Henry Farrell on Aaron Swartz.

His guest posts at Crooked Timber.

I sort of agree with the generous broad view he takes in the post on Toward a Larger Left.

Corey Doctorow via DeLong

JSTOR

JSTOR (pronounced jay-stor;[3] short for Journal Storage) is a digital library founded in 1995. Originally containing digitized back issues of academic journals, it now also includes books and primary sources, and current issues of journals.[4] It provides full-text searches of more than a thousand journals, dating back to 1665 in the case of the Philosophical Transactions of the Royal Society. More than 7,000 institutions in more than 150 countries have access to JSTOR. Most access is by subscription, but some old public domain content is freely available to anyone, and in 2012 JSTOR launched a program of free access to some further articles for individual scholars and researchers who register.

On July 19, 2011, internet activist Aaron Swartz was charged with data theft in relation to bulk-downloading academic journal articles from JSTOR.[9] According to the indictment against him, Swartz surreptitiously attached a laptop to MIT's computer network, which allowed him to "rapidly download an extraordinary volume of articles from JSTOR".[10] Prosecutors in the case say Swartz acted with the intention of making the papers available on P2P file-sharing sites.[11] Swartz surrendered to authorities, pleaded not guilty to all counts and was released on $100,000 bail. Prosecution of the case is ongoing.[12] Two days later, on July 21, Greg Maxwell published a torrent file of a 32-GB archive of 18,592 academic papers from JSTOR's Royal Society collection, via The Pirate Bay, in protest against Swartz' prosecution.[13][14] 

From September 6, 2011, JSTOR has made some public domain content freely available to anyone.[15] JSTOR stated that they had been working on making it free for some time, and the Swartz controversy made them "press ahead" with the initiative.[16]

Swartz committed suicide yesterday at the age of 26.

Swartz's father worked in the computer industry, and from a young age Aaron was interested in computing, frequently studying computers, the Internet and Internet culture.[3] At the age of 14 Swartz co-authored RSS 1.0 Specification. He later attended Stanford University, however he left after one year of studying, stating 'I didn't find it a very intellectual atmosphere, since most of the other kids seemed profoundly unconcerned with their studies'.[3]. Instead he founded the software company Infogami, a startup that was funded by Y Combinator's first Summer Founders Program.[4] 

Through the Y Combinator program, Swartz found himself working on the Reddit website. Initially finding it difficult to make money from the project, the site later gained in popularity, with millions of users visiting it each month. In late 2006, after months of negotiations, Reddit was sold to CondéNet, owners of Wired magazine.[3] Swartz moved with his company to San Francisco to work on Wired, but grew unhappy with the set-up[3] and in January, 2007, he was asked to resign from his position.[5] Swartz described himself as being ill and suffering from a constant depressed mood throughout 2007.[6] In September, 2007, Swartz joined with Simon Carstensen and launched Jottit. In 2010-2011 he was a fellow at Harvard University's Edmond J. Safra Center for Ethics.[7] 

Swartz was also the creator of the web.py web application framework,[8] and co-founded Demand Progress,[7] a progressive advocacy group that organizes people via email and other media for "contacting Congress and other leaders, funding pressure tactics, and spreading the word" about targeted issues.

Platinomics by Greg Ip

I disagree with Ip more often than with most economic writers I read in that he seems to take it easy on Bernanke and the Fed, often writing with skepticism about what the Fed can accomplish. That's exactly what Romer and Romer warn about.

Fed Watch: More on Central Bank Independence by Tim Duy

Fox News Doesn't Understand How Coins Work by Yglesias

There are multiple equilibria

How effective is fiscal policy: Guest post from Roger Farmer by John Quiggin

Thought-provoking.

IOUs

The Debt Ceiling’s Escape Hatch by Edward Kleinbard

A Trillion-Dollar Coin Brings a Jackpot of Jests by Annie Lowrey

The inflation dragon is just around the corner by Simon Wren-Lewis

Django is a BAMF*

I recently saw Tarntino's "Django Unchained," the first part of PBS's "The Abolitionsists," and the season opener of "Justified."

