"It is easy to confuse what is with what ought to be, especially when what is has worked out in your favor."
- Tyrion Lannister
"Lannister. Baratheon. Stark. Tyrell. They're all just spokes on a wheel. This one's on top, then that's ones on top and on and on it spins, crushing those on the ground. I'm not going to stop the wheel. I'm going to break the wheel."
- Daenerys Targaryen
"The Lord of Light wants his enemies burned. The Drowned God wants them drowned. Why are all the gods such vicious cunts? Where's the God of Tits and Wine?"
- Tyrion Lannister
"The common people pray for rain, healthy children, and a summer that never ends. It is no matter to them if the high lords play their game of thrones, so long as they are left in peace. They never are."
- Jorah Mormont
"These bad people are what I'm good at. Out talking them. Out thinking them."
- Tyrion Lannister
"What happened? I think fundamentals were trumped by mechanics and, to a lesser extent, by demographics."
- Michael Barone
"If you want to know what God thinks of money, just look at the people he gave it to."
- Dorothy Parker
Wednesday, November 22, 2017
Sunday, November 19, 2017
Thursday, November 16, 2017
Wednesday, November 15, 2017
Saturday, November 11, 2017
Friday, November 10, 2017
Monday, November 06, 2017
Sunday, November 05, 2017
In a September 2015 email obtained by The Washington Post, a lawyer from Perkins Coie, a law firm representing both the DNC and the Clinton campaign, wrote the Sanders campaign with a copy of what was presented as a “standard joint fundraising agreement.”Democrats express outrage over allegations of early party control for Clinton in 2016
Donna Brazile: I considered replacing Clinton with Biden as 2016 Democratic nominee
Saturday, November 04, 2017
Politics, though, was not the focus of the Third Way interviewers, who believed there was more to be gained by asking neutral, open-ended questions. In accordance with Third Way’s ideology, they believed that political partisanship was not most people’s primary concern. But sometimes the Wisconsinites brought up politics anyway.
At the Labor Temple Lounge in Eau Claire, nine gruff, tough-looking union men sat around a table. One had the acronym of his guild, the Laborers International Union of North America, tattooed on a bulging bicep. The men pinned the blame for most of their problems squarely on Republicans, from Trump to Governor Scott Walker. School funding, the minimum wage, college debt, income inequality, gerrymandering, health care, union rights: It was all, in their view, the GOP’s fault. A member of the bricklayers’ union lamented Walker’s cuts to public services: “If we can’t help each other,” he said, “what are we, a pack of wolves—we eat the weakest one? It’s shameful.”
But their negativity toward Republicans didn’t translate to rosy feelings for the Democrats, who, they said, too frequently ignored working-class people. And some of the blame, they said, fell on their fellow workers, many of whom supported Republicans against their own interests. “The membership”—the union rank-and-file—“voted for these Republicans because of them damn guns,” a Laborers Union official said. “You cannot push it out of their head. A lot of ‘em loved it when Walker kicked our ass.”(h/t Chapo Trap House)
Friday, November 03, 2017
Monday, October 30, 2017
McCulley: I think it should be a collaborative venture between the Fed and Congress. Yes, I used the word “collaborative,” which I think applies in a more general way to the relationship between Congress and the Fed.
The Fed’s operational independence is grounded in the thesis that the legislature cannot be trusted with monetary policy, as the electoral process is inherently biased to inflation, of overstimulating the economy with too much spending relative to taxation, running inflationary budget deficits.
That simply has not been the case for a long, long time. Yes, we’ve had large deficits, but inflation has been too low, not too high. Thus, I’m not convinced by the argument that strict Fed independence is always and everywhere needed to discipline the fiscal authorities’ inflationary bias.
Kelton: What about policy today?
McCulley: If President Trump wants to try to boost real growth from 2 percent to 3 percent, there is no reason that the Fed should actively push back. That doesn’t mean that the Fed shouldn’t or wouldn’t respond if such an acceleration in growth were to finally drive unemployment low enough to generate a loud wage and inflationary response.
My point is that there is no reason for the Fed to prevent the “experiment,” if Mr. Trump and the Republican Congress want to run it.
