Bruce Bartlett: Inflationphobia, Part III: "To be sure, some inflationphobes never believed their own rhetoric; they were just trying to score political cheap shots or con unsophisticated investors into buying gold – from which the inflationphobe reaped a commission. But many others were sincere in their belief that higher inflation was inevitable. Intellectually honest inflationphobes need to explain why they were wrong and stop crying wolf or else it will be reasonable to assume they are simply cranks and crackpots."
Thomas Piketty and Gabriel Zucman: Capital is Back: Wealth-Income Ratios in Rich Countries 1700-2010: "How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970-2010 national balance sheets recently compiled in the top eight developed economies. For the U.S., U.K., Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise of wealth-income ratios in recent decades, from about 200-300% in 1970 to 400-600% in 2010. In e↵ect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600-700%). This can be explained by a long run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the = s/g Harrod-Domar-Solow formula. That is, for a given net saving rate s = 10%, the long run wealth-income ratio is about 300% if g = 3% and 600% if g = 1.5%. Our results have important implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares."
Noah Smith: Noahpinion: Is the interest rate on reserves [IROR] holding the economy back? No!: "Martin Feldstein claims to have solved the puzzle of why Quantitative Easing has not resulted in higher inflation…. The IROR is 0.25%. The T-bill rate is just over 0%. This means that the difference in the expected real rate of return between a world with an IROR and a world without an IROR is about 0.25%. In a world without an IROR, banks lend to any risky project with an expected real rate of return of S. In a world with an IROR, banks lend to any risky project with an expected real rate of return of S + 0.25%. Therefore, what Feldstein is asserting is that there is an absolutely huge number of risky projects whose expected return is between S and S+0.25. He is asserting that if we lowered the safe rate by 0.25%, a huge panoply of projects would then become worth investing in, and a huge torrential flood of reserves would be released into the economy, boosting inflation and lowering unemployment in the process. Does that seem reasonable? To me, that does not seem reasonable in the slightest."
Matt Seidel: ‘A Sustained Sense of Violation’: When Bad House Guests Invade Literature: "The Western literary tradition is indebted to the disaster caused by a bad guest. Aided by some divine meddling, Paris performs the consummate indignity against his host Menelaus by absconding with his wife. Much strife and narrative ensues: the broken wall, the burning roof and tower, and the epic poems and tragic dramas from which the canon emerges. Bad guests—a band of seducers, thieves, hapless slobs, and madmen—are thus at the foundation of our literature. They populate works from horror stories to comic masterpieces like Kingsley Amis’s Lucky Jim, whose protagonist, despite his “enforced avoidance of anything ambitious,” shows at least some initiative in trashing Professor Welch’s guestroom with a cigarette and a razor blade."
John Wilford: First New World Fort Was Spain’s: "In the Appalachian foothills of western North Carolina, archaeologists have discovered remains of a 16th century fort deep in the interior of what is now the United States…. Researchers had known from Spanish documents about the two expeditions led by Juan Pardo from the Atlantic coast from 1566 to 1568. A vast interior seemed open for the taking. This was almost 20 years before the failure of the English at Sir Walter Raleigh’s 'lost colony' near the North Carolina coast…. One of Pardo’s first acts of possession, in early 1567, was building Fort San Juan in an Indian town almost 300 miles in the interior, near what is known today as the Great Smoky Mountains. It was the first and largest of six forts the expedition erected on a trail blazed through North and South Carolina and across the mountains into eastern Tennessee…. Spanish records report that about 18 months after Fort San Juan’s construction, Indians in the region rebelled and put the torch to them all, killing all but one of the soldiers in the garrisons. Pardo, who had returned to his base at Santa Elena on the coast at present-day Parris Island, S.C., lived to return home to Spain."
Will Wilkinson: Libertarian populism: Unpopular and impolitic: "THE idea of 'libertarian populism' has been frequently floated by conservative writers such as Tim Carney and Ben Domenech as a potentially promising political strategy for the right…. Perhaps it is unfair to judge the idea based on an analysis of Mr Paul's budget plan. Paul Krugman's seething hostility toward the ideas of Paul Ryan, a Republican congressman from Wisconsin, may have even less to do with it. An indignant Nick Gillespie, the libertarian editor-in-chief of Reason.com, chides Mr Krugman for ignoring Mr Carney's credibly populist ideas…. Ramesh Ponnuru of Bloomberg… complain[s] that… proposing to abolish America's import-export bank is not exactly a scintillating political idea, and that cutting payroll taxes is probably less popular than the programme they are meant to finance. Yet I don't think this gets to the core…. Right-wing populism in America has always amounted to white identity politics, which is why the only notable libertarian-leaning politicians to generate real excitement among conservative voters have risen to prominence through alliances with racist and nativist movements…. Political parties are coalitions of interests, and the Republican Party is the party of the rich, as well as the ideological champion of big business. A principled anti-corporatist, pro-working-class agenda stands as much chance in the GOP as a principled anti-public-sector-union stance in the Democratic Party. It simply makes no sense."
Tim Noah: The sequester isn’t hurting you? Think again | Oscar Wilde: An Ideal Husband | Jeff Kleintop: Strongest Bull Market Since World War II | Senator Wyden on Domestic Data Collection | Dylan Matthews: ‘Orange Is the New Black’ got you upset about prison? The real Piper explains what to do about it | Man creates realist body-cut-in-two illusion and scares people | Archaeology: largest Hellenistic mosaic found in Calabria | Drew Linzer: Dynamic Bayesian Forecasting of Presidential Elections in the States | Nate Silver: The White House is not a metronome |