Hoisted from Fifteen Years Ago: The Monetarist Counterrevolution

The Monetarist Counterrevolution: April 2001:

Introduction

Last year I published an essay (DeLong, 2000) arguing that modern Keynesians are really monetarists. Even if they--we--do not really like to admit it, most of the key elements in how modern "new Keynesian" economists view the world are derived from or heavily influenced by the work of Milton Friedman.

But that essay left me unsatisfied, for it was only half of the story.

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Monday Smackdown/Hoisted from 4 Yrs Ago/April Fools All Year/David Graeber Blogging: No, Silicon Valley Did Not and Does Not Partake of the Anarchist Utopian Nature. Why Did You Imagine It Did?

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Brad DeLong : No, Silicon Valley Did Not and Does Not Partake of the Anarchist Utopian Nature. Why Did You Imagine It Did?: I would be smarter if I read more Unfogged comment threads...

Courtesy of an unknown lurker informing the Mineshaft that "Graeber, on Twitter, sourced [his] Apple claim to his memory of a lecture by Richard Wolff", and of bjk commenting on More on Graeber, I am led to the… unusual opinions… of neo-Althusserian structuralist wingnut--and guy who made it pleasant to be at U.Mass--Richard D. Wolff:

Economic Crisis from a Socialist Perspective: Beginnings for the "reform plus" strategy: The contradictions of capitalism offer us partial yet useful examples of the democratization of enterprise advocated by this “reform plus” agenda. One of these, recurring in California for decades, can illustrate our argument.

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One Last April-Fools Note on Niall Ferguson: Why Did Keynes Write "In the Long Run We Are All Dead"?

May 09, 2013: Niall Ferguson Is Wrong to Say That He Is Doubly Stupid: Why Did Keynes Write "In the Long Run We Are All Dead"? Weblogging: NewImage

Niall Ferguson: An Open Letter to the Harvard Community: "Last week I said something stupid about John Maynard Keynes...

...Asked to comment on Keynes’ famous observation “In the long run we are all dead,” I suggested that Keynes was perhaps indifferent to the long run because he had no children, and that he had no children because he was gay. This was doubly stupid. First, it is obvious that people who do not have children also care about future generations. Second, I had forgotten that Keynes’ wife Lydia miscarried.

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Hoisted from 1999: Review of Paul Krugman, The Return of Depression Economics.

Just in case I get swelled-headed and think I am right more often than I am...

Brad DeLong (1999): Review of Paul Krugman, The Return of Depression Economics: Paul Krugman (1999), The Return of Depression Economics (New York: W.W. Norton: 039304839X).

This is a book that anyone interested in international economic policy and the possible destinies of the world economy needs to read. Paul Krugman is, as I have said before, the best claimant to the mantle of John Maynard Keynes: an extremely knowledgeable professional economist, an excellent writer, and an incisive critic of what international economic policymakers are doing wrong.

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Future Economists Will Probably Call This Decade the 'Longest Depression'

Over at Huffington World Post: Future Economists Will Probably Call This Decade the 'Longest Depression': Posted: 01/08/2016 9:28 am EST Updated: 49 minutes ago: Economist Joe Stiglitz warned back in 2010 that the world risked sliding into a 'Great Malaise.' This week, he followed up on that grim prediction, saying, 'We didn't do what was needed, and we have ended up precisely where I feared we would.'

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The Melting-Away of North Atlantic Social Democracy

This has been available in full exclusively at the magnificent and well worth subscribing-to Talking Points Memo.

SEND TPM MONEY!!!!

But now let me let it out into the wild here--and promise to imminently (well, maybe in a month...) write about the whole symposium of which it is a part:

The Melting Away of North Atlantic Social Democracy: Hotshot French economist Thomas Piketty, of the Paris School of Economics, looked at the major democracies with North Atlantic coastlines over the past couple of centuries. He saw five striking facts:

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A Few Scattered Notes, Observations, and Examples of Graphs and Diagrams in Teaching and Doing Economics/The Honest Broker for the Week of February 9, 2016

Perhaps starting a broader conversation...