"Justified" was entertaining and had a number of sudden turns. A conflict is being set up between Boyd Crowder and an evangelical preacher who is successfully weening the residence of Harlan County off of Oxycotin and the other drugs Crowder is peddling by turning them on to the opiate of religion. A down on her luck prostitute could be the Crowder's downfall. And it was gratifying to hear Walton Goggins quote Asimov and Keynes to one of his pushers who had found the Lord and stolen Boyd's money.

Goggins was also in the highly entertaining "Django Unchained." Great performances by the actors: Jamie Foxx, Christoph Waltz, Leonardo DiCaprio, Samuel Jackson, and Don Johnson (and Jonah Hill,etc.) I loved the soundtrack. While Tarantino helped the Germans look bad in "Inglorious Basterds," in "Django Unchained" one of the protagonists is a anti-slavery German bounty hunter played by Waltz. Waltz's Dr. Schultz is a great humanist and shows that Germans have a great liberal, pro-enlightentment tradition - see Goethe, Schiller, Beethoven, Marx - one that was crushed by war, economic depression and fascism.** Southerners come off really bad as the Germans did in Basterds. All the actors do an outstanding job, but Jackson's Uncle Tom Steven is the one who stuck with me. What a nasty fellow. I liked DiCaprio's speech on phrenology and the supposed submissiveness of blacks (everyone tossed about the N word.) And I liked how Tarantino had that one slave who hated Django because he thought he was a black slave trader. Pretty brutal but entertaining movie. DiCaprio could get some awards. Jackson should.

"The Abolitionists" was kind of brutal too but very thought-provoking and educational. It was the first of three episodes and focused on Frederick Douglass, Garrison, William Lloyd Garrison, Angelina Grimké, John Brown and Harriet Beecher Stowe. All of the whites were hardcore evangelical Christians who believed slavery was a sin. Douglass was a slave at first. He wasn't submissive enough for his owner so he brought in someone out of Tarantino movie, a guy who would "break" slaves by beating them once a week. Douglass fought back, even though it meant death, and bested the "breaker" guy who never told or came back, because if word got out his reputation would be damaged. Douglass said up to that point he had been a boy, but from there on he was a man. Grimké's story was very interesting as she was a black sheep of one of the wealthiest Southern (slave-owning of course) families, if not one of the wealthiest in the world at the time. But she felt slavery was a sin and worried for the souls of her fellow white southerners. So she moved north. In one dramatized scene, Garrison was attacked by a pro-slavery mob in the North and was so rattled he bowed out of the movement for a while. A lot of drama about Slavery these days, see "Lincoln" also.

-----------------------------
*Bad ass mother fucker.
**Dr Shultz at one point asks a southern musician at the plantation to stop playing Beethoven, because I assume it's offensive to him to hear such beautiful music in such a context. He notes the irony of the plantation owner admiring the black French novelist Dumas. He holds up the idealism and morality of art in contrast to corrupt institutions. On a personal, emotional level, Shultz also has bad flashbacks over the recent mauling of a runaway slave by dogs he witnessed. This reminded me of similar episodes or stories about Europeans like Nietzsche and William Wilberforce, both of whom became unhinged after witnessing the beatings of a horse by its master.

I have some German ancestry. On my father's side my great-grandmother emigrated from Germany to New York City where she married another German immigrant who died young. One of her nephews (my grandfather's cousin) was conscripted late in WWII and sent to the Eastern Front. He disappeared as the Red Army advanced westward. My grandfather fought in the Pacific.
    "Inglorious Basterds" did have some good Germans, so to speak: the starlette played by Diane Krueger and Til Shweiger's Sgt. Hugo Stiglitz. And the German soldier who had heard of Stiglitz was pretty tough and honorable in a way:

My third blog post back in March 2004 on the first day of the blog's existence.

Titled: "Fast, badass zombies versus slow, dumbass zombies" and linked to "My Stupid Dog" blog.

Dawn of the Dead and ressentiment

I probably won't see the remake of George Romero's Dawn of the Dead. I love the original, though I think Romero lost the eeriness of Night of the Living Dead when he decided to make Dawn in color. But the remake has one major problem that I could see from a mile away.