Sunday, October 29, 2017
Friday, October 27, 2017
Thursday, October 26, 2017
Tuesday, October 24, 2017
Sunday, October 22, 2017
Saturday, October 21, 2017
Friday, October 20, 2017
Thursday, October 19, 2017
Monday, October 16, 2017
The Peterson Institute conference on “Rethinking Macroeconomic Policy”, which we alerted readers to last week, was well worth watching. The marvel of the internet is that virtuous event organisers such as Peterson can give global access by posting online the agenda, papers and recordings of the presentations, including the panel discussions, which were as interesting as the presentations themselves.
I recommend everyone to take a look — but with a disappointment spoiler up front. For while some of the world’s most brilliant economists took part, which alone makes it worth a view, the promised “rethinking” was often more incremental (even marginal) than radical.
The opening paper and presentation by Olivier Blanchard and Larry Summers is a tour de force in terms of stating where the debate stands today in a range of key policy areas. They were followed by former Federal Reserve chair Ben Bernanke, who headlined the panel on monetary policy (here is his paper and video recording of his presentation).
I will focus here on monetary policy issues (the conference covered many other things as well).
As my colleague Chris Giles expertly laid out last week, there is a crisis in central bank theory and practice, which can be briefly summarised as follows: western economies are far from where central bankers thought they would have been by now, still either below capacity or not convincingly at full capacity. Worse yet, they do not understand why. In this context, one might have hoped for some deep soul-searching in a conference of this calibre.
In terms of concrete “deliverables”, there were few new proposals for how to do monetary policy differently. The main contribution was Bernanke’s discussion of complementing the current framework of targeting inflation rates by targeting price levels. Targeting levels rather than rates of change has the advantage of built-in “memory”: in a situation where prices have fallen short of expectations, like today, price level targeting (PLT) would have the central bank aim to make up for lost ground, and thus command more aggressive monetary policy.
But as Bernanke pointed out, in the reverse situation of an inflation overshoot — say, because of a one-off rise in commodity prices or a fall in the exchange rate — PLT would require the central bank to slow down economic activity to keep inflation below target for a while. That would be neither desirable nor credible. His conclusion is that the current framework should be complemented with an announcement in normal times that PLT would be introduced if, and for as long as, interest rates were at zero, and suspended otherwise. This would no doubt improve on the current situation. But it feels little more than a tweak.
There was surprisingly little discussion of national income level targeting — where a central bank targets a path for the nominal size of an economy rather than prices — which does not have the same problem as PLT. Nor was there much engagement with the problem with all proposals for new targets that would be more stimulative, which is that central banks have failed to meet the targets they currently have. If they cannot engineer 2 per cent inflation rates today, why should their commitment to achieve a price level or national income target be any more credible?
Another disappointment on the discussion was how the top of the economics profession takes for granted the impossibility of more negative nominal interest rates. Blanchard and Summers capture the professional consensus when they write that “there is little question that the binding lower bound on short-term nominal interest rates (zero, or slightly negative) limited the scope of monetary policy to sustain demand during the recovery”.
But the fact is that those central banks that have tried to go negative have had no problems doing so, and that techniques for limiting a rush into physical cash exist. There is so far no empirical basis for believing in a near-zero lower bound on central bank interest rates. One would have hoped the luminaries of the field would have been more adventurous in exploring the use of more steeply negative rates.
Most profoundly, there was little sense of urgency that more radical rethinking was needed. Adam Posen, who convened the conference, was one of few who made a point out of this. He suggested that it was both ahistorical to think of asset purchases by central banks as unconventional (which implies that central bank action has been less innovative since the financial crisis than central bankers like to claim) and that more radical policy change was needed.
The closest to a proposal for how to do monetary policy differently was Bernanke’s proposal for pre-announced PLT in predefined exceptional times. But when Blanchard asked panellists whether, if conditions are “back to normal” 10 years from now, they thought central banks would think any differently about monetary policy, the shared expectation seemed to be that a normalisation of the economy would and should lead to a normalisation of policy thinking too, but with a preparedness for a possible return to abnormal situations.
