does have was not fully connected to reality?
Responding to Krugman is as productive as smacking a skunk with a tennis racket.... Let's not be fooled by chicanery (silly Paul, you are no Rabbit).... An honest Paul Krugman (we will use this term again below but this is something called a "counter-factual").... Also remember, much like when the Germans bombed Pearl Harbor, nothing is over yet. The Fed has not undone its extraordinary loose monetary policy and is just now stopping its direct QE purchases.... Paul, and others, should by now know the folly of declaring victory too early....
This isn't a screed where I claim to have invented my own consumption basket showing inflation is rising at 25% per annum - though some of those screeds are interesting.... We have indeed observed tremendous inflation in asset prices.... If one counts asset inflation it seems we've indeed had tremendous inflation.... Where effects did show up, it actually caused rather a lot of inflation....
Mostly Paul is wrong, and twisting the facts, and doing so as rudely and crassly as possible, yet again. The rest of the JV team of Keynesians who have also jumped on board are doing the same thing, just with more class and less entertainment value than the master.... Paul will continue to be mostly wrong, mostly dishonest about it, incredibly rude, and in a crass class by himself (admittedly I attempt these heights sometimes but sadly fall far short). That is a prediction I'm willing to make over any horizon, offering considerable odds, and with no sneaky forecasts of merely 'heightened risks'. Any takers?
This: "Note to Self: CBO and Part D"
OK, self-of-six-months-ago, what about the Congressional Budget Office and Medicare Part D do you want me to note?
So I followed my son's friend Jennifer Allaway: #Gamergate Trolls Aren't Ethics Crusaders; They're a Hate Group into the wilds of #GamerGate; discovered among other things that in response to the misogyny there is now a Scalzi Gender; and found that Reason continues its downward spiral with some more "harassment has been a two-way street" opinions-of-shape-of-earth-differ journamalism. I then thought I owed it in order to round out my understanding the picture to see what the honchos of science fiction publishing house Baen Books had to say about #GamerGate...
Must- and Shall-Reads:
And Over Here:
The following is the Opinion of the Naval Court of Inquiry which examined whether Rear Admiral Husband E. Kimmel and General Walter C. Short were in dereliction of duty on (and before) December 7, 1941. The court took testimony, examined exhibits and allowed both officers to have counsel. No dereliction of duty was found.
Report of Navy Court of Inquiry [October 19, 1944]: OPINION:
....For sixty years, he was one of my closest friends. My debt to him, both personal and professional, is beyond measure. Despite deep sadness at his death, I cannot recall him without a smile rising to my lips. He was as quick of wit as of mind. His wit always had a point, and was never mean or nasty — though some of the objects of his wit no doubt felt its sting. His occasional humorous articles — such as “The History of Truth in Teaching” — have become classics and demonstrate that had he chosen to become a professional humorist rather than a professional economist, he would have achieved no less fame in the one field than he did in the other. His death has left the world a far less joyful place for Rose and me, as for so many others.
Jeremy Hodges reports:
using a technique known as edge sorting, at Genting’s Crockfords casino in London, according to his lawyers. Genting refused to pay up, saying the practice is unfair. A casino ‘is a cat and mouse environment, it is an adversarial environment,’ Richard Spearman, Ivey’s lawyer said in court. ‘It doesn’t mean you have to be dishonest.’ Ivey, who sued Genting last year, argues that edge sorting isn’t dishonest and he should be paid the money.... Both sides agree that Ivey was in the casino in August 2012 and that he won the money.... Edge sorting is a way a card player can gain an advantage by working out the value of a card by spotting flaws or particular patterns on the back of certain cards.... It’s agreed ‘in the present case that there are legitimate strategies that may used by skilled players which have the purpose and effect of providing the player, rather than the casino, with the advantage on particular bets,’ Spearman said in court documents...