Paul Krugman: In Defense of Funny Diagrams: "Brad DeLong asks a question about which of the various funny diagrams economists love...

...should be taught in Econ 101. I say production possibilities yes, Edgeworth box no--which, strange to say, is how we deal with this issue in Krugman/Wells. But students who go on to major in economics should be exposed to the box--and those who go on to grad school really, really need to have seen it, and in general need more simple general-equilibrium analysis than, as far as I can tell, many of them get these days. There was, clearly, a time when economics had too many pictures. But now, I suspect, it doesn’t have enough....

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Robber Barons: Hoisted from 1998/ The Honest Broker for the Week of February 2, 2016

J. Bradford DeLong (1998): Robber Barons:

First draft October 13, 1997; second draft January 1, 1998.


I. Introduction

'Robber Barons': that was what U.S. political and economic commentator Matthew Josephson (1934) called the economic princes of his own day. Today we call them 'billionaires.' Our capitalist economy--any capitalist economy--throws up such enormous concentrations of wealth: those lucky enough to be in the right place at the right time, driven and smart enough to see particular economic opportunities and seize them, foresighted enough to have gathered a large share of the equity of a highly-profitable enterprise into their hands, and well-connected enough to fend off political attempts to curb their wealth (or well-connected enough to make political favors the foundation of their wealth).

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Comment at the URPE-AEA Session: Causes of the Great Recession and the Prospects for Recovery: The Honest Broker for January 18, 2016

Notes for My Comment at the URPE-AEA Session: Causes of the Great Recession and the Prospects for Recovery

  • Presiding: Fred Moseley
  • David M. Kotz and Deepankar Basu: Stagnation and Institutional Structures
  • Robert McKee [Michael Roberts]: Recessions, Depressions, and the Rate of Profit
  • Mario Seccareccia and Marc Lavoie: Understanding the Great Recession: Keynesian and Post-Keynesian Insights
  • Discussants: Robert J. Gordon, Brad DeLong, David Colander

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What Have We Unlearned from Our Great Recession? (January 2011): The Honest Broker for the Week of January 11, 2016

Jan 07, 2011 10:15 am, Sheraton, Governor's Square 15 American Economic Association: What's Wrong (and Right) with Economics? Implications of the Financial Crisis (A1) (Panel Discussion): Panel Moderator: JOHN QUIGGIN (University of Queensland, Australia)

  • BRAD DELONG (University of California-Berkeley) Lessons for Keynesians
  • TYLER COWEN (George Mason University) Lessons for Libertarians
  • SCOTT SUMNER (Bentley University) A defense of the Efficient Markets Hypothesis
  • JAMES K. GALBRAITH (University of Texas-Austin) Mainstream economics after the crisis:

My name is Brad DeLong.

I am a Rubinite, a Greenspanist, a neoliberal, a neoclassical economist.

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The Grand Strategy of Rising Superpower Management: The Honest Broker for the Week of January 4, 2016

Xi jinping Google Search

Munk School Trans-Pacific Partnership Conference: Geopolitics Panel

Revised and Extended: I could now talk about the risks of the Trans-Pacific Partnership. You have already heard a lot about the risks in the previous session here. You have heard about dispute resolution and about intellectual property. You have heard about instituting largely-untested dispute resolution procedures in such a way that they will be very difficult indeed to amend or suspend or replace or adjust in the future.

We all know very well the eurozone’s ongoing experience. We remember that the euro single currency is in its origins a geopolitical project. We remember the origins of the eurozone at Maastricht—the decision of the great and good of Europe that something needed to be done to bind Europe more closely together in the wake of the absorption into the Bundesrepublik of the German East and the collapse of the Soviet Empire. The creation of a single currency was clearly something.