To paraphrase James Carville, it's the zombies, stupid. In the remake, they're first-rate badasses. They act as if they were on a constant adrenaline high. They have extra speed and super strength. They are powerful. They're much like the beefed-up, overcaffeinated, perpetually angry "infecteds" in Danny Boyle's recent 28 Days Later. And they're all wrong.

Romero's zombies are weak, slow and stupid. You could outsmart one, outrun it, or if need be, take it down in a fair fight. The only problem is, these zombies vastly outnumber any humans still alive. The ratio is several dozen zombies to one warm body in Night; by Day of the Dead it's grown to something like several hundred thousand to one.

In Romero's Dead trilogy, zombie attacks become an objective correlative for what Nietzsche called ressentiment. They involve a mobocratic tyranny, as weak and incompetent corpses band together and achieve a dominance over the living minority that they could not otherwise attain. It's no surprise, then, that Romero's zombie attacks usually involve a surrender of the individual "live" person to a mob of walking dead. Dawn and Day both feature an attack in which dozens of zombie bodies burst from an enclosed space (in Dawn, an elevator; in Day, a locked roof) and overwhelm a human in a wave attack. Most telling, though, is that when the zombies attack, their arms are outstretched toward the victim, as if they were begging for something. Which, in a manner of speaking, they are: They all want a little piece (or maybe a big piece) of the human victim. Engulfed in this mob's sudden coercive demand, the living human falls to the ground, where seething masses literally devour him.

Seldom do these zombies succeed at a one-on-one attack, and when they do, it's usually because the victim has a misplaced sense of compassion. Of course, Nietzsche claimed that along with democracy, compassion and religion were other weapons that the weak routinely use against the strong. But in Romero's Dead trilogy, victims of one-on-one attacks seldom die quickly; instead, they malinger for days, "infected" by a deadly virus which apparently all walking dead carry. Upon their death, they become assimilated into the faceless mob. Compassion for the weak comes with a very heavy penalty.

Of course, the survivors in Romero's films don't fare too well, either: Their individualistic tendencies lead to squabbling and bickering. In the Dead trilogy this infighting becomes an all-too-predictable motif. Individuals seem more concerned with battling each other than with defeating the hordes of walking dead, and as a result they are unable to form the coalitions necessary to turn the tables on the mob.

Nietzsche's vision of individualism was no less tragic. The social apparatus, fueled by ressentiment, stacks the deck against the great-souled man (or ubermensch) to the point that his only real options are to withdraw or perish. Dawn and Day opt for withdrawal; Night, the most bracing and unnerving of the three, chooses death instead. Ayn Rand attempted to resolve this basic problem in Atlas Shrugged by uniting all productive men and women. Yet she fails to recognize that John Galt's crypto-fascist consensus of resistance is no more conducive to individual activity than the repressive societies these productive folk attempt to resist.

Whatever we can say of Romero, he is at least smarter than Rand. His zombie flicks frighten us not just because they're gory or shocking, but because they insinuate that, much as we may like the idea of individualism, it may not have much of a future in an increasingly mobocratic society. The idea of being overwhelmed by stinking masses, of being forced into a way of life (or death) we would not choose for ourselves, lies at the maggot-infested heart of the original Dead trilogy. That's why it disturbs us long after the lights come up.

The slow, dumbass zombies of "The Walkind Dead" return in February. The zombie phenomenon is now rivaling the vampire one. These are the fastest, badass zombies I've seen to date:

Coin of Freedom

The platinum coin idea is idiotic. That is the point. by Neil Irwin (Jan. 9)

This idea is positively idiotic, though it has gained a more and more respectable set of fans. (They now include Bill Gross, the nation’s biggest bond investor, a Bush administration economist named Donald Marron, and the Nobel laureate and New York Times columnist Paul Krugman). Some of the critics are misunderstanding what it would do and wouldn’t do. The fact that it is idiotic is kind of the point.