...and thank you all for joining us here today. This is a special day for us at the Federal Reserve Bank of Minneapolis, especially at the Helena Branch. Dave Solberg, a member of the Branch’s board of directors, will complete his service at the end of this year. I would like to extend my personal thanks to Dave for his service to the Helena Branch and, more broadly, to the Federal Reserve. The time that our directors, and members of our advisory councils, devote to their work is truly valuable. Dave and his colleagues bring important insights about the economy from people on Main Street and on farms and ranches across the region. As I have said many times, we have no end of data at the Federal Reserve, but data are backward-looking, and we need all the information we can get to make judgments about the future course of the economy. So thanks again to Dave and to his colleagues on the board, as well as anyone else in the room who has served on a Federal Reserve board or council. We appreciate your service.
...I've been working on a new study on the importance of diversity in game content to game players, and whether or not the game industry is able to predict this desire. Game developers can be hard to reach.... By September 25th, I basically had all the data I needed. And then I got this email: 'Hey diddle-doodle, Ms. Allaway! A heads-up: your project has been targeted for extensive "vote brigading" (possibly ranging into the tens of thousands of entries). Use that knowledge however you will. Cheers'.... I went into 8chan—the movement's current and primary forum for coordinating their efforts—and found a discussion on a 'secret developer survey,' referring to my questions.... In under four hours, the developer survey jumped from around 700 responses, which had been collected over the course of a month, to over 1100 responses. The responses were not... subtle.... It appeared that less than 5 percent of the new responses had actually come from developers.... Responses like this.... I set about locking down accounts, emailing professors, contacting campus safety, and calling family. It was an exhausting process, but I considered it necessary. The attack could get out of hand.... If you're even asking about equality or diversity in games, being shouted down in a traumatizing manner is now a mandatory step that you have to sit back and endure. But I don't hate #Gamergate for what they've done to me. I'm a researcher; my goal is to analyze and to understand. And after two weeks of backtracking through the way they've carried out their operations, this is the conclusion I've reached: #Gamergate, as we know it now, is a hate group...
In which some more of my ancestors, fighting for Colonel John Glover's Marblehead Mariners, save George Washington from being encircled and annihilated by Howe:
On October 18, [Howe] landed 4,000 men at Pelham, 3 miles (4.8 km) north of Throgs Neck. Inland were 750 men of a brigade under the command of Col. John Glover. Glover positioned his troops behind a series of stone walls, and attacked the British advance units. As the British overran each position, the American troops fell back and reorganized behind the next wall. After several such attacks, the British broke off and the Americans retreated. The battle delayed British movements long enough for Washington to move the main army to White Plains, avoiding being surrounded on Manhattan. After losing to the British in a battle at White Plains, and losing Fort Washington, Washington retreated across New Jersey to Pennsylvania.
...is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity.... To the extent that opportunity itself is enhanced by access to economic resources, inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality.... Society faces difficult questions of how best to fairly and justly promote equal opportunity. My purpose today is not to provide answers to these contentious questions, but rather to provide a factual basis for further discussion.... I will review trends... then identify and discuss four sources of economic opportunity in America.... The first two are widely recognized as important sources of opportunity: resources available for children and affordable higher education. The second two may come as more of a surprise: business ownership and inheritances.... In focusing on these four building blocks, I do not mean to suggest that they account for all economic opportunity, but I do believe they are all significant sources of opportunity for individuals and their families to improve their economic circumstances...
Must- and Shall-Reads:
And Over Here:
My father told me: Write it all down, you are good at it – and today, I am glad to have this diary from the time of the occupation time. My parents, my three siblings, my uncle’s family with five children and three grandparents in all, we lived in my parent’s house at the factory site, at some distance from the residential area Aachen-Forst (now Philipsstraße) – in the middle of the combat zone.
Here is a decision that Bishop Finn could reverse, should he decide to listen to his Pope, and thus decide to change his life follow Jesus Christ rather than Baal Melqart.
I'm not holding my breath...
Mary Sanchez (May 2014): Catholic Church forces woman to leave job after gay marriage is revealed: "Colleen Simon insisted on performing her job this week out of devotion...
...On Wednesday, she managed a delivery of 2,000 pounds of food for the pantry at St. Francis Xavier Church. It’s work she sees as fulfilling God’s will, his call to serve. She couldn’t let the food spoil.