That view is oddly forgetful of recent history. It does not acknowledge that the failure to forecast the crisis could indicate that something is deeply wrong in how we think about monetary policy even in normal times. Even if one tacks on a precommitment to do things differently should a new deflationary crisis occur, à la Bernanke’s proposal or some other readiness to return to “unconventional” tools, that largely presupposes that we have by now figured out how to deal with protracted slow demand growth with very low interest rates.
In other words, expecting future monetary policy to be largely as before, with some newly exploited crisis tools in the toolbox, rather takes as given that monetary policy has performed close to the best it could have done both before and after the crisis. That is, if nothing else, a self-flattering view for monetary policymakers to take. But it is not very reassuring. For central bankers, as for everyone else, admitting one has got things badly wrong is a prerequisite for doing better.
Sunday, October 15, 2017
THURSDAY, OCTOBER 12, 2017
I think it will be the forgotten depression. The triumphalism of neoliberal capitalism and Fed independence made this unpossible, and the unquestionable stewardship of Obama/Geithner rendered it moot. I'm not sure that even historians - decades later, as is their privilege - will grapple with this fact.
Saturday, October 14, 2017
Friday, October 13, 2017
Women's March on making Bernie opening speaker: “We all know how busy women leaders are”
Thursday, October 12, 2017
Monday, October 09, 2017
Sunday, October 08, 2017
Friday, October 06, 2017
For more than a decade the Fed chair has been a distinguished academic economist — first Ben Bernanke, then Janet Yellen. You might wonder how such people, who have never been in the business world, who have never met a payroll, would deal with real-world economic problems; the answer, in both cases: superbly.
In particular, both Bernanke and Yellen responded effectively to a once-in-three-generations economic crisis despite constant heckling from back-seat drivers in Congress and on the political right in general. And their intellectual and moral courage has been completely vindicated by events.
Monday, October 02, 2017
Across Europe, social democratic or center-left parties are in decline. In elections this year in France and the Netherlands, the socialist and labor parties did so poorly that many question their future existence. Even in Scandinavia, considered the world’s social democratic stronghold, long-dominant parties have been reduced to vote shares in the high 20s and low 30s.
Even if you don’t support the left, this should be cause for concern. Social democratic parties were crucial to rebuilding democracy in Western Europe after 1945. They remain essential to democracy on the Continent today.
During the postwar years, social democratic parties acknowledged capitalism’s upsides and downsides. In contrast to Communists, center-left parties recognized that markets were the most effective engine for producing economic growth and prosperity. But in contrast to classical liberals and many conservatives, social democrats did not embrace markets wholeheartedly. Instead, the center-left insisted that it was possible — indeed, necessary — for governments to cushion markets’ most destabilizing effects. Capitalism would be kept subservient to the goals of social stability and solidarity, rather than the other way around.
By the late 20th century, this distinctive message had been mostly discarded. Instead, the left became dominated by two camps.
During the postwar decades, social democracy promoted solidarity and a sense of shared national purpose so as to avoid the fractures that undermined European democracy during the late 19th and early 20th centuries. In contrast to Communists, who exclusively focused on class conflict, the center-left built bridges between workers and others. And in contrast to the individualism of classical liberals and many conservatives, the center-left’s emphasis was on citizens’ obligations to one another and the government’s duty to promote the good of society.
By the late 20th century, however, this understanding of social democracy’s goals had been largely abandoned. Some failed to address concerns generated by social and cultural change, either out of lack of understanding or out of a hope that solving economic problems would make them disappear. Others uncritically embraced these changes, promoting both cosmopolitanism and the interests and cultural distinctiveness of minority groups. This camp became associated with the politically deadly idea that strong national identities were anachronistic, even dangerous, and citizens made uneasy by their erosion were bigots.
These attitudes have fragmented the left’s constituency and made it impossible to rebuild the social solidarity or sense of shared national purpose necessary to support high taxes, robust welfare programs and activist governments.