Everything You Need to Know About the Crazy Plan to Save the Economy With a Trillion-Dollar Coin by Matt O'Brien

Enter the trillion-dollar coin. It sounds nuts. But there's a loophole that actually lets the Treasury create coins in whatever value it wants, even $1 trillion. It's all straightforward enough. The Treasury would create one of these coins, deposit it at the Federal Reserve, and use the new money in its account to pay our bills if the debt ceiling isn't increased. This has gone from being just another wacky idea in the world of internet comments to something that's getting taken seriously due, in large part, to the efforts of Joe Weisenthal of Business Insider and Josh Barro of Bloomberg View to promote it. (Which you can follow on Twitter at #MintTheCoin). Their logic is that as silly as the trillion-dollar coin sounds, the debt ceiling is far sillier -- and much more destructive.

As this terrifying report from the Bipartisan Policy Center shows, the consequences of going over the debt ceiling are unthinkable and unpredictable. At best, it will mean immediate 40 percent austerity; at worst, it will mean an outright default on our debt. Both are bad enough that a legal gimmick like the trillion dollar coin sounds sane in comparison, if it comes to that. At least that's what Representative Jerry Nadler, Paul Krugman, and, as of pixel time, over 6,000 other patriotic Americans think.

The Hobson's choice is either let the economy crash and burn or further the banana-republicization of America.

Jeffrey Lacker, a Man Who Never Changes His Mind No Matter How Often He's Wrong by Yglesias

A Bold Dissenter at the Fed, Hoping His Doubts Are Wrong by Binyamin Appelbaum

Okun, Unemployment, and Wages by Jared Bernstein

Keith Phipps leaves the A.V. Club.

ROUGH TRANSCRIPT: STIMULUS OR STYMIED?: THE MACROECONOMICS OF RECESSIONS

Panel Moderator: J. BRADFORD DELONG (University of California-Berkeley)

Panelists:
CARLO COTTARELLI (International Monetary Fund)
PAUL KRUGMAN (Princeton University)
VALERIE A. RAMEY (University of California-San Diego)
HARALD UHLIG (University of Chicago)

The Frustrating Fiscal Stimulus Debate by Yglesias

Is he right? Will rightwingers admit they don't care about the unemployed, inequality or the output gap? You would think that rightwingers would like to close the output gap and then funnel the gains to the 1 percent and/or cut taxes.

Nate Silver on Reddit today at 1 p.m. CST.

Bobo Brooks pushes the Pete Peterson agenda and lies by omission once again by failing to mention the housing bubble.

Andrew Ross Sorkin waves away the housing bubble and financial crisis by classifying them as a once-in-a lifetime event:

While there is no question that the original rules would do a better job preventing the next 100-year flood in the banking system, their quick adoption most likely would have created their own drag on the economy because bank lending would most likely have been curtailed.

Hopefully Yellen is right and Bernanke will raise rates on reserves to slow the economy when it needs slowing in 2018 or whenever the output gap is closed.

Why Is Our Policy Agenda So Biased Toward Fiscal Policy? (As Opposed to Jobs…) by Jared Bernstein
TARP didn't buy a recovery as Geithner promised and it discredited ARRA in the public's confused mind. We spend all of this money for such a tepid recovery.

Romer & Romer on Monetary Policy Complacency by Yglesisas

The Fire Next Time

Or Hostage-taking extortion by the banks and Republicans

Rebranding the “trillion-dollar coin” by Steve Randy Waldman

Kicking the can down the road, either by Waldman's reasonable suggestion or by a deal that doesn't include cuts to entitlement benefits but does have spending cuts, may buy time for the Republicans to be voted out of office. My preference would be for a confrontation.

Secret and Lies of the Bailout by Matt Taibbi

Yellen: Fed Likely to Vary Interest Rates for Reserves in Future (via Thoma)

I don't believe there will be bailouts next time. And there will be another bubble as the financial industry successfully blocked reforms.

So we should just shoot the hostages in both cases and let the banks and Republicans deal with the consequences.

Sen. John Cornyn's Outrageous Op-Ed on the Debt Ceiling by Yglesias

Politicians are often successful shakedown artists and the debt ceiling clown show is just a big shakedown. Republicans lost the Presidential race and Senate seats hopefully in part because of the clown show in 2011.

