Isn’t it ironic that the Greek debt crisis depressed the Euro, whose nations needed more stimulus to their faltering economies, and boosted the dollar in a flight to quality that will reduce aggregate demand in the struggling U.S. economy?
“In the end, businesses had to choose between lowering wages and shutting down. Often, they shut down.” Let’s see now. Government spending is out of control. So are budget deficits and debt generation. The taxpayers are in revolt. Tea parties are dominating the political scene. Yet, despite all this, we get an announcement that government [...]
I’m afraid I’m about to state the obvious again. Most of you already know what I’m about to say, but as I listen to pundits talk about Greece on daytime TV it’s becoming obvious that not everyone does. The issue is sovereign debt: when is it a problem and when does it become a crisis? [...]
Getting Curiouser and Curiouser Many mistakes were made during the Great Depression of the 1930s, and we seem determined to repeat all of them. They include starting a trade war with Smoot-Hawley, raising marginal tax rates in the middle of the depression, tightening monetary policy through misinterpretation of the meaning of excess bank reserves, [...]
A couple of people have mentioned to me that the TARP repayments are all over the news and suggested that I write about it. My response has been that I didn’t know how to avoid saying I told you so. I’ve written and said often that TARP would produce a profit for taxpayers, or only [...]
I ended my previous post, Jobless Recoveries: A Look Back, by raising a question; how does the same monetary policy that fosters disinflation in the general economy foster an inflationary bubble in only one sector? By easing monetary policy, the Fed intended to address a very weak labor market, a jobless recovery that threatened to [...]
The other day a top-notch interviewer on financial radio was paying more than his usual deference to his distinguished guest on the subject of health care. The guest summed things up with an analogy. He said the case for requiring young people who don’t want health insurance to purchase it anyway was the same as [...]
Notes made for remarks to the Federalist Society on November 13, 2009 It’s an honor to be on this panel with all these distinguished people. But I’m afraid I was invited because I’m considered soft on bailouts. That’s a terrible reputation to have. What is it they say about poker? “If you look around the [...]
The headline in today’s Wall Street Journal says “World Tries to Buck Up the Dollar.” The headline writer no doubt savored the opportunity to use “buck” for its double meaning even though it might have been more accurate to say “World Tries to Hold Down It’s Currencies.” That would have gotten closer to the world’s [...]
Credits in the U.S. balance of payments give rise to a demand for dollars. Debits reflect the supply of dollars. Together, they determined the exchange rate for the dollar. So far, so good. Everybody knows that. Then why is it that virtually all the commentary on the dollar on financial TV and in blogs fails [...]