During the postwar period, European politics was dominated by competition between a center-left and center-right that offered real policy differences but agreed on the basic framework of liberal, capitalist democracy. These parties were large enough to form governments, set agendas and get policies enacted. But as the outcome of the recent German elections makes clear, the center-left’s electoral demise has rendered it unable to form stable, coherent governments — which makes it more difficult to solve problems and leaves voters more frustrated with traditional parties and institutions.
This is one part of what has allowed populists to make inroads, as was clear during the German elections, where the far-right Alternative for Germany party promoted itself as the true “alternative” to the status quo. Even many within the Social Democrats acknowledged their party lacked a vision of where it wanted Germany to go.
Tuesday, September 26, 2017
She actually says (though maybe it was her three ghostwriters): “Bernie proved again that it’s important to set lofty goals that people can organize around and dream about, even if it takes generations to achieve them.” Rejecting a generation of neoliberal orthodoxy, she continues:
Democrats should reevaluate a lot of our assumptions about which policies are politically viable. These trends make universal programs even more appealing than we previously thought. I mean programs like Social Security and Medicare, which benefit every American, as opposed to Medicaid, food stamps, and other initiatives targeted to the poor. Targeted programs may be more efficient and progressive, and that’s why during the primaries I criticized Bernie’s “ free college for all ” plan as providing wasteful taxpayer-funded giveaways to rich kids. But it’s precisely because they don’t benefit everyone that targeted programs are so easily stigmatized and demagogued…. Democrats should redouble our efforts to develop bold, creative ideas that offer broad-based benefits for the whole country.
Thursday, September 21, 2017
Saturday, September 16, 2017
...In fact, it's worse than that: we were never going to get a revolution, and Bernie knew it all along. Think about it: has there ever been an economic revolution in the United States? Stretching things a bit, I can think of two: (1) The destruction of the Southern slave economy following the Civil War. (2) The New Deal. The first of these was 50+ years in the making and, in the end, required a bloody, four-year war to bring to a conclusion. The second happened only after an utter collapse of the economy... unemployment at 25 percent....
We're light years away from that right now. Unemployment? Yes, two or three percent of the working-age population has dropped out of the labor force, but the headline unemployment rate is 5 percent. Wages? They've been stagnant since the turn of the century, but the average family still makes close to 30,000, only 27 percent are dissatisfied with their personal lives. Like it or not, you don't build a revolution on top of an economy like this. Period. If you want to get anything done, you're going to have to do it the old-fashioned way: through the slow boring of hard wood.
Why do I care about this? Because if you want to make a difference in this country, you need to be prepared for a very long, very frustrating slog.... There's a decent chance that Bernie's failure will result in a net increase of cynicism about politics, and that's the last thing we need. I hate the idea that we might lose even a few talented future leaders because they fell for Bernie's spiel and then got discouraged when it didn't pan out.... If you don't want your followers to give up in disgust, your inspiration needs to be in the service of goals that are at least attainable. By offering a chimera instead, Bernie has done the progressive movement no favors...
Sanders lost me when he derided "establishment" economists. I do not trust any politician that picks adviser that only tell him what he wants to hear.
Reply September 11, 2017 at 05:36 AM
Friday, September 15, 2017
Tuesday, September 12, 2017
Monday, September 11, 2017
Saturday, September 09, 2017
Thursday, September 07, 2017
Sunday, September 03, 2017
Saturday, September 02, 2017
Friday, September 01, 2017
Thursday, August 31, 2017
Sunday, August 27, 2017
Thursday, August 24, 2017
Fully Automated Luxury Gay Space Communism
For years we’ve been told that only deep cuts can save our economy. Portugal’s socialist-led government has proved the opposite
Wednesday, August 23, 2017
Tuesday, August 22, 2017
Monday, August 21, 2017
Sunday, August 20, 2017
Saturday, August 19, 2017
Was it possible, that at every gathering--concert, peace rally, love-in, be-in, and freak-in, here, up north, back east, wherever--those dark crews had been busy all along, reclaiming the music, the resistance to power, the sexual desire from epic to everyday, all they could sweep up, for the ancient forces of greed and fear?
