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 […]

The Fed Governor Shortage

The New York Times had a pretty good article yesterday about the unfilled seats on the Federal Reserve Board and the possibility that the normally seven-person board may soon be down to three members. Based on my experience of having sat on the FOMC with the Board of Governors and the other Reserve Bank presidents […]

Falling Dollar? It Depends on the Index

When the Federal Reserve adopted a super easy monetary policy in response to the financial crisis and recession, many analysts, along with their predictions of hyper-inflation, predicted a collapse of the dollar. Furthermore, many advocated measures to strengthen the dollar in foreign exchange markets. It was widely believed that what we needed was not a […]

How the Fed Fuels the Coming Inflation

The title above is also the title of an opinion piece by Allan Meltzer in the May 7, 2014, print edition of the Wall Street Journal. Let me say that I am an acquaintance and long-time admirer of Alan Meltzer. He is the world’s foremost historian of the Federal Reserve. Also relevant, he is a […]

Plunging Productivity: The Worst News of All

In the glory days of the New Paradigm Economy in the late 1990’s, sustained, above-average productivity growth powered the virtuous cycle of faster output, input and employment growth with lower unemployment and inflation rates. Healthy increases in output per hour worked permitted higher wages for employees without comparable increases in unit labor costs for employers. […]