Over at Equitable Growth: Jonathan Chait has an interesting piece on the thought on healthcare policy of the likely future senator from Iowa, Joni Ernst:
...have failed. And yet conservative opposition... has not diminished. If you want to know why this is, listen to... Joni Ernst....
We’re looking at Obamacare right now. Once we start with those benefits in January, how are we going to get people off of those? READ MOAR
Must- and Shall-Reads:
And Over Here:
Victoria Cross: No. 6092111 Private (acting Sergeant) George Harold Eardley, The King’s Shropshire Light Infantry (Congleton, Cheshire).
In North-West Europe, on 16th October, 1944, during an attack on the wooded area East of Overloon, strong opposition was met from well sited defensive positions in orchards. The enemy were paratroops and well equipped with machine guns. A Platoon of the King’s Shropshire Light Infantry was ordered to clear these orchards and so restore the momentum of the advance, but was halted some 80 yards from its objective by automatic fire from enemy machine gun posts. This fire was so heavy that it appeared impossible for any man to expose himself and remain unscathed.
Over at Equitable Growth: I am very happy to be here this morning to introduce the Oregon Economic Forum's Keynote Speaker, Doug Elliott of the Brookings Institution, and to set the stage for his talk.
To do that, let me ask all of you to cast yourselves back to 2006, to the end of Alan Greenspan's long tenure as Chair of the Federal Reserve, and to the days of what was then called the "Great Moderation". During Greenspan's term starting in 1987 the unemployment rate had never gone above 7.8% and it had gotten as low as 3.8%. The attainment of low unemployment under Greenspan did not signal any forthcoming inflationary spiral: The peak 12-mo PCE price index core inflation rate during Greenspan's tenure was 4.7%. The peak inflation rate that followed that 3.8% unemployment rate was 2.4%. Inflation had not been above 2.5% since December 1993. READ MOAR
Over at Equitable Growth: God! We were (and are) so smart!
J. Bradford DeLong and Lawrence H. Summers (1992): Macroeconomic Policy and Long-Run Growth:
On almost any theory of why inflation is costly, reducing inflation from 10%/year to 5%/year is likely to be much more beneficial than reducing it from 5%/year to 0%/year. So austerity encounters diminishing returns. And there are potentially important benefits of a policy of low positive inflation. It makes room for real interest rates to be negative at times, and for relative wages to adjust without the need for nominal wage declines....
These arguments gain further weight when one considers the recent context of monetary policy in the United States. A large easing of monetary policy, as measured by interest rates, moderated but did not fully counteract the forces generating the recession that began in 1990. The relaxation of monetary policy seen over the past three years in the United States would have been arithmetically impossible had inflation and nominal interest rates both been 3%-points lower in 1989. Thus a more vigorous policy of reducing inflation to 0%/year in the mid-1980s might have led to a recent recession much more severe than we have in fact seen...
If the past 24 hours... the past six months... the past six years... are not convincing evidence that a 2%/year inflation target is too low, what would be convincing evidence to that effect?
Plus Bonus Hoisted from the Archives:
A 2%/Year Inflation Target Is too Low: First, the live question is not whether the Federal Reserve should raise its target inflation rate above 2% per year.
The live question is whether the Federal Reserve should raise its target inflation rate to 2% per year.
On Wednesday afternoon, Federal Reserve Chair Bernanke stated that he was unwilling to undertake more stimulative policies because "it is not clear we can get substantial improvements in payrolls without some additional inflation risks." But the PCE deflator ex-food and energy has not seen a 2% per year growth rate since late 2008: over the past four quarters it has only grown at 0.9%. At a 3.5% real GDP growth rate, unemployment is still likely to be at 8.4% at the end of 2011 and 8.0% at the end of 2012--neither of them levels of unemployment that would put any upward pressure at all on wage inflation. It thus looks like 1% is the new 2%: on current Federal Reserve policy, we are looking forward to a likely 1% core inflation rate for at least another year, and more likely three. A Federal Reserve that was now targeting a 2% per year inflation rate would be aggressively upping the ante on its stimulative policies right now. That is not what the Federal Reserve is doing. Would that we had a 2% per year inflation target.
