Game of Thrones: Shireen

I copied out the wiki entry on Stannis the other day.

Stannis orders Justin Massey to go with Tycho Nestoris to Braavos, where Justin will use the money given to him by the Iron Bank of Braavos to hire sellsword companies till he has a force no less than twenty thousand strong and then sail back to Westeros. Stannis also gives orders that if he is slain in the coming battle, Justin is still to do as instructed, with the intention of using the army to place his daughter, Shireen Baratheon, on the Iron Throne.

If Stannis die, and I hope he doesn't, Shireen could be the Third Dragon, ahead of an army twenty thousand strong. Maybe she'll marry Rickon and clean the North of the Boltons and Freys.

Stefan Zweig

I saw Wes Anderson's The Grand Budapest Hotel last night. It was inspired by the "writings of Stefan Zweig.* Then later I saw a movie on cable, A Promise, with Rebecca Hall, Alan Rickman and Richard Madden which was based on a novel by Zweig.

*see the "adaptations" section.

Krugman on Keynes

Keynes Is Slowly Winning by Krugman

On Not Being Stupid by Krugman

The price level

Forget the Monetary Base and Just Pay Attention to the Price Level by David Glasner

The Federal Reserve's Dirty Little Secret by David Beckworth

Stannis Baratheon

("They'll bend the knee or be destroyed.")

(Stannis is coming to Winter.)

From the series.

Stannis was born the second son to Steffon Baratheon and Cassana Estermont, the younger brother of Robert Baratheon and the older brother of Renly Baratheon. His parents died when he was thirteen. He lost his faith in the Seven on that day, vowing that gods who were cruel enough to take his father and mother in sight of their children would never have his worship.^[8] Even in his youth he was said to be a serious, dour and humorless boy.

Stannis's stubbornness and determination are legendary and served him well during Robert's Rebellion. He successfully held the Baratheon castle of Storm's End against Mace Tyrell's siege,^[9] which lasted the majority of the war, unintentionally ensuring one of the largest loyalist forces did not take the field against the rebels. His garrison held under desperate conditions, only avoiding starvation by the timely intervention of a smuggler, Davos. His cargo of onions allowed them to hold the fortress. After the siege was lifted by Lord Eddard Stark, Stannis took Davos into his service, dubbing him "The Onion Knight" and allowing him to choose the name Seaworth for his new house. True to Stannis' inflexible sense of justice, he also punished Davos for his crimes as a smuggler by removing the first joint from each finger of Davos's left hand, as payment for his past crimes. Davos accepted the punishment provided Stannis carry it out himself.

Following the Sack of King's Landing and the surrender of the Tyrells at Storm's End, the new king, Robert Baratheon, charged his brother Stannis with building a new fleet to seize Dragonstone, which was still loyal to the Targaryens. Viserys and Daenerys Targaryen were smuggled from the island before Stannis could capture Dragonstone, which upset Robert. The king blamed Stannis for letting the Targaryen heirs escape,^[10] although the two children had been spirited to safety by Targaryen loyalists shortly before Stannis set sail.^[11] After commanding the successful assault on Dragonstone, Stannis was displeased to discover that King Robert had named him Lord of Dragonstone, instead of the wealthier Storm's End, which was given to their younger brother Renly, who had not done anything of true note during the war. Stannis resented this as an intentional slight,^[6] which Cersei Lannister agrees with.^[10] However, Robert needed a strong ruler to control what had been a holdout of the Mad King's loyalists, and Stannis was much more suited for this role than Renly was.^[12] The island castle was the traditional seat of the heir of the Iron Throne, the Prince of Dragonstone, so the then-childless Robert was granting it to his heir at that time, Stannis.^[13] It had the added advantage of taking prickly Stannis away from the mainland of Westeros. True to his nature, Stannis became an effective and efficient administrator as head of House Baratheon of Dragonstone.

During his wedding to Lady Selyse Florent, King Robert deflowered Delena Florent on Stannis's wedding bed. This coupling led to the birth of Edric Storm, the only acknowledged bastard of the king. Stannis insisted that he was a blight upon the honor of his wife's house and promptly shipped him off to his other uncle, Lord Renly, at Storm's End.^[15]Stannis was appointed to the small council as well, as the master of ships.^[9] During Greyjoy's Rebellion, Stannis commanded the royal fleet and trapped and destroyed much of the Iron Fleetat Fair Isle. Afterwards, he subdued Great Wyk in his brother's name.^[14] While he was at court in King's Landing, Stannis left Ser Axell Florent as castellan of Dragonstone.