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Interview: Brad DeLong and Jan Hatzius: The Honest Broker for the Week of December 28, 2015

An interview with Jan Hatzius I did last fall:

Brad DeLong is a professor of economics at UC Berkeley, where his research focuses on financial crises and 20th century macroeconomics, as well as the political economy of monetary and fiscal policy. He has taught at Harvard University and served as Deputy Assistant Secretary of the Treasury for Economic Policy under the Clinton Administration. Below, he and Goldman Sachs Chief Economist Jan Hatzius discuss risks around liftoff and the structural downshift in rates.

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MOAR Musings on the Current Episteme of the Federal Reserve...: The Honest Broker for December 21, 2015

Paul Krugman's Respectable Radicalism politely points out (at least) one dimension along which I am a moron.

Let me back up: Here in the United States, the current framework for macroeconomic policy holds that the economy is nearly normalized, that further extraordinary expansionary and fiscal policy moves carry "risks", and that as a result the right policy is stay-the-course. I was arguing that the Economist Left Opposition demand--for substantially more expansionary monetary and fiscal policies right now until we see the whites of the eyes of rising inflatio--was soundly-based in orthodox lowbrow Hicks-Patinkin-Tobin macro theory. That is the macro theory that economists like Ben Bernanke, Janet Yellen, and Stan Fischer taught their entire academic careers.

Paul Krugman points out—politely—that I am wrong.

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The Melting Away of North Atlantic Social Democracy: The Honest Broker for the Week of December 14, 2015

Over at Talking Points Memo: The Melting Away of North Atlantic Social Democracy: Hotshot French economist Thomas Piketty, of the Paris School of Economics, looked at the major democracies with North Atlantic coastlines over the past couple of centuries. He saw five striking facts:

  • First, ownership of private wealth—with its power to command resources, dictate where and how people would work, and shape politics—was always highly concentrated.
  • Second, 150 years—six generations—ago, the ratio of a country’s total private wealth to its total annual income was about six.
  • Third, 50 years—two generations—ago, that capital-income ratio was about three.
  • Fourth, over the past two generations that capital-income ratio has been rising rapidly.
  • Fifth, the flow of income to the owner of the dollar capital did not rise when capital was relatively scarce, but plodded along at a typical net rate of profit of about 5% per year generation after generation.

He wondered what these facts predicted for the shape of the major North Atlantic economies in the 21st century. And so he wrote a big book, Capital in the Twenty-First Century **READ MOAR at Talking Points Memo

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Review of Ben Friedman's, "The Moral Consequences of Economic Growth": Hoisted from the Archives from Ten Years Ago/The Honest Broker for the Week of November 30, 2015

Ambrogio Lorenzetti Effects of Good Government in the city Google Art Project The Allegory of Good and Bad Government Wikipedia the free encyclopedia

Hoisted from the Archives from Ten Years Ago: Ben Friedman's, "The Moral Consequences of Economic Growth": Ten years ago my review of Ben Friedman's very nice The Moral Consequences of Economic Growth http://www.amazon.com/exec/obido/asin/0679448918/braddelong00 was up at Harvard Magazine http://www.harvardmagazine.com/:

Growth is Good: An economist's take on the moral consequences of material progress

Economists have always been very good at detailing the material consequences of modern economic growth. It makes us taller: we are perhaps seven inches taller than our preindustrial ancestors. It makes us healthier: babies today have life expectancies in the seventies, not the twenties (and more than half that improvement is not directly related to better medical technology, narrowly defined). It provides us with leisure: eight-hour workdays (rather than ‘Man’s work is from sun to sun, and woman’s work is never done.’) It provides us with enough clothing that we are not cold, enough shelter that we are not wet, and enough food that we are not hungry. It provides us with amusements and diversions, so that there is more to do in the evenings than huddle around the village campfire and listen yet again to that blind poet from the other side of the Aegean tell the only long story he knows—the one about Achilles and Agamemnon. As time passes, what were luxuries become, first, conveniences, and then necessities; what were utopian dreams become first luxuries and then conveniences; and what was unimagined even in wild fantasy becomes first utopian dreams and then luxuries.

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Are We Approaching Peak Human?: The Honest Broker for the Week of November 9, 2015

Are We Approaching Peak Human?