But if we were targeting a 2% inflation rate--which we are not--should we be targeting a higher rate? I believe that the answer is yes.
To explain why, let me take a detour back to the early nineteenth century and to the first generations of economists--people like John Stuart Mill who were the very first to study in the industrial business cycle in the context of the 1825 crash of the British canal boom and the subsequent recession. John Stuart Mill noted the cause of slack capacity, excess inventories, and high unemployment: in the aftermath of the crash, households and businesses wished to materially increase their holdings of safe and liquid financial assets. The flip side of their plans to do so--their excess demand for safe and liquid financial assets--was a shortage of demand for currently-produced goods and services. And the consequence was high unemployment, excess capacity, and recession,.
Once the root problem is pointed out, the cure is easy. The market is short of safe and liquid financial assets? A lack of confidence and trust means that private sector entities cannot themselves create safe and liquid financial assets for businesses and households to hold? Then the government ought to stabilize the economy by supplying the financial assets the market wants and that the private sector cannot create. A properly-neutral monetary policy thus requires that the government buy bonds to inject safe and liquid financial assets--what we call "money"--into the economy.
All this is Monetarism 101. Or perhaps it is just Monetarism 1. We reach Advanced Macroeconomics when the short-term nominal interest rate hits zero. When it does, the government cannot inject extra safe and liquid money into the economy through standard open-market operations: a three-month Treasury bond and cash are both zero-yield government liabilities, and buying one for the other has no effect on the economy-wide stock of safety and liquidity. When the short-term nominal interest rate hits zero, the government has done all it can through conventional monetary policy to fix the cause of the recession. The economy is then in a "liquidity trap."
Now this is not to say that the government is powerless. It can buy risky and long-term loans for cash, it can guarantee private-sector liabilities. But doing so takes risk onto the government's books that does not properly belong there. Fiscal policy, too, has possibilities but also dangers.
My great uncle Phil from Marblehead Massachusetts used to talk about a question on a sailing safety examination he once took: "What should you do if you are caught on a lee shore in a hurricane?" The correct answer was: "You never get caught on a lee shore in a hurricane!" The answer to the question of what you should do when conventional monetary policy is tapped out and you are at the zero interest rate nominal bound is that you should never get in such a situation in the first place.
How can you minimize the chances that an economy gets caught at the zero nominal bound where short-term Treasury bonds and cash are perfect substitutes and conventional open-market operations have no effects? The obvious answer is to have a little bit of inflation in the system: not enough to derange the price mechanism, but enough to elevate nominal interest rates in normal times, so that monetary policy has plenty of elbow room to take the steps it needs to take to create macroeconomic stability when recession threatens. We want "creeping inflation."
How much creeping inflation do we want? We used to think that about 2% per year was enough. But in the past generation major economies have twice gotten themselves stranded on the rocks of the zero nominal bound while pursuing 2% per year inflation targets. First Japan in the 1990s, and now the United States today, have found themselves on the lee shore in the hurricane.
That strongly suggests to me that a 2% per year inflation target is too low. Two macroeconomic disasters in two decades is too many.
If Cliff Asness was going to write the passage below, has there ever been a worse week for him to write it?
I mean "it's not over! The enormous pent-up inflation from the Fed's QE programs is out there bubbling under the surface!! Short Treasuries massively now!!!" has not been a winning rhetorical strategy for quite a while, and to double down on it this week does make you look like quite an idiot...
Paul Krugman lived up to his lifelong motto of 'stay classy'... lesser lights of the Keynesian firmament have also jumped in (collectivists, of course, excel at sharing a meme). Responding to Krugman is as productive as smacking a skunk with a tennis racket.... Paul's screeds.... I'll put our collective record up against Krugman's (and the Krug-Tone back-up dancers) any day of the week and twice on days he publishes... chicanery (silly Paul, you are no Rabbit)... never-uncertain-but-usually-wrong like Paul... malpractice... honest Paul Krugman (we will use this term again below but this is something called a "counter-factual")... former economists turned partisan pundits....
