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 [...]
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 [...]
(Not All Details are Bad) The front page of today’s Wall Street Journal features a useful breakdown of the third quarter real GDP statistics. On the negative side, it shows that the strength in consumption spending benefited from various temporary government programs: primarily cash for clunkers and the first time home buyers’ credit. Those will [...]
“You can’t spend your way out of recession” is a sound bite heard almost every day on financial TV. Recently a guest commentator combined that sound bite with this one: “You can’t borrow your way out of debt.” Perhaps the second one was intended to divert our attention from the first one. Clever. Perhaps too [...]
(The Glass is Half Full; not Half Empty) The good news that employment declined less in August than in previous months is more important than the bad news of the rise in the unemployment rate. As I've noted here previously, the unemployment rate (from the household survey) had not kept up with employment losses [...]
Last year I said that I felt about a strong dollar like St. Augustine felt about chastity. "Lord, make me chaste, but not just yet." My version was, "Lord, give us a strong dollar, but not just yet." My point was that while a strong dollar had benefits in normal times it would make a [...]
My local newspaper this morning showed a picture of a guy standing in a line of job seekers at a Career Expo. He had his cap on backwards. If, in the unlikely event, he were contacted for the household survey of employment, they would ask him if he had a job. He would say no. [...]
Gross Domestic Product (GDP) and real GDP are generated by total U.S. spending on final goods and services. The U.S. national income accounts use the spending categories of Consumption (C) plus Investment (I) plus Government spending (G) plus Exports minus Imports (X-M). GDP = C + I +G + X – M. (These categories roughly correspond to [...]
Last Friday I was on The Kudlow Report to discuss the proposal that the Fed be audited in connection with the question of any inappropriate influence applied by Chairman Bernanke on Mr. Lewis of the Bank of America in connection with the Merrill acquisition. I may follow up in a separate post on some of the [...]
The collapse of confidence resulting from last Friday's bad employment report was overdone, not because the news wasn't that bad, but because expectations had gotten way too rosy. The search for green shoots with green-colored glasses had led to false hopes and denial– a false dawn if you will. The employment report reminded us that [...]