Uncharted: The Berkeley Ideas Festival :: Freight and Salvage Coffeehouse :: October 16, 2015

Brad DeLong and Peter Leyden

https://www.youtube.com/watch?v=7hAHsGr76tY :: Reinvent.net

Transcript edited for clarity and coherence

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On the Proper Size of the Public Sector, and the Proper Level of Public Debt, in the Twenty-First Century: The Honest Broker for the Week of October 26, 2015

Progress and Confusion cover2 pdf 1 page

Rethinking Macro Policy III

Jack Morton Auditorium, George Washington University :: April 15-16, 2015

It has now been seven years since the onset of the global financial crisis. A central question is how the crisis has changed our view on macroeconomic policy. The IMF originally tackled this issue at a 2011 conference and again at a 2013 conference. Both conferences proved very successful, spawning books titled In the Wake of the Crisis and What Have We Learned? published by the MIT Press.

The time seemed right for another assessment. Research has continued, policies have been tried, and the debate has been intense. How much progress has been made? Are we closer to a new framework? To address these questions the IMF organized a follow up conference on "Rethinking Macro Policy III: Progress or Confusion?", which took place at the Jack Morton Auditorium in George Washington University, Washington DC, on April 15–16, 2015.

The conference was co-organized by IMF Economic Counselor Olivier Blanchard, RBI Governor Raghu Rajan, and Harvard Professors Ken Rogoff and Larry Summers. It brought together leading academics and policymakers from around the globe, as well as representatives from civil society, the private sector, and the media. Attendance was by invitation only.

Wrap Up Video:


Session IV: Fiscal Policy in the Future Video:

Vitor Gaspar, Marco Buti, Martin Feldstein, Brad DeLong


J. Bradford DeLong

On the Proper Size of the Public Sector, and the Proper Level of Public Debt, in the Twenty-First Century

(Edited and revised version of: http://www.bradford-delong.com/2015/07/needed-more-government-more-government-debt-less-worry-the-honest-broker-for-the-week-of-july-12-2015.html)

Introduction

Olivier Blanchard, when he parachuted me into the panel, asked me to “be provocative.”

So let me provoke:

My assigned focus on “fiscal policy in the medium term” has implications. It requires me to assume that things are or will be true that are not now or may not be true in the future, at least not for the rest of this decade and into the next. It makes sense to distinguish the medium from the short term only if the North Atlantic economies will relatively soon enter a regime in which the economy is not at the zero lower bound on safe nominal interest rates. The medium term is at a horizon at which monetary policy can adequately handle all of the demand-stabilization role.

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Trekonomics Panel at New York Comic Con: The Honest Broker for the Week of September 28, 2015

: Trekonomics Panel at New York Comic Con (October 11, 2015)

I have been playing with FOLD, and having fun. Here I take the transcript of the New York Comic Con "Trekonomics" panel created by the extremely-productive-on-long-airplane-flights Izabella Kaminska, add to it, and annotate it...

Hey! Why hasn't the Financial Times paid for her to step back from Alphaville and turn her Beyond Scarcity series of weblog posts into a book?

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A Reader's Guide to the Secular Stagnation Debate: The Honest Broker for the Week of October 12, 2015

Over at Equitable Growth: The very sharp and energetic Peter Passell, who runs the Milken Institute Review these days, commissioned me to write a reader's guide to the secular stagnation debate. I set it up as a four-corner cage match--Bernanke, Rogoff, Krugman, and Summers--and I am proud of it. (But I have to offer apologies to those--Koo, Blanchard, Feldstein come most immediately to mind, but there are others--who have their own serious positions that are not completely and satisfactorily understood as linear combinations of the four I chose to be my basis vectors.) It is out:

J. Bradford DeLong (2015): The Scary Debate Over Secular Stagnation, Milken Institute Review 2015:IV (October) pp. 34-51:

Bernanke... says we have entered an age of a “global savings glut.”... Rogoff... points to the emergence of global “debt supercycles.”... Krugman warns of the return of “Depression economics.” And... Summers calls for broad structural shifts in government policy to deal with “secular stagnation.” READ MOAR

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Some Perhaps Cogent Thoughts on the Structure of the Fed, on Productivity Trends, and on Macroeconomic Policy: The Honest Broker for September 14, 2015

The highly-estimable Tim Duy is doing what he does best once again: worrying about the Federal Reserve's conduct of monetary policy:

Tim Duy: Some Thoughts On Productivity And The Fed: "Yellen is leaning in the direction of taking the productivity numbers at face value...