Much like when the Germans bombed Pearl Harbor, nothing is over yet. The Fed has not undone its extraordinary loose monetary policy and is just now stopping its direct QE purchases...
It was perfectly normal--well, not strikingly abnormal--for Cliff Asness to have taken a look at the speed at which the monetary base was increasing in 2009 and thinking that such policies, unless reversed, were likely to lead to a burst of inflation. Wrong, but not strikingly abnormal.
It was perfectly normal--well, not strikingly abnormal--for Cliff Asness to have taken a look at the speed at which the national debt was increasing in 2009 and thinking that such policies, unless reversed, were likely to lead to high Treasury real interest rates. Wrong, but not strikingly abnormal.
In order to avoid such predictions you had to:
For large increases in the monetary base not to make the likely future one of high inflation, and for large increases in the national debt not to make the likely future one of high Treasury real interest rates--well, something weird had to be going on.
But, as Krugman, Woodford, Eggertssen, Hicks, Keynes, etc. had noted, were warning, and were correct in warning back in 2009-2010, something weird was going on.
Because of how the economy had gotten itself wedged, the risk that extraordinary monetary easing would lead to an inflationary spiral was extremely low. Because of how the economy had gotten itself wedged, the risk that large government debt issuance would lead to exploding real interest rtes on government debt was extremely low. Only people who really did not understand what was going on would think that 2010 was a time to stress, highlight, obsess over, and freak out about INFLATION! DEBT! when the real risks to freak out about were DEPRESSION!! UNEMPLOYMENT!!!
But when something weird is going on, to get things badly wrong is normal--well, not that abnormal.
What is not normal--what is really abnormal--is to be a dead-ender.
What is not normal is to claim that your analysis back in 2010 that quantitative easing was generating major risks of inflation was dead-on.
What is not normal is to adopt the mental pose that your version of classical austerian economics cannot fail--that it can only be failed by an uncooperative and misbehaving world.
What is not normal is, after 4 1/2 years, in a week, a month, a six-month period in which market expectations of long-run future inflation continue on a downward trajectory, to refuse to mark your beliefs to market and demand that the market mark its beliefs to you. To still refuse to bring your mind into agreement with reality and demand that reality bring itself into agreement with your mind. To still refuse to say: "my intellectual adversaries back in 2010 had a definite point" and to say only: "IT'S NOT OVER YET!!!!"
...may be the biggest dove on the Federal Reserve, but his interest-rate projections would make him just an ordinary trader on Wall Street. The current Fed funds futures contract is pricing in interest rates of 2% at the end of the third quarter of 2017. The lowest “dot” on the Fed’s dot plot of interest rates is for rates of 2% at the end of 2017. And the next lowest dot is at 2.63%. It’s not known for certain that the 2% dot for 2017 comes from Kocherlakota, but his speeches are consistent with such a view. For example, unlike his colleagues, he doesn’t think any rate hike would be appropriate next year. He doesn’t expect inflation as measured by the PCE price index to get back to 2% until 2018. And he doesn’t want any reduction in accommodation unless the outlook is for inflation to be at 2% in two years time...
Battery Sergeant Major Ernest Powdrill describes life on the front line in Holland.
The weather was appalling, the drenching rain was intense and the days were permanently dark. It was bitterly cold. The locality was wooded and gloomy, the enemy were around us in some considerable numbers and the area was extensively mined. South of Oploo was not a comfortable position to be in, but there was no alternative.
On the night of 14th – 15th October Powdrill had to go forward with supplies for the Forward Observation tank, referred to as the RDon, which was concealed on the edge of woods, much closer to the enemy. He went forward in a carrier with Driver Smith:
Martin Wolf, Larry Summers, Mohamed El-Erian, Brad DeLong: The Institute of International Finance, Inc. | Events
Let's quote Thomas Piketty:
...in the United States. The increase was largely the result of an unprecedented increase in wage inequality and in particular the emergence of extremely high remunerations at the summit of the wage hierarchy, particularly among top managers of large firms...
