Author Archive

Happy Birthday Milton Friedman

Today is the 102 anniversary of the birth of America’s greatest economist, Milton Friedman. He was not only the “fastest gun in the West” as my professor and Friedman’s student, Richard Timberlake, put it, referring to his intellectual firepower and debating skills. He was also one of the most influential in changing our lives for […]

My New Paradigm Frog

The highlight of my almost 14 year tenure as President of the Federal Reserve Bank of Dallas and member of the FOMC was the “new paradigm” economy in the second half of the 1990s. During that time, I often used the analogy of boiling a frog to illustrate the positive changes in the economy that […]

Whoopie GDP

Well, real GDP finally hit a 4 percent growth rate in the second quarter; so, naturally, the Dow ended the day down. This is why I don’t claim to be a forecaster, and, when I’m forced into it, I try to update it often. While I could quibble—for instance, inventory accumulation accounted for 1.66 percentage […]

The President’s Minimum Wage Proposal

This morning I heard President Obama bragging on the June jobs report. Moving on to what further could be done to improve the jobs situation, he mentioned his proposal to increase the minimum wage. I’m sorry I have to paraphrase here, but I couldn’t pull over and write down his exact words; so I ask […]

Go Economy Go!

This morning’s employment report showed an old-normal, wide-spread increase in payroll employment of 288,000, with nice upward revisions in April and May totaling 29,000 jobs. This raised the average employment gains over the past three months to 272,000. The unemployment rate in June fell to 6.1 percent from 6.3 percent in April and May. The […]

Exporting Energy

I’m afraid the phrase “too soon old, too late smart” applies to me. To that should be added “too late informed.” I’m always discovering new information about topics I thought I knew thoroughly. Take Jerry Lee Lewis, for example. I’ve been a lifelong fan, and he is still my go-to guy when I seek nostalgia […]

The Foreign Trade Imbalance

People like me, who studied economics in the old days, learned that foreign trade imbalances were financed by passive capital flows, but that market forces would tend to correct significant trade imbalances, either through changes in the exchange rate or equivalent changes in internal income, output, prices, etc. However, sometime between then and now, capital […]

The ECB’s Negative Interest Rate

Among other easing measures, the ECB has cut the interest rate on its deposit facility to minus 1/10 of one percent, from an implied rate of zero. This is new territory and I’m eager to see how it works out. At first blush it seems odd to charge banks for depositing money at the central […]

Monetarist vs. Keynesian: Velocity Is the Key

One of the neat (in my opinion) things I used to do in elementary macro or money and banking class was to show how you can explain the basic equalities of the macro economy using two languages: the language of the equation of exchange (MV=PQ) and the Keynesian language built into our national income accounts […]

The Ted Spread

Yesterday, I attended an excellent conference on monetary policy at the Bush Library—Bush 43 that is. While all the participants were excellent, the big draw was former Chairman, Ben Bernanke, in the flesh. Chairman Bernanke was interviewed by President Bush’s former Chief of Staff, Josh Bolton, who was in on some of the conversations between […]