Despite his loyalty and service to his brother Robert, Stannis feels Robert has given him little in return. Instead of thanking him for holding Storm's End against the Tyrells he thanked Eddard Stark for lifting the siege instead. Instead of thanking Stannis for capturing Dragonstone for him, Robert blamed Stannis for the escape of the Targaryen children.^[6] Stannis helped Jon Arryn, Robert's Hand of the King, in ruling the kingdoms but received little or no acknowledgement or thanks from his elder brother, who spent his time, hunting, drinking and whoring. Stannis never complained publicly since service without expectation of reward was required of him in his positions, although he often did so privately to Robert and Cersei.^[10]

Just prior to the events of A Game of Thrones, Stannis suspected that the children of Queen Cersei Lannister were not actually Robert's. He confided his suspicions to Lord Arryn, and they investigated the matter together. Stannis did not bring his suspicions to Robert, as he knew Robert would not believe the charges coming from him. Since Robert had no love for his brother Stannis, the younger Baratheon would be seen as making himself heir. However, Stannis felt Robert would listen if the charges came from Jon Arryn, whom Robert loved. They visited several of Robert's baseborn children in the city and Stannis pointed out that all had black hair and they looked like Robert. Jon consulted the book The Lineages and Histories of the Great Houses of the Seven Kingdoms of past marriages of noble houses and discovered the same was true: whenever a Baratheon wed, their sons and daughters would have black hair, even if the other parent was a golden-haired Lannister.

After determining that Cersei's children were in fact not Robert's, Jon meant to act and planned for his son Robert Arryn to be fostered with Stannis on Dragonstone. However, Lord Arryn died before he could bring the evidence before Robert.

After the death of Jon Arryn, Stannis flees to Dragonstone to gather his strength and plan his next move.^[16] Lord Eddard Stark wonders why Stannis left, believing it was due to the discovery of whatever secret Jon Arryn was allegedly murdered for, although not realizing that Stannis was also slighted by Robert's selection of Eddard as his new Hand of the King. Ned, via Grand Maester Pycelle, sends a raven with a polite letter requesting Lord Stannis to return to his seat on the small council.^[17] During Eddard's investigation of Jon's death, he discovers that Stannis and Jon had spent a great deal of time together. When he is told Stannis and Jon visited a brothel, when Stannis is normally so righteous to the point of prudish, he gets closer to the truth.^[9] Robert dies after a boar hunt and is succeeded by his son, Joffrey Baratheon.^[18] Eddard tries to rule as regent, but is outmaneuvered by Robert's widow, Cersei Lannister. The boy king Joffrey subsequently has Eddard executed.^[19]

On Dragonstone, Stannis declares he is the true heir of Robert Baratheon to the Iron Throne, as Joffrey has no true claim to the throne. Since the king's death Stannis has been gathering what strength he can from the lords of the narrow sea and from Myrish and Lyseni sellswords, but his forces are too few to challenge the Lannisters in King's Landing. Additionally, his younger brother, Renly, has also declared himself king with the support of House Tyrell; most of the Baratheon bannermen in the Stormlands are following Renly. Stannis's maester, Cressen, suggests he should treat with Robb Stark, who has been declared King in the North, or Lysa Arryn, but his wife, Selyse, says Stannis should not treat for what is his by right.

Selyse has fallen under the influence of Melisandre, a priestess of the Lord of Light. She declares the Red Comet is a sign that Stannis must sail and the banners of the Reach and the Stormlands will flock to him, but Stannis is not convinced. Selyse then tells him to embrace the Lord of Light. She says Melisandre has looked into the flames and seen Renly dead.^[6] Stannis renounces the Faith of the Seven and embraces the Lord of Light, seeking only the power that Melisandre promises will follow. The statues of the Seven at Dragonstone are burned in sacrifice. Melisandre proclaims Stannis to be Azor Ahai reborn, a messianic figure in the R'hllor faith. His switch to the faith of R'hllor divides Stannis's own men into two factions: King's Men who still follow the Faith of the Seven and Queen's Men who worship R'hllor.^[8]

As a first step toward claiming the Iron Throne, Stannis has hundreds of letters sent to lords throughout Westeros proclaiming himself king and claiming, correctly, that Ser Jaime Lannister, not Robert Baratheon, is the father of Cersei's children.^[8] Rather than a direct assault on King's Landing, Stannis leads his forces to besiege Storm's End, hoping to convince his younger brother to join forces with him. He offers Renly to be his heir and a place at the king's small council. Renly makes light of the offer and the brothers have an inconclusive parley that fails to reconcile them. They agree that their forces will meet at dawn. That night, Melisandre uses her magic to birth an animated shadow, which assassinates Renly in his tent at first light. The majority of Renly's followers subsequently swear allegiance to Stannis.