...and seeing low wage growth as consistent with the view that the productivity slowdown is real.... The unobserved component approach suggests that productivity growth decelerated to an annualized pace of just 0.82 percent by the second quarter of this year... [in line with] Fed staff estimates of potential GDP growth range from roughly 1.6 to 1.8 percent through 2020.... Yellen might think back to the 1990’s, when a surprise rise in productivity growth temporarily lowered the natural rate of unemployment... [and] reverse that logic now and think that the arguments for tighter policy are stronger....

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Musings on Thomas Malthus, the Hellenistic Age, the Loyal-Spirit Great Kings of Iran 550-330 BCE, and Other Topics: The Honest Broker for the Week of August 17, 2015

Today's Economic History: Paul Krugman muses:

Paul Krugman: SPQR And All That: "Adrian Goldsworthy’s The Fall of Carthage...

...All pre-industrial societies, I thought, were Malthusian... at the edge of subsistence... [and] a small elite, 5 or 10 percent... liv[ing] on resources extorted.... This model still seems to me to be pretty good for the Roman Empire. But at least as Goldsworthy describes it, the Roman Republic at the time of the Punic Wars was something very different... social solidarity... loyal allies... strong commitment from a large fraction of the population... military manpower... durability.... Are there any other examples in history like this? And how did they do it?

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A Now-Extended Non-Sokratic Dialogue on Webite Design: The Honest Broker for the Week of August 3, 2015

1280px Sanzio 01 jpg 1 280×993 pixels

Multiple Comments of the Day: What I, at least, regard as an interesting discussion in the comments to my A Very Brief Sokratic Dialogue on Website Redesign: From that post:

Platon: Five requirements?

Sokrates: Yes.... The stream... so... who want to either read what is new or to treat the site as a weblog--that is, have a sustained engagement and conversation with the website considered as a Turing-class hivemind--can do so.... The front-end... to give each piece of content a visually-engaging and subhead-teaser informative welcome mat.... The syndication... to propagate the front-end cards out to Twitter and Facebook.... The stock... a pathway... by which people can pull things written in the past... relevant... to their concerns today.... The grammar: The visually-interesting and subhead-teaser front-end... needs to lead the people who would want to and enjoy engaging with the content to actually do so.... [But,] as William Goldman says, nobody knows anything.

Platon: Is there anybody whose degree of not-knowingness is even slightly less than the degree of not-knowingness of the rest of us?...

Sokrates: My guess... http://www.vox.com--Ezra Klein and Melissa Bell and company--are most likely to be slightly less not-knowing than the rest of us....

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Needed: More Government, More Government Debt, Less Worry: The Honest Broker for the Week of July 19, 2015

Over at Equitable Growth: Introduction

Olivier Blanchard, when he parachuted me into this panel, asked me to “be provocative”.

So let me provoke:

My assigned focus on “fiscal policy in the medium term” has implications. It requires me to assume that things are or will be true that are not now or may not be true in the future, at least not for the rest of this and into the next decade. It makes sense to distinguish the medium from the short term only if the North Atlantic economies will relatively soon enter a régime in which the economy is not at the zero lower bound on safe nominal interest rates. The medium term is at a horizon at which monetary policy can adequately handle all of the demand-stabilization role. READ MOAR

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Why Did the Supreme Court Decide Yet Another ObamaCare Case Today?: The Honest Broker for the Week of June 28, 2015

This morning, Republican-appointed Supreme Court Chief Justice John Roberts wrote and five of his colleagues -- Democrat-appointed Breyer, Ginsburg, Sotomayor, and Kagan, and Republican-appointed Kennedy -- agreed that:

