More on the Evolution of the Federal Reserve at 100

My previous post (on December 23) described the origins of the Federal Reserve System, which just celebrated its 100th anniversary. Centralizing bank reserves in the central bank, appropriately called the Federal Reserve System because of that was designed to prevent cash or reserve shortages in one or more banks from being transmitted to other banks […]

Why Did They Call It The “Federal Reserve” System?

One hundred years ago today President Wilson signed the Federal Reserve Act, thus creating the Federal Reserve System, our central bank. It wasn’t called the Bank of the United States, following the lead of the Bank of England, and it wasn’t called the Central Bank of the United States. Why such an odd name, the […]

The Broken Windshield Fallacy

In the Texas section of today’s New York Times (p. 33A) under a four column picture of a fellow installing a new windshield is the headline “Big Rocks, Torn-Up Roads, Fragile Glass.” A sub-headline reads “An Oil Boom Can Be Good for All Kinds of Entrepreneurs.” One hardly has to read the article to know […]

3.6 Percent Is Better Than 2.5 Percent, I Guess

On several occasions when GDP growth has been based primarily on inventory accumulation, I’ve felt compelled to call attention to the difference between inventory growth and growth in the more fundamental categories of fixed investment, consumption or exports. Inventory increases, which count in the GDP numbers as a form of investment, can be good or […]


I was in the parking lot of the C-J building at the University of Georgia when I heard. I had given the President my first vote as a new 18-year old freshman three years earlier, following the lead of my dad who said that the democrats were for the little man. He considered himself a […]

China’s One-Child Policy

The recent changes in China’s one child policy brought back some memories. On my first visit to mainland China several years ago to attend a government sponsored conference, I spent several additional days in Beijing and Shanghai visiting with officials of the central bank, the foreign exchange authority, university officials as well as speaking to […]

Rethinking Quantitative Easing

First, it’s time to address the term “Quantitative Easing” once again. It originated when the Fed pushed its target federal funds rate down to near zero, and people said, that’s it. That’s all the arrows in the Fed’s quiver. No, even after short-term rates reach bottom, you can still add to the quantity of money […]

The Rose Colored Employment Report

Last Friday, the labor department reported an increase in payroll employment of 204,000 in October along with upward revisions in the previous two months, and the stock market celebrated. The Dow rose 167.80 points on Friday, or 1.08 percent. This good news came from the Labor Department’s establishment survey. Its household survey was another story. […]

Third Quarter GDP–Less Than Meets the Eye

As is so often the case recently, the headline GDP number for the third quarter is less impressive once we look under the hood at the components. Real GDP increased at a 2.8 percent rate in the first estimate of the third quarter, a welcome increase from the 2.5 percent rate increase in the second […]

Back to the Fifties

The Lord works in mysterious ways. Just as the tiresome inanity of the government shutdown/debt ceiling saga was about to take a permanent toll on my psyche, relief came from an unexpected source. A parking lot attendant saw fit to change the channel on my Sirius XM radio from CNBC, where it had been for […]