One of Renly's sworn swords who refuses to follow Stannis is Ser Cortnay Penrose, castellan of Storm's End. Cortnay refuses to surrender the castle, fearing what Stannis would do to the bastard within, Edric Storm. He challenges Stannis to a duel, which the king refuses. Ser Davos Seaworth rows Melisandre beneath the fortress, and the priestess assassinates Penrose as she did Renly.

With Storm's End under his control, Stannis launches an amphibious assault on King's Landing. Braving wildfire, a river-spanning chain, and other defenses, Stannis's forces are defeated at the cusp of victory when Lannister and Tyrell reinforcements unexpectedly arrive, seemingly led by Renly's ghost; it is in fact Garlan Tyrell wearing the deceased Renly's armour.

Stannis returns to Dragonstone, his host broken by the Battle of the Blackwater.^[20] He has his Hand of the King, Lord Alester Florent, imprisoned when the man attempts to make peace with the Lannisters by offering them Stannis's daughter, Shireen Baratheon, as a hostage.^[21]

When Ser Davos Seaworth returns to Dragonstone, Stannis has him brought before him to hear Axell Florent's plan to assault Claw Isle and put the island to the sword in retaliation for Lord Ardrian Celtigar's submission to King Joffrey. Davos calls the plan evil, stating that the smallfolk of Claw Isle are not traitors. Stannis agrees and names Davos Seaworth his new Hand of the King, since Davos is one of the few men who have the courage to tell his king the truth, even when he knows the truth will not be well-received.^[22]

Melisandre urges Stannis to sacrifice Robert's bastard Edric Storm to complete a spell she claims will raise dragons from stone and grant him more power. Stannis, though initially reluctant,^[22] is about to follow through with the ritual when Davos smuggles the boy away and urges Stannis to take his remaining forces north to defend the Wall.^[23]

Stannis sails his forces north to the Wall, leaves Selyse and Shireen at Eastwatch-by-the-Sea, and marches west along the Wall. His forces arrive just in time to crush Mance Rayder's wildling army at the Battle of Castle Black.^[24] He stays at the King's Tower of Castle Black to negotiate a settlement with the wildlings and offers to legitimize Jon Snow as Lord of Winterfell if he supports Stannis's rule.^[25] The offer falls through when Jon is selected as Lord Commander of the Night's Watch.^[26] Stannis continues to seek support in the North for another attempt at the throne.

Stannis sends flocks of ravens from the Wall to all northern houses asking them to declare for him. He receives silence or refusals from the lords, with only the Karstarks, led by the castellan of Karhold, Arnolf Karstark, declaring for him.^[27][28]

According to the current High Septon, Stannis has turned from the truth of the Faith of the Seven to worship a red demon, and his false faith has no place in the Seven Kingdoms.

Stannis sends Davos Seaworth to White Harbor to treat with Lord Wyman Manderly on his behalf.^[29] Stannis receives many rejections from his demands of fealty from the northern lords, although he does win the support of a portion of House Umber led by Mors Umber. Stannis has the King-Beyond-the-Wall, Mance Rayder burned for the crime of being a deserter of the Watch.^[30] He then offers the remaining Free Folk a choice - bend the knee or go back to the wild. Given the severe threat posed by the Others in the wild, nine of every ten wildlings bend the knee.^[30] Unbeknownst to Stannis, however, the burned Mance was actually a glamoured Rattleshirt.^[31]

Stannis is counseled by Arnolf Karstark via raven messages to join his strength to his and attack the Dreadfort, seat of the new Warden of the North, Lord Roose Bolton. Stannis agrees and plans to make his assault when Ramsay Bolton marches south to take Moat Cailin from the ironborn. Stannis does not know that Arnolf Karstark is secretly working for House Bolton and is trying to lure Stannis into a trap. Upon hearing the plan, however, Lord Commander Jon Snow persuades Stannis not to go down this course, as Jon knows how strong the Dreadfort is even with a small garrison.^[32]

