I guess in some ways it’s a race against the clock. What the optimists are really saying is the equivalent of the old eighties neo-Keynesian notion of filling in the troughs. That’s what government spending and monetary “stimulus” intend to accomplish, to limit the downside in a bid to buy time. Time for what? The economy to heal on its [...]
So much of the growth scare scenario relies upon China’s willingness to end it. By count of conventional Economics, there cannot be a case where a country like China just sits back and lets the economy fall into (further) decay. The argument will always devolve into some form of debate as to economic potential, but surely in a place like [...]
It is more than interesting that Herbert Hoover has become the modern ideal of the liquidationist. In these very trying times, one is either that or a Keynesian, Hoover’s supposed opposite, an interventionist who believes there is no good in any recession or deflation at any time. To “prove” the superior foundations of the latter, the ideological associates of that [...]
There was a robust debate inside economics earlier in the recovery period over Okun’s “Law”, the seemingly stable relationship between the unemployment rate and real GDP. The Great Recession was stunningly large in terms of the skyrocketing unemployment rate given that initial estimates for real GDP were bad but not as catastrophic. This was more than a theoretical problem for [...]
If there is any doubt as to the confusion inside the FOMC, one needs only to examine its models. The latest updated projections make a full mockery of both monetary policy and the theory that guides it. Ferbus and the rest don’t buy the labor market story, either, which is why the Fed can only be hesitant at best about [...]
I know too well that the current thinking on the economy and labor is that any activity is “good” activity, and thus better something happens than resources remain idle. I think that notion is easily disproved by common sense, as waste is not just “wrong” but harmful over the longer run. But economics is impervious to anything related to the [...]
The justification of ZIRP/QE has been largely based, in the real economy outside subsidizing bank lending, on the premise that low interest rates stir additional or incremental borrowing. The distortion of the domestic economy in the United States since the mid-1970’s toward consumption in the household sector has been a function of this assumed dynamic. It remains the textbook approach [...]
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