― Thomas Pynchon, Inherent Vice
Our Texas freedom-fighters have been prone to misbehavior ever since. A recent Ku Klux Klan rally in Austin produced an eccentric counter- demonstration. When the fifty Klansmen appeared (they were bused in from Waco) in front of the state capitol, they were greeted by five thousand locals who had turned out for a “Moon the Klan” rally. Citizens dropped trou both singly and in groups, occasionally producing a splendid wave effect. It was a swell do.I was there and participated!
Friday, August 18, 2017
Thursday, August 17, 2017
Wednesday, August 16, 2017
Similarly, leftists who opposed Hillary Clinton or have stressed the role of “economic anxieties” of downwardly mobile whites in the rise of the Trumpian right may start catching flak for excusing and thus enabling Nazis. Indeed, if any of the great historians of the Nazi period wrote their books today, they’d be denounced for larding their accounts with such interpretive context, as they all did, because context has now been reclassified as blame-shifting.
It’s not a totally implausible theory, that the country becomes more tolerant during economic booms and that white Americans become more racially prejudiced during recessions or stagnation.
But the evidence for the theory is mixed at best. In many cases, it’s hard to see much correlation between objective economic conditions and the status of race relations.
The group, which admires John Brown, a white abolitionist who led an armed insurrection in 1859, issued a “call to arms” on its website: “To the fascists and all who stand with them, we’ll be seeing you in Virginia.”
The scholar and activist Cornel West told the newscast “Democracy Now!” that anti-fascists saved his life and the lives of other nonviolent clergy members in Charlottesville. “We would have been crushed like cockroaches were it not for the anarchists and the anti-fascists,” he said on the show. “You had police holding back and just allowing fellow citizens to go at each other.”
Tuesday, August 15, 2017
NGDP monetary policy rule.
Sunday, August 13, 2017
Saturday, August 12, 2017
Yes, the system is rigged – and if you don’t feel like anyone in politics is doing anything to un-rig it, well, that’s how a lot of folks who should have been with us last November wound up voting for Donald Trump.
3) In terms of the behavior of the Fed at the time of the crash, there had been some preparations for it, mostly by people at the New York Fed, and indeed the various alternative entities the Fed rolled out temporarily after the hard crash were cooked up in advance by them. However, the most important thing the Fed did remains widely unknown and unadvertised, although I have posted on it previously, and it has been publicly reported on, it not on front pages anywhere ever. That would be the half a trillion dollar save the Fed did for the European Central Bank, taking a bunch of very bad assets onto the Fed balance sheet, which were then gradually and quietly rolled off over the next six months to be replaced by Mortgage Backed Securities. The euro was crashing, and the ECB was facing the threat that both BNP Paribas and Deutsche Bank were in danger of failing. This was the immediate danger that could have led to a full blown global financial crash of a 1931 level or worse. This save was probably the most important thing the Fed did to keep the crisis from bringing about another Great Depression, although it remains not well known, partly because both the Fed and the ECB did not want it advertised. A good account of this can be found in Neil Irwin’s book, _The Alchemists_.
Friday, August 11, 2017
Thursday, August 10, 2017
In 1979, a secret memo from the tobacco industry was revealed to the public. Called the Smoking and Health Proposal, and written a decade earlier by the Brown & Williamson tobacco company, it revealed many of the tactics employed by big tobacco to counter “anti-cigarette forces”.
In one of the paper’s most revealing sections, it looks at how to market cigarettes to the mass public: “Doubt is our product since it is the best means of competing with the ‘body of fact’ that exists in the mind of the general public. It is also the means of establishing a controversy.”
This revelation piqued the interest of Robert Proctor, a science historian from Stanford University, who started delving into the practices of tobacco firms and how they had spread confusion about whether smoking caused cancer.
Wednesday, August 09, 2017
Expectations are everything, especially in economics.
That’s why a distinct lack of progress in a few basic measures of economic progress, particularly relative to pre-crisis expectations, has left many Americans questioning how much they have personally benefitted from the economic recovery.
A new report from the Roosevelt Institute, a liberal think tank in Washington, highlights a number of ways in which "the recovery since 2009 is, in a sense, a statistical illusion."