Instead, Stannis travels west to take Deepwood Motte from the ironborn that hold it. Jon Snow advises him to go through the mountains north of Winterfell and win the support of the mountain clans, including the Flints, Wulls, Norreys and Liddles. The mountain clans are deeply loyal to the memory of Eddard Stark and would take pride in receiving a king. Stannis wins over several of their chiefs, such as Old Torghen Flint and Hugo "Big Bucket" Wull. With an additional three thousand men in his army, Stannis then retakes Deepwood Motte.^[14] Stannis takes several ironborn captive, including Asha Greyjoy, and returns Deepwood Motte to House Glover, an act that gains him popular support in the North and earns him the support of the Glovers and House Mormont. Stannis's men are also reinforced by survivors of the battle at Winterfell who have been hiding in the wolfswood.^[33] His army marches on Winterfell and is eventually joined by the forces of Arnolf Karstark and Mors Umber. However, they are slowed by relentless snowstorms.^[34][35] Learning of Arnolf Karstark's planned treachery from Arnolf's niece, Alys, Jon Snow sends a message to Stannis trying to warn him.

According to a taunting letter written by Ramsay Bolton to Jon Snow, Stannis was killed along with most of his army in the siege of Winterfell.^[36] Stannis's last known location was a snowed-in crofters' village three days west of Winterfell.^[35][37][38] It is unknown, however, if Stannis is really dead, or if it is just a lie written by Ramsay.

Though reportedly isolated and secluded, Stannis is actively and efficiently preparing for the looming battle against the Boltons. At the crofters' village, Stannis receives the Braavosi banker Tycho Nestoris and the two sign a contract. Stannis plans to send the banker back to the Wall so he does not get caught up in the fighting.

Stannis is made aware of Arnolf Karstark's planned treachery due to the message Jon Snow gave the banker. Stannis has Arnolf, his son Arthor and three grandsons arrested and plans to execute them, though whether their death will be quick beheadings or by fire depends on their willingness to confess. Stannis prepares his position to battle the coming vanguard of Lord Roose Bolton's army led by Ser Hosteen Frey. Stannis sends Ser Justin Massey to escort "Arya Stark" back to the Wall to reunite the girl with her half-brother, Jon Snow, in gratitude for Jon warning him to amass the northern mountain clans rather than march straight into the Karstarks' plans.

Stannis orders Justin Massey to go with Tycho Nestoris to Braavos, where Justin will use the money given to him by the Iron Bank of Braavos to hire sellsword companies till he has a force no less than twenty thousand strong and then sail back to Westeros. Stannis also gives orders that if he is slain in the coming battle, Justin is still to do as instructed, with the intention of using the army to place his daughter, Shireen Baratheon, on the Iron Throne.

Stannis plans to have Theon Greyjoy executed, hoping to gain favor with his northern allies by exacting justice for the murders of Bran and Rickon Stark.^[39]

[to be continued]

Game of Thrones

The Horn of Winter by Robert Waldmann

HBO is rerunning Season Four today. In episode 3, "Breaker of Chains," Sandor Clegane and Arya Stark are taken in as guests by a good farmer loyal to the Tullys and his daughter. The farmer is religious and discusses the Red Wedding and how the Freys are cursed by the Gods because they violated Guest Rights.

And then Clegane turns around and violates Guest Rights by stealing the farmer's silver. Arya is upset at him. And - spoiler alert - Clegane doesn't make it through the season, thanks to Brienne of Tarth.

Along with Arya and the poor farmer, another good, kind person is Shireen Baratheon, daughter of Stannis. Shireen doesn't like how her father and Melisandre burned her uncle and others for being infidels and refusing to burn their idols to the Seven Gods. Her kindness and goodness leads her to a friendship with Ser Davos and in a discussion with him, she gives him the notion that the Iron Bank of Bravos isn't big on distinctions, just like Shireen's father, Stannis. Davos understands that the Iron Bank doesn't care who rules Westeros as long as they get paid. Davos will convince them that Stannis will pay them back for their support as the Lannisters have been weakened by Joffrey's death and Lord Tywin won't be around forever.

