Category: Recession

Limited Shorts

I went to the movies this afternoon and saw, Limitless—PG-13 of course—to see how the main character deals with a serious case of writer’s block. Not very well, since pharmaceuticals were involved. However, I recently tried one of those little 5-hour energy shots without apparent adverse consequences. It’s not that there’s no news to write […]

Monetary Policy Easing is Nothing to Fear

Labels Matter According to Bill Shakespeare (my post-election populist style) “a rose by any other name would smell as sweet.” I’m not so sure. Exhibit A is the current hoopala over QE2, or the Fed’s second round of so-called quantitative easing. The inevitable comparison to a huge ocean liner congers up images of draconian measures—a […]

Financial Reform:Transparency is the Enemy

Ogden Nash said that progress is good if it isn’t overdone. I’ve long felt the same about transparency as my following verse indicates. Transparency is a current central banker cause But it reminds me too much of sausages and laws I think translucence, like my shower door, is a good compromise It lets in the […]

Purity, Obscurity and the Slaves of Defunct Economists

The Fed’s lending and the Treasury’s investments in banks will not cost taxpayers anything. Unfortunately, that can’t be said for the government’s stimulus program to create jobs. That is old fashioned government spending: Money spent, money gone. A large stimulus program was needed to cushion the recession and reduce job losses. But the program outsourced […]

Bailouts, Failures, and Death Panels

They are now making jokes about death panels — not to pull the plug on Grandma in the reformed health-care regime, but to pull the plug on banks and other large institutions posing risk in the reformed financial regime. Preventing failure doesn’t seem to be the goal. Triggering and punishing failure are the goals. The […]

Supply Side Employment Growth

Some of my supply side friends are probably perturbed with me for my view that, while their model may be appropriate for normal times, Keynes is relevant during a period of inadequate demand. In fact, I view his General Theory as a guide for getting out of a recession or liquidity trap. The focus now […]

The Yuan, the Dollar: Repeating the Policy Mistakes of the Great Depression

In several recent speeches, I’ve mentioned that our policy makers seem intent on repeating the policy mistakes of the depression. I mention the clamor for the Fed to withdraw or mop up excess reserves even though bankers feel the need to hold them without significant incentive. Doing that very thing during the depression caused bank […]

The Fed’s Exit Strategy and Excess Reserves

As I pointed out in my last post on inflation, the expansion of the Fed’s balance sheet assets has been largely offset on the liability side of its balance sheet by excess reserves held by banks. Those reserves are assets to the banks and liabilities to the Fed. They are “excess” reserves because they exceed the […]

Inflation: Why I Don’t Expect It

It’s taken for granted in some circles that a sharp acceleration of inflation is the inevitable result of the monetary and fiscal policies of the past year or so. I disagree for the following reasons. *While budget deficits have grown dramatically, in absolute terms and as a percentage of GDP, for the most part they […]

Monetary Policy: Not Just the Federal Funds Rate

Last week I argued that the “considerable period” language in the FOMC’s post-meeting announcements is not a good idea. It robs the FOMC of flexibility it might need, and it gives the markets too much near term certainty. That does not mean that I think the FOMC should tighten monetary policy immediately. Monetary policy is […]