The study finds the nation’s total economic output, its gross domestic product, "remains about 15% below the pre-recession trend, a larger gap than at the bottom of the recession." The first chart below shows that lag, while the second offers insights into just how badly the crisis dented expectations about the future.
Strong employment gains in recent months have brought the jobless rate down to a historically-low 4.3%. However, this decline has not been accompanied by rising incomes or consumer prices, generally associated with a sustainable economic boom. Some Federal Reserve policymakers have found this trend puzzling, while many labor economists point to underlying weaknesses in the job market, including high levels of underemployment and long-term joblessness, as drags on income.
Stagnant wages amid rising profits have meant that the wage share in US national income has fallen from 63% to 57% in the last 15 years, according to the report.
"It is impossible for the wage share to ever rise if the central bank will not allow a period of 'excessive' wage growth," writes J.W. Mason, who authored the report. "A rise in the wage share necessarily requires a period in which wages rise faster than would be consistent with longterm macroeconomic stability."
In other words, if Fed officials tighten monetary policy at the first sign of wage increases, they will never allow the imbalances that have built up, including deep income disparities, to be torn down. Average hourly earnings rose just 2.5% on a yearly basis in July, nothing to write home about and certainly not enough to begin the ground lost over the last decade and more.
Business investment, which is key to long-run economic growth, has also been dismal during the now eight-year expansion.
"There is no precedent for the weakness of investment in the current cycle. Nearly ten years later, real investment spending remains less than 10% above its 2007 peak," Mason writes.
"This is slow even relative to the anemic pace of GDP growth, and extremely low by historical standards. In the three previous [economic] cycles lasting that long, real investment spending had increased anywhere from 30% to 80%. Even shorter cycles saw substantially greater investment growth." Roosevelt 3 investment growth Roosevelt Institute
Finally, Mason looks at whether the economy is at risk of running hot, generating inflation, which central bank officials cite to justify interest rate increases. The Fed has raised interest rates three times since December 2015 to a range of 1% to 1.25%.
"On the contrary, we argue, while a myopic focus on one or another data series might support a story of binding supply constraints, the behavior of the economy as a whole is much more consistent with a situation of depressed demand—an extended recession," the report concludes.
"The overall picture also makes it unclear what actual danger is posed by overheating in the conventional sense. Most of the obvious costs of overheating — higher inflation, higher interest rates, a rising wage share — would be desirable under current circumstances."
What's the difference? 15 versus 10 percent? Suggesting we close the 15-10 percent output gap isn't promising "unicorns and rainbows." Well it is a big ask regarding the current Democratic Party. Maybe that's partly why Hillary lost to Trump.
Tuesday, August 08, 2017
Shares go into a public fund that distributes the yearly dividends as a social wage based on hours worked perhaps
Uncle gets to keep zero
A Zero gravity credit system is the lynch pin
Monday, August 07, 2017
Sunday, August 06, 2017
tight labor markets bad for profits? Goldman Sachs warnings.
Exactly. As @JWMason1 has shown, corporations are pumping cash out to shareholders, rather than sucking it in for investment.
Gavin Wright paper
Joan Robinson on labor market and productivity gains
Cambridge capital controversy
Some members of the Marxian school argue that even if the means of production "earned" a return based on their marginal product, that does not imply that their owners (i.e., the capitalists) created the marginal product and should be rewarded. In the Sraffian view, the rate of profit is not a price, and it is not clear that it is determined in a market. In particular, it only partially reflects the scarcity of the means of production relative to their demand. While the prices of different types of means of production are prices, the rate of profit can be seen in Marxian terms, as reflecting the social and economic power that owning the means of production gives this minority to exploit the majority of workers and to receive profit. But not all followers of Sraffa interpret his theory of production and capital in this Marxian way. Nor do all Marxists embrace the Sraffian model: in fact, such authors as Michael Lebowitz and Frank Roosevelt are highly critical of Sraffian interpretations, except as a narrow technical critique of the neoclassical view. There are also Marxian economists, like Michael Albert and Robin Hahnel, who consider the Sraffian theory of prices, wages and profit to be superior to Marx's own theory.