Jorah Mormont is one of my favorite characters. I always cut him some slack for informing on Daenerys. He didn't know her and wanted to get home. Did he inform for too long though? In episode 5, "First of His Name," though I noticed how we wavered from advising Daeneyrs to take King's Landing after learning that Joffrey Baratheon was dead. Barristan Selmy wanted to. Mormont wavered perhaps because he realized if they went back, Daenerys would learn the truth. I would like to believe he was so honorable and in love with Daenerys that he was giving his best council.

I love Davos, Stannis, Arya, Daario, Tyrion, Daenerys, Brienne and many others, but on the show Sansa really survives so much and remains good and kind. That last scene of her this season as she walks down the stairs in nice black clothes, one imagines you can see her aunt Lyanna in her, the dark beauty of the North who Rhaegar Targaryen started a war for.

Along with the karmic or God's justice the Hound suffers, the evil leader of the renegade Nights Watch at Craster's Keep encounters it as well, or just bad luck. He lectures Jon Snow about fighting with honor, when one of the abused women stabs him the back. Then as he turns, Snow gets him through the head. A man without honor has consequences to suffer as well. Or maybe it's just bad luck and bad things happen to everyone, good and bad, in Westeros.

2 percent and the fiscal-monetary mix

Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel by Neil Irwin

THE FISCAL-MONETARY MIX by Chris Dillow

(via Thoma)

fiscal councils

How Fiscal Policy Failed During the Great Recession by Mark Thoma

But I’m not very hopeful that Congress will change its ways voluntarily, any more than I think the financial system will change on its own. So what else can we do? Another answer would be to create an independent, Fed style committee in charge of making recommendations for fiscal policy during recessions. Unlike the Fed, the committee wouldn’t actually set fiscal policy, it would only make recommendations to Congress (preferably a plan that is budget neutral over a period of years, and a plan that would take effect unless Congress votes it down)

Person of Interest

Butlerian Jihad: "Thou shalt not make a machine in the likeness of a human mind."

AV Club reviews Person Of Interest: “The Cold War”

Baker, DeLong and Krugman on monetary policy

"Since Abe took office, Japanese companies have had little problem hiring workers. The employment to population ratio has risen by two full percentage points in the less than two years since Abe took office. This would be comparable to an increase in employment in the United States of almost 5 million people. That is almost 1 million more than the job growth we have actually seen over this period."

The Washington Post Wants Japan to Fire Workers by Dean Baker

Over at Equitable Growth: I Hate Those Blurred Lines! Monetary Policy and Fiscal Policy: Daily Focus by DeLong

torture and mendicants and war enablers

During the Iraq, some on the anti-war left blamed human rights organizations for paving the way to war with criticisms of the regime's human rights abuses. But without those norms, you wouldn't have had people in the U.S. government fighting back against torture policies.

America’s Shame: What’s in the Senate Torture Report? by John Cassidy

recognition

Golden Globe nominations include Rosamund Pike for Gone Girl; Benedict Cumberbatch for The Imitation Game; Fincher for Gone Girl; Linklater for Boyhood; Clive Owen for the Knick; Silicon Valley; The Normal Heart; Juila Louis-Dreyfus for Veep; Louis CK. Game of Thrones. True Detective and Fargo were good too if dark.

Time magazine recognized Game of Thrones, The Americans, Broad City, Louis CK, True Detective, Fargo, and Last Week with John Oliver.

Minsky

Minsky on the Non-Neutrality of Money by J.W. Mason

Continuum

Continuum has been renewed for one last season

"The Canadian series, which stars Rachel Nichols as a well-meaning fascist from the future and Erik Knudson as her sidekick, Teenage Canadian Steve Jobs, will return for a six-episode fourth season, set to air next year. Hopefully, those six episodes will give creator Simon Barry and his staff time to close the book on the series’ convoluted but entertaining take on militarized police forces, idealistic terrorists, and magical skintight spy suits, since the fourth season will be the show’s last."

liquidity

What to Read on Liquidity by J.W. Mason

"the point is liquidity, the point is liquidity, the point is liquidity."