...They’re intrigued, but not convinced. Perhaps Mr. Piketty has isolated the forces that will drive wealth inequality in the future, but for now, they’re not convinced the forces he focuses on are central to understanding the recent rise in wealth inequality. At least that’s my reading of the latest survey run by the University of Chicago’s Initiative on Global Markets. I’ve written before about their Economic Experts panel, which is intended to be broadly representative of opinion among elite academic economists.... The expert economists were asked whether
the most powerful force pushing toward greater wealth inequality in the U.S. since the 1970s is the gap between the after-tax return on capital and the economic growth rate.
To translate, does the T-shirt slogan “r>g” explain why wealth has become more unequally distributed?... 18 percent... uncertain. The clear majority either disagreed (59 percent) or strongly disagreed (21 percent)....
But what was the point of this? We saw from the Piketty quote up at the top that Piketty does not think that "r>g" has been driving the rise in American inequality. Why is it an interesting question to ask?
Justin, in my view, buries the lead, for he does indeed point out later on in his article:
If surveyed, it is likely that he would have joined the majority view in disagreeing with the claim the survey asked about. In Mr. Piketty’s telling, rising incomes among the super-rich are responsible for the recent rise in wealth inequality...
Shouldn't the IGM Forum at the Booth Business School of the University of Chicago have found somebody who had actually read Piketty's Capital in the Twenty-First Century to decide on what questions to ask?
I am sure that it was always such--that intellectual standards in the academy were always not that high, and that a great many of the people making arguments always were people who hadn't done their homework. But I do seem to be reminded of it more and more these days, especially since the beginning of the financial crisis back in 2007...
Jo Walton: After Paris: Meta, Irony, Narrative, Frames, and The Princess Bride: [Steven] Brust is definitely writing genre fantasy...
...and he knows what it is, and he is writing it with me as his imagined reader, so that’s great. And he’s always playing with narrative conventions and with ways of telling stories, within the heart of genre fantasy--Teckla is structured as a laundry list, and he constantly plays with narrators, to the point where the Paarfi books have a narrator who addresses the gentle reader directly, and he does all this within the frame of the secondary world fantasy and makes it work admirably.
...I think moving back to additional asset purchases in a situation like that should be something we should seriously consider.... The concern is the next steps that [the ECB] may need. That worries me a little bit. Will their policy response be as timely and aggressive as needed?... The markets are pricing in a lot of other things that might happen and a lot of those are negative. The cross currents are really the story.
...with an unprecedented level of loose monetary policy... created a risk of serious inflation....Paul Krugman lived up to his lifelong motto of "stay classy" with a piece on the subject entitled Knaves, Fools, and Quantitative Easing. Some lesser lights of the Keynesian firmament have also jumped in.... Responding to Krugman is as productive as smacking a skunk with a tennis racket. But, sometimes, like many unpleasant tasks, it's necessary....
We did not make a prediction.... We warned of a risk....
UPDATE: Cliff Asness states that I misinterpreted his column: that he did not intend for his:
I'm amazed that a Paul Krugman can look at 15+ years of the earth not warming and feel his beliefs [on global warming] need no modification...
to be a right-wingnut dog-whistle claim that global warming from human activity had stopped and was unlikely to resume.
@delong: .@Cimmerian999 Suggest you replace “the earth not warming” with “surface atmosphere temperatures not exceeding extraordinary spike of 1998”
.@Cimmerian999: .@delong Yes, in a paragraph meant to be funny (lost on you and Jesse obviously) that would work much better.
...can look at 15+ years of the earth not warming and feel his beliefs need no modification or explanation...
What next, Cliff? ShadowStats? Queen Elizabeth a secret lizard-person? Moon landing faked?
...the U.S. economy today is further from "normalization"--understood as a 2%/year breakeven inflation rate in financial markets--than it was in June 2012, just before Bernanke began talking about "unwinding" and triggered Ms Market's Taper Tantrum:
Why the steep slide in expectations of inflation since June has not triggered more of an FOMC reassessment of its policies than it has is a mystery. Such a reassessment certainly was not on display or in sub rosa whispers in Washington DC during IMF week...