JW Mason comments on Quiggins's post:

 I suspect this is a major direction realistic policy-oriented macroeconomics is going to go in — that if you want central banks to be responsible for stabilization policy, it’s not enough for them to set the short-term risk-free rate, they need to also control interest rate spreads and the composition of lending, implying. a much more comprehensive set of controls on credit markets.

MATT O'BRIEN VS. MARTIN FELDSTEIN ON QUANTITATIVE EASING by DeLong

Tax Code May Be the Most Progressive Since 1979 by Annie Lowrey

Construction Numbers May Not be What They Seem by Dean Baker

The state of macroeconomics: it all went wrong in 1958 by John Quiggen

Third, Friedman used his critique of fine-tuning that macro policy should be confined to a rules-based monetary policy, with no role for fiscal policy. Although Friedman’s own prescription (a rule controlling the rate of growth of the money supply) was unsuccessful and quickly abandoned, these ideas were the basis of the policy regime, based on the use of interest rates as an instrument to meet inflation targets, that prevailed from the 1980s to the financial crisis, and to which central banks plan to return as soon as the crisis is over. 

The real decline was in the 1970s and 1980s, as Friedman’s already overstated critique of Keynesianism was pushed to the limits of credibility and beyond. The big ideas of the period: Ricardian equivalence, Rational Expectations, Policy Ineffectiveness, Microfoundations, Real Business Cycle theory and the (strong-form) Efficient Markets Hypothesis were based on plausible (to economists, anyway) arguments. They didn’t have much empirical support but, given that Keynesian models weren’t working well either, this wasn’t enough to stop them taking over the debate. 

The main response was New Keynesianism which showed that with plausible tweaks to the standard micro assumptions, some Keynesian results were still valid, at least in the short run. New Keynesianism gave a rationale for the countercyclical monetary policies pursued by central banks in the inflation targeting era, whereas the classical view implied that a purely passive policy, such as Friedman’s money supply growth rule, was superior. Broadly speaking the pre-crisis consensus consisted of New Keynesians accepting the classical position in the long run, and most of Friedman’s views on short-term macro issues, and abandoning advocacy of fiscal policy, while the New Classicals acquiesced in moderately active short-term monetary policy 

How you evaluate this consensus depends on your view of the period from 1990 to the crisis. Noah Smith, quoting Simon Wren-Lewis says 

Implicit in this view is the idea that the Great Moderation was a policy success and that the subsequent Great Recession was the result of unrelated failures in financial market regulation. My view is that the two can’t be separated. In the absence of tight financial repression, asset price bubbles are regularly and predictably[3] associated with low and stable inflation. Central banks considered and rejected the idea of using interest-rate policies to burst bubbles, and the policy framework of the Great Moderation was inconsistent with financial repression, so the same policies that gave us the moderation caused the recession.

To sum up, work done in macroeconomics since the discovery of the Phillips curve has offered an improved understanding of a wide range of issues. On the other hand, it has produced and sustained the dominance, in central banks and in much of the economics profession, of an empirically unsupportable position that is resolutely opposed to fiscal stimulus, or to any large-scale countercyclical policy. It has also diverted most of the intellectual energy of academic macroeconomists into a largely fruitless search for microfoundations, at the expense of an improved understanding of the various co-ordination failures that are at the heart of the macroeconomic problem. 

I don’t suggest throwing out everything that’s been done since 1958 and starting all over from there. But, in many ways, that would be a better choice than continuing on the current path.

The New Tell-All Fed by RANDALL S. KROSZNER

After the Japanese economy declined in the early 1990s and fell into deflation, the Bank of Japan dropped interest rates to nearly zero and embarked on a huge asset-purchase program (the pioneering “quantitative easing” program). The actions were on a much larger scale relative to G.D.P. than what the Fed has done. 

Japan’s central bank, however, made the mistake of emphasizing that these purchases were only temporary and would be reversed at the first signs of the proverbial “green shoots” of recovery. Despite the bank’s large-scale asset purchases, the uncertainty that these statements created undermined confidence and the willingness to borrow. The bank’s words spoke louder than actions. 