Or as Andrew Mellon is reported to have advised Hooover:

liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people

Rooseveltian Resolve

Four Questions about Fiscal Policy by JW Mason

The Nearly Forgotten Dearly Beloved 1920-21 Depression Yet Again; Or, Never Reason from a Quantity Change by David Glasner

‘Battle of the beards’: Paul Krugman vs. Ben Bernanke by Robert J. Samuelson (May 6, 2012)

Ben Bernanke (1999): "Rooseveltian Resolve" by DeLong  (March 02, 2013)

Japanese Monetary Policy: A Case of Self-Induced Paralysis? by Ben Bernanke (December 1999)

Earth to Ben Bernanke: Chairman Bernanke Should Listen to Professor Bernanke by Krugman (April 24, 2012)

Mason on Konczal and monetary policy

Five Thoughts on Monetary Policy by JW Mason

misc. macro and growth policies

Hitting the sweet spot with PGEPs: Pro-growth, equalizing policies by Jared Bernstein

Why India Trails China by Amartya Sen

Q. and A. With Charles Evans of the Fed: Low Inflation Is the Primary Concern by Binyamin Appelbaum

Virtual Office Hours: Asset Prices, Monetary Policy, Secular Stagnation, Inequality, and Pikettyism by DeLong

The Walking Dead and Beth Greene

AV Club reviews The Walking Dead: “Coda”

"You keep telling yourself you have to do whatever it takes just until this is all over. But it isn't over. This is it. This is who you are and what this place is until the end."

- Beth Greene to Dawn

Star Wars: The Force Awakens

Baker on DeLong

Question for Brad DeLong and the Debt School of the Downturn: What Would Our Saving Rate Be If We Didn't Have Debt? by Dean Baker

Brad DeLong tells us that he is moving away from the cult of the financial crisis (the weakness of the economy in 2014 is somehow due to Lehman having collapsed in 2008 -- economists can believe lots of mystical claims about the world) and to the debt theory of the downturn. Being a big fan of simplicity and a foe of unnecessary complexity in economics, I have always thought that the story was the lost of housing wealth pure and simple. (And yes folks, this was foreseeable before the collapse. Your favorite economists just didn't want to look.)

Just to be clear on the distinction, the loss of wealth story says it really would not have mattered much if everyone's housing wealth went from $100k to zero, as opposed to going from plus $50k to minus $50k. The really story was that people lost $100k in housing wealth (roughly the average loss per house), not that they ended up in debt. Just to be clear, the wealth effect almost certainly differs across individuals. Bill Gates would never even know if his house rises or falls in value by $100k. On the other hand, for folks whose only asset is their home, a $100k loss of wealth is a really big deal.

The debt story never made much sense to me for two reasons. First, the housing wealth effect story fit the basic picture very well. Are we supposed to believe that the housing wealth effect that we all grew up to love stopped working in the bubble years? The data showed the predicted consumption boom during the bubble years, followed by a fallback to more normal levels when the bubble burst. 

The other reason is that the debt story would imply truly heroic levels of consumption by the indebted homeowners in the counter-factual. Currently just over 9 million families are seriously underwater (more than 25 percent negative equity), down from a peak of just under 13 million in 2012. Let's assume that if we include the marginally underwater homeowners we double these numbers to 18 million and 26 million.

How much more money do we think these people would be spending each year, if we just snapped our fingers and made their debt zero? (Each is emphasized, because the issue is not if some people buy a car in a given year, the point is they would have buy a car every year.) An increase of $5,000 a year would be quite large, given that the median income of homeowners is around $70,000. In this case, we would see an additional $90 billion in consumption this year and would have seen an additional $130 billion in consumption in 2012.

Would this have gotten us out of the downturn? It wouldn't where I do my arithmetic. For example, compare it to a $500 billion trade deficit than no one talks about. Furthermore, the finger snapping also would have a wealth effect. In 2012 we would have added roughly $1 trillion in wealth to these homeowners by eliminating their negative equity. Assuming a housing wealth effect of 5 to 7 cents on the dollar, that would imply additional consumption of between $50 billion to $70 billion a year, eliminating close to half of the debt story. So how is the downturn a debt story? (You're welcome to put in a higher average boost to consumption for formerly negative equity households, but you have to do it with a straight face.)

Finally, getting to the question in my headline, the current saving rate out of disposable income is 5 percent. This is lower than we ever saw until the stock wealth effect in the late 1990s pushed it down to 4.4 percent in 1999, it hit 4.2 percent in 2000. The saving rate rose again following the collapse of the stock bubble, but then fell to 3.0 percent in 2007. The question then for our debt fans is what they think the saving rate would be absent another bubble, if we eliminated all the negative equity.