Section 18031 [of the Affordable Care Act--i.e., the ObamaCare Law--] provides that “[e]ach State shall . . . establish an American Health Benefit Exchange..." [But] if [a] State chooses not to do so, Section 18041 provides that the Secretary [of Health and Human Services] “shall . . . establish and operate such Exchange..." (emphasis added [by Roberts]).... The phrase “such Exchange”... instructs the Secretary to establish and operate the same Exchange that the State was directed to establish.... Black’s Law Dictionary 1661... (defining “such” as “That or those; having just been mentioned”).... State Exchanges and Federal Exchanges are equivalent—they must meet the same requirements, perform the same functions, and serve the same purposes...
A simple matter of black-letter law, no? The plain meaning of the phrase "such Exchange" means that anything legal that is true of a health-insurance exchange established by, say, the state of New York is also true of a health-insurance exchange established by the federal government for, say, the state of Florida if the state of Florida fails to establish its exchange, no?

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Discussion of Matthew Rognlie: "Deciphering the Fall and Rise in the Net Capital Share": The Honest Broker for the Week of June 14, 2015

Discussion of Matthew Rognlie: "Deciphering the Fall and Rise in the Net Capital Share"

http://www.brookings.edu/~/media/projects/bpea/spring-2015/2015a_rognlie.pdf

J. Bradford DeLong :: University of California at Berkeley

At FOLD: https://readfold.com/read/delong/discussion-of-matthew-rognlie-e43Cyu5q


Let me begin by thanking Matt Rognlie for doing some very serious and thoughtful digging into this set of factor-payments data. That digging leaves me in an ideal position for a discussant: There are interesting and important numbers. These numbers have not been put together in this way before. The author is wise enough not to believe he has nailed what the numbers mean to the floor. Thus I am in an excellent position to, if not add intellectual value, at least to claim a lavish intellectual-rent share of Matt Rognlie's product.

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New Economic Thinking, Hicks-Hansen-Wicksell Macro, and Blocking the Back Propagation Induction-Unraveling from the Long Run Omega Point: The Honest Broker for the Week of May 31, 2015

Over at Equitable Growth: In the long run... when the storm is long past, the ocean is flat again.

At that time--or, rather, in that logical state to which the economy will converge if values of future shocks are set to zero--expected inflation will be constant at about the 2% per year that the Federal Reserve has announced as its target. At that time the short-term safe nominal rate of interest will be equal to that 2% per year of expected inflation, plus the real profits on marginal investments, minus a rate-of-return discount because short-term government bonds are safe and liquid. At that time the money multiplier will be a reasonable and a reasonably stable value. At that time the velocity of money will be a reasonable and a reasonably stable value. Why? Because of the powerful incentive to economize on cash holdings provided by the the sacrifice of several percent per year incurred by keeping cash in your wallet rather than in bonds. And at that time the price level will be proportional to the monetary base. READ MOAR

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The Great Depression and the Great Recession in the North Atlantic: The Honest Broker for the Week of May 17, 2015

2015 McKenna Lecture :: Claremont McKenna College

Over at Equitable Growth: Back in 1959 Arthur Burns, lifelong senior Republican policymaker, Chair of the Council of Economic Advisers under President Eisenhower, good friend of and White House Counselor to President Nixon, and Chair of the Federal Reserve from 1970 to 1978 gave the presidential address to the American Economic Association. In it, he concluded that the United States and a lot of choices to make as far as its future economic institutions and economic policies were concerned. And, he said:

These... choices will have to be made by the people of the United States; and economists--far more than any other group--will in the end help to make them...

That's you. "Economists", that is. And I am glad to be here, because I am glad that you are joining us. For we--all of us in America--need you. Arthur Burns was right: you are better-positioned than any other group to help us make the right choices, at the level of the world and of the country as a whole, but also at the level of the state, the city, the business, the school district, the NGO seeking to figure out how to spend its limited resources--whatever. READ MOAR

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