The highest priority in the economic revival plan of the newly elected prime minister, Shinzo Abe, is to strong-arm the Bank of Japan into acknowledging that it will do simply “whatever it takes” to reverse deflation there and allow a recovery to take root. 

Mark J. Carney, the head of Canada’s central bank and soon to be the governor of the Bank of England, also seems to be embracing the “whatever it takes” theory of communications: tying monetary policy to a single measure of overall economic health (like nominal income) rather than multiple metrics (inflation, inflation expectations, unemployment numbers) that may be even easier to understand. 

The Fed might well consider alternative economic indicators as it assesses whether its interventions are reducing uncertainty and promoting recovery. But the key, it seems, is to be forthcoming about its thinking with the American people. For now, the bank’s smart, calibrated open-mouth policy has been a step in the right direction.

(via Thoma)

Coin of Freedom

What goes on the other side of Ronnie Raygun's face?

Deo vindice often translated as "God will vindicate us."

Were the G.O.P. Votes Against Boehner a Historic Rejection? by Micah Cohen

Lessons From Europe on Averting Disaster by Floyd Norris

The reality is that the current budget deficit largely reflects two things: exceptionally low government revenue and the continuing problems caused by the financial crisis and recession that followed the bursting of the housing bubble. Bringing tax revenue back to historical levels, as well as the growth in revenue and reductions in spending that will automatically follow an improving economy, will make a major difference. 

There are issues that must be addressed regarding health care costs and Medicare, as well as the fact that there will be fewer workers for each retiree as the baby boomers retire. But those who see a Greek-type crisis here should ask themselves why the government can borrow at interest rates that remain extraordinarily low. The world’s trust in Uncle Sam’s ability to pay its debts has remained high. 

What are not high are taxes, although a poll would no doubt show that many people think otherwise. 

Federal taxes, relative to the size of the economy, are significantly lower than they were after Ronald Reagan cut them. During 2012 federal revenue amounted to around 17 percent of gross domestic product. At the Reagan low point, the figure was a full percentage point higher. In 2009, when the deficit was ballooning, the figure fell below 16 percent, something that had happened only once during the more than 60 years for which comparable data is available. 

Back in 2000, federal revenue approached 21 percent of G.D.P. The assumption that such strong collections would continue played a major role in the forecasts of budget surpluses as far as the eye could see. In 2001, aides to President George W. Bush pointed to the figure as proof that Americans were overtaxed. It turned out that tax revenue figures were temporarily inflated in two ways by the bull market in technology stocks. Not only were there a lot of capital gains to be taxed, but soaring share prices also produced a lot of ordinary income for those employees and executives who could cash in stock options. 

At the time, it was assumed that such options had no significant impact on tax revenue, because the income that went to the employee provided an offsetting tax deduction for the company that issued the options. That might have been true had the companies been paying taxes, but many of the most bubbly stocks were in companies that never had, and never would, pay a dollar in income taxes.

That revenue would have come down sharply after the technology stock bubble burst, even without the Bush tax cuts. But those tax cuts worsened the situation and are a major cause of the current deficits.

Los Angeles Times Effort to Promote Generational Conflict Flunks Reality Test by Dean Baker

Over the longer term deficits are projected to be a problem, but this is because of the projected explosion in health care costs, not the aging of the population. If U.S. per person health care costs were comparable to those in any other wealthy country we would be looking at long-term budget surpluses, not deficits. This suggests that there is a conflict between the interests of the public at large and the health care providers (e.g. the drug, insurance and medical supply companies and high paid medical specialists), but not between generations.

Finally, it is important to note that the cuts that have been proposed for Social Security and Medicare, such as raising the normal retirement age or the age of eligibility for Medicare would primarily hit the young, not people currently receiving benefits from these programs. Polls have shown that seniors often support these programs because they want to ensure that their children and grandchildren get the same benefits that they enjoy, not out of a selfish impulse to protect what they have.

The Coin Option

Atrios:

It's perfectly legal so just do it, or threaten to anyway.

Put Reagan on it, just for giggles.

Ronnie Raygun on the coin would be hilarious. Call it the Freedom Coin.

Liberalism Is Alive and Well—America May Be Doomed by Yglesias

What we learned, in other words, is that even with a Democratic President in the White House who's eager to cut spending on retirement programs they still don't get cut. That's how robust the welfare state is. Recall that the last time we had a Republican President in the White House what he did was make Medicare benefits significantly more generous. Recall also that Mitt Romney ran on a pledge to increase Medicare benefits for ten years and then offset that by cutting benefits for younger people in the future. That's how robust the welfare state is. Concern trolling about Democratic senators' willingness to blink on taxes is neat, but all we're seeing again and again is confirmation of Paul Pierson's thesis from Dismantling the Welfare State?, namely that dismantling the welfare state is incredibly difficult.

Depressing reading

Does "Changes" Mean Something Different at the NYT Than in Normal English? by Dean Baker

"In the 2008 campaign, Mr. Obama said that his top priority as president would be to “create bottom-up economic growth” and reduce inequality. He has governed as such." 

This is at best debatable. President Obama bailed out the big Wall Street banks, allowing them to get trillions of dollars in loans at below market interest rates. This massive subsidy allowed many of the richest people in the country to preserve their wealth when market forces left to themselves almost certainly would have put most of the major banks out of business. 

Obama has also refused to make a reduction in the value of the dollar a top goal in trade policy. A lower valued dollar would create millions of new manufacturing jobs by making U.S. goods more competitive in the world economy. This would provide a strong boost to labor demand and wages.

Some Perspective on the Fiscal Cliff Deal by Jared Bernstein

Social Security: Principles, Facts, and Fixes by Bernstein

My Views on Spending Cuts and Entitlements by Bernstein

In Case You Were Dying For More Polemics On the Chained CPI…Here Ya Go: by Jared Bernstein

But They Will Always Smash It On The Floor by Duncan Black

But Republicans will inevitably see a balanced budget as an opportunity to give money to rich people (tax cuts and crony capitalism). The reward for liberals for this well done very important work? Tax cuts for rich people and unpaid for disastrous wars. 

Liberals should spend their time in office figuring out how to implement a sticky liberal agenda, one which is hard to dislodge, not figuring out how to create a pot of money for Republicans to steal when it is their turn.

As Baker points out, the tax cuts for rich people and unpaid disastrous wars didn't bust the budget, the housing bubble did that. We need a way to fix the shampoo economy.

Exciting reading:

Commenter at Beat the Press writes:

"President Obama is a huge fan of Lincoln's second inaugural address. Hopefully, President Obama's second inaugural won't disappoint."

Yes! I hope he lays into the debt ceiling clown show, more Jamie Foxx on jobs spending than Samuel Jackson on deficit reduction and "shared sacrifice."* This will be his legacy.

----------------------------
*Reference to the new film "Django Unchained."

Krugman against Dan Kervick and the MMTers:

But leaving the debt ceiling on one side, isn’t it true that since spending can currently be financed by Fed money printing, we shouldn’t care at all about the notional debt owed to the Fed? Alas, no. 

It’s true that printing money isn’t at all inflationary under current conditions— that is, with the economy depressed and interest rates up against the zero lower bound. But eventually these conditions will end. At that point, to prevent a sharp rise in inflation the Fed will want to pull back much of the monetary base it created in response to the crisis, which means selling off the Federal debt it bought. So even though right now that debt is just a claim by one more or less governmental agency on another governmental agency, it will eventually turn into debt held by the public. 

We are living in weird economic times, where many of the usual rules don’t apply and there are big free lunches to be had. But not everything is a free lunch, even now. Sorry.

Scary comment from Lee A. Arnold at DeLong:

Wedges driven in, by clockwork. It looks to me like Speaker Boehner is fed up with the Tea Party, and so he asked the Senate Republicans to come up with something the Senate Democrats would pass, in order to put the intractable House members on the spot. So one wedge is being driven into the Republican Party between the moderates (such as they are) and the wingnuts. The next debate becomes rhetorically very simple: debt ceiling vs. cuts to Social Security and Medicare. And those cuts can be blamed squarely and publicly on the House Republicans. So the second wedge will be driven between the Republican Party and the rest of the country. If the Dems can get back the House in 2014, we could finally start taxing the people who can afford it.