Eichengreen on competitive devaluations

Competitive devalution to the rescue by Barry Eichengreen

In fact, this popular account is a misreading of both the 1930s and the current situation. In the 1930s, it is true, with one country after another depreciating its currency, no one ended up gaining competitiveness relative to anyone else. And no country succeeded in exporting its way out of the depression, since there was no one to sell additional exports to. But this was not what mattered. What mattered was that one country after another moved to loosen monetary policy because it no longer had to worry about defending the exchange rate. And this monetary stimulus, felt worldwide, was probably the single most important factor initiating and sustaining economic recovery. 

It is true that the process was disorderly and disruptive. Better would have been for the countries concerned to co-ordinate their moves to a more stimulative monetary policy without sending exchange rates on a roller-coaster ride. But, not for the first time, they failed to agree. Those in the most precarious positions had no choice but to pursue the new policy unilaterally. 

In any case, monetary easing achieved through a process of "competitive devaluation" was better than no monetary easing. Those countries that shifted in this direction first were also first to recover. But in the end – the end coming after an excruciating five years – they had all moved in the requisite direction, and they all began to recover.

corporate buy backs

Still Disgorging by J.W. Mason

Disgorge the Cash by J.W. Mason

DeLong on Wolf

Over at Equitable Growth: Night Thoughts on Martin Wolf's Shocking Shifts: Daily Focus by DeLong

Thoma on Piketty

When Piketty Argued for Income Redistribution, He Changed Economics by Mark Thoma

the Banks

Rant Of The Day by Andrew Sullivan

Emily Bazelon

Bazelon was one of my favorite regulars on The Colbert Report along with the German ambassador. Hopefully she'll visit the new show.

Fed under pressure

As Federal Reserve Selects New Top Officials, Coalition Calls for Public Input by Binyamin Appelbaum

Mid Terms and minimum wage

Bad news is that Republicans took governorships and the Senate. Good news on the minimum wage and rewarding work.

For all that, the minimum wage is popular, very popular, as voters in four red states proved once again Tuesday. Nebraskans approved a ballot measure to raise that state’s minimum wage to $8 an hour next year and $9 in 2016; South Dakotans voted to raise it to $8.50 next year. Arkansas voters approved a gradual increase to $8.50 by 2017. And Alaskans agreed to raise it to $9.75 by 2016. 

In Illinois, the one blue state to consider the issue, voters opted for $10 an hour starting next year, albeit in a nonbinding referendum. 

Consequently, a majority of states, containing more than half of the working-age population, have or soon will have minimum wages higher than the federal minimum.

via Dean Baker

Anyhow, Lane wants politicians to stop raising the minimum wage so he proposes indexing it to the rate of inflation. The idea of indexation is good, but Lane has the wrong target. Back in the good old days, when we had 4.0 percent growth and 3.0 percent unemployment, the minimum wage rose in step with productivity. If it had continued to rise in step with productivity since its peak level in 1968 it would be more than $17 an hour today.

Keynes and the ZLB

The Liquidity Trap, the Great Depression, and Unconventional Policy: Reading Keynes at the Zero Lower Bound by Richard Sutch

QE and inflation

The Effect of QE on UST Yields by Mark Dow

Via Matthew Klein

Mark Dow has persuasively argued that it boils down to learning: a lot of people used to think bond-buying was equivalent to the policies that led to the Weimar hyperinflation and those people either changed their mind or were forced to leave the market because their trades kept blowing up. 

(Peter Thiel comes to mind.) 

Another possibility is that QE3 did affect inflation expectations but in a way that is invisible to the naked eye because we can’t know what would have happened in the absence of additional bond-buying. While intriguing, this unfalsifiable hypothesis leaves us feeling empty inside.

Did Dow anticipate Robert Waldmann?

Wren-Lewis, Mason and Waldman

Michael Woodford on the Interdependence of Monetary and Fiscal Policy by JW Mason

Some thoughts on QE by Steve Randy Waldman

Fighting the last war by Simon Wren-Lewis

Konczal on monetary policy

Did the Federal Reserve Do QE Backwards? by Mike Konczal

It would have been nice for a journalist or Congressperson to have asked Bernanke. This is why they wanted to get out of QE ASAP.

O'Brien on QE

Why the Fed is giving up too soon on the economy by Matt O'Brien

Kockerlakota and the North Dakota oil boom

Kocherlakota dissents. I believe his turn about first came when he visited the North Dakota "man camps" of the oil boom.

Oct. 29 FOMC statement:

Voting against the action was Narayana Kocherlakota, who believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level.

'The Overnighters' shows dark side of North Dakota oil boom