Fed Up story

Fed, Eager to Show It’s Listening, Welcomes Protesters by Binyamin Applebaum

Baker and DeLong on currency values

The Washington Post's TPP Challenge by Dean Baker

Since adjusting currencies are an essential part of a "free-trade" regime, a real trade deal should have rules against currency management. While the exact provisions are more than I have time for just now, Fred Bergsten (the president emeritus of the Peterson Institute for International Economics) and his colleague Joe Gagnon give us a good start here.

 Must-Read: Very good thoughts in a Kaleckian mode...
by DeLong

It is very odd. Back in 1988-1994, when I was a deficit hawk, there was reason to be: interest rates were relatively high, bad news about future deficits appeared to no longer strengthen but to slightly weaken the dollar--suggesting that the hot-money Unconfidence Fairy and the Bond Vigilantes were near if not at hand--and there was a large disconnect between the revenues and the spending that the laws in place would generate.

And now?

Not.

Interest rates are lower than anyone thought they would see in many lifetimes. The dollar's value is not in any sense threatened by deficit news. And the thirty year fiscal gap is 1.7% of GDP--a number that normal politics can deal with--and in a world of safe asset shortage many not be too high but rather, too low (and improperly backloaded).

but none of the non-Keynesian economist professional deficit hawks have shifted sides since 1992, and a new generation has grown up and started getting their deficit-panic welfare...

Duncan Weldon: Negative Yields, the Euthanasia of the Rentier & Political Economy:

I don’t understand the political economy that has brought us tight fiscal & easy money--it simply isn’t creating enough winners to be sustainable...

Rising asset values certainly have created a block of beneficiaries.... But... with gilt yields at around 0.5%... years of saving isn’t worth as much as they hoped... [and] owning a more valuable house will [not] be seen as adequate.... This cohort will get bigger each year....

Whilst the macroeconomic argument for more active fiscal policy has always been strong, the political economy conditions that may drive it are becoming clearer. Aggressive deficit-financed state spending may (unusually) create two sets of winners--the workforce who benefit from faster growth, tighter labour markets and stronger real income growth and the mass of (relatively) small scale rentiers who would benefit from higher rates.... [But the] voting public don’t seem particularly keen on deficits. I’ve wondered myself recently--whatever happened to deficit bias? It may be that, as Eric Longeran has argued, this is the best argument for helicopter money. If fiscal policy makers won’t do what is required, then perhaps monetary policymakers can.

And Paul Krugman: