Author Archive

More Investment and Exports in Second Quarter GDP–Just What We Needed

The writer, Gore Vidal, is reported to have said that he didn’t have much to say but he had lots to add. He was referring to his penchant for editing, rewriting, and subsequent drafts of his original work. That applies to the third draft of the second quarter GDP numbers released yesterday. The growth rate […]

The Timing Is About Right for King Dollar

Earlier in the recovery from the Great Recession, Larry Kudlow and most of his TV guests used to call for a strong dollar, ”king dollar,” in fact. A healthy economy needs a strong dollar. My response was that yes, in normal times, a strong dollar is good, but these aren’t normal times. We are trying […]

“Ignore the Low Inflation and Strong Dollar. The Experiment Isn’t Over Until Things Turn Bad.”

One of my favorite newspaper clippings is an op ed piece in the WSJ by Art Laffer in June 2009 predicting high inflation and interest rates resulting from the Fed’s easy money policy. The culprit specifically was the monetary base shown in an accompanying chart taking off like a rocket. I think enough time has […]

Money Hoarding

A recent piece published by the St. Louis Fed concluded that inflation has been low because of a sharp decline in the velocity of money reflecting money hoarding by the public. This conclusion got a great deal of attention by the talking heads on financial tv. The problem is that the conclusion is very misleading […]

Why Has the Texas Economy Outperformed? A Surprising Answer From Paul Krugman

Years ago, when I was still at the Dallas Fed and long before Governor Perry had become the longest-serving Governor of Texas, he invited me to Austin for lunch. I expected it to be with his staff, but it was just him and his chief of staff. He asked me to update him on the […]

JOLTS Are Looking Good

Jolts are not an external shock to the economy. Rather, Jolt is an an acronym for job openings and labor turnover and is prominent on Chairman Yellen’s labor market dashboard. That’s good because Jolts are looking good. The first Friday of the month employment changes are net numbers which obscure much of the dynamics of […]

The Fed’s Vice Chairman, Stanley Fischer, States the Obvious and Creates a Buzz

In a speech in Sweden, apparently only the second one since becoming Vice Chairman of the Fed’s Board of Governors, Mr. Fischer said that both the U.S. and the global recoveries have been disappointing. Well, duh! That load of insight had people talking all day today on financial TV, including me on CNBC. I take […]

Central Banker Heaven

I have finally reached the point where people are quoting me from the old days, but they have no idea they are doing so. They don’t know who I am (or was) so they don’t know it’s me they are quoting. Ten years after retiring from the Federal Reserve, I have reached exalted status of […]

Our International Trade Deficit–Down This Month, Up This Year

A graph of the U.S. international trade deficit in goods and services over the past two years by the Bureau of Economic Analysis shows no discernable change, although the surrounding commentary says that the deficit actually increase by $5 billion from June 2013 to June 2014. The latest month, however, showed a reduction of the […]

The Employment Cost Index–Not Inflationary

The Economic Cost Index for the second quarter got quite a bit of attention last week, probably more than it deserved. It increased 0.7 percent, up from the first quarter increase of below 0.4 percent. it was taken by many commentators on the financial networks to portend higher inflation. Indeed, many of them referred to […]