If he means the cuts will be enacted, that's scary. If not, hopefully this wedge action happens and the Republicans lose the House.

The Great Society's Next Frontier by Mike Konczal

Full Employment Is the Best Social Program by Mike Konczal

I pretty much agree with Konczal.

The Winners and Losers in the Fiscal-Cliff Deal by Yglesias

The elderly: As recently as yesterday morning, it was taken for granted that one of the major provisions of an alternative to the fiscal cliff would be cuts in the federal retirement security programs that are the main long-term drivers of deficits. But ultimately Democrats cared more about avoiding spending cuts than securing tax revenues, and Republicans cared more about low taxes than cutting spending. Old people are the winners.

Emphasis added. Yglesias recently blogged that he got a mortgage and this is Exhibit A of what happens when someone gets one.

The main long-term driver is Medicare and our broken health care system which is much more inefficient than any other advanced nation's system. The main short-term driver is the after-effects of the bursting of the housing bubble.

That Bad Ceiling Feeling by Krugman

So, why am I feeling so despondent, and why do so many other progressives, like Noam Scheiber, feel the same? Because of the way Obama negotiated. He gave every indication of being more or less desperate to cut a deal before the year ended — even though going over the fiscal cliff was not at all a drop-dead moment, since we could have gone weeks or months without much real economic damage. 

Now, given his evident antsiness to cut a deal in this case, how credible is his promise to hang tough over the debt ceiling, which is a much brighter red line? He may say that he absolutely, positively won’t negotiate over the ceiling — but nothing in his past behavior makes that believable. 

Maybe this time will be different. Maybe the Treasury is secretly preparing to invoke the 14th amendment, or issue a trillion-dollar platinum coin, or direct that the whole budget gap be taken out of spending dear to Republicans. But I have to say that I now expect Obama to cave on the ceiling; and so, of course, do the Republicans, which means that the crisis is going to happen. 

The only thing that might save this situation is the fact that Obama has to be aware just how much is now riding on his willingness to finally stand up for his side; if he doesn’t, nobody will ever trust him again, and he will go down in history as the wimp who threw it all away. 

But even that may not be enough. I guess we’ll see.

House and Senate Democrats have to say no to cuts in Social Security and raising the eligibility age of Medicare.

Maybe in two months the economy will be in a better place so the threats by the nihilistic Republicans will be less threatening.

So, Krugman, Baker, Sheiber and Tim Duy believe Obama will cave. Commenters Cawley, Kervick etc. KNOW he will.

My guess is that they they will follow the usual clown show routine per Scheiber:

For Democrats, the optimistic take-away is that the two parties set up a mechanism for getting deals done, which is roughly as follows: First, the White House works out a compromise with Mitch McConnell, which passes the Senate with a bipartisan super-majority. This effectively isolates the House GOP and tells John Boehner the game is up. Boehner then lets his conservative members kvetch at length about McConnell’s treachery and the cosmic unfairness of it all. But eventually he brings up the compromise for a vote, and it passes with several dozen Republicans and a majority of Democrats.

Suffice it to say, the process is messy and full of anxious last-minute lurches in either direction. But it ultimately gets the job done. We could do worse than running the same playbook when we’re on the clock again in March.

Obama's legacy

What Did You Learn From the Cliff Debate, Dorothy? (And the most important question in today’s politics.) by Jared Bernstein

Interestingly, the administration has a chance to make a real difference in this area while at the same time dealing with the Congressional threat noted above: do not negotiate with the Republicans on the debt ceiling. 

It is unthinkable that the nation should, in weeks, be put through another crazy fiscal debate, this one with even higher stakes. It is even more unthinkable to allow a group of renegades to force national default in order to get a dollar of spending cuts for each dollar increase in the ceiling (and again, beyond sweeping calls for reducing caps of non-defense spending, something we’ve already pushed too far, they don’t have a plan here either). 

The debt ceiling seems like an insurmountable problem, but I’m reminded of what the noted philosopher Donny Rumsfeld used to say in such cases: “if you can’t solve a problem, make it bigger.” This isn’t just a debt ceiling debate. It’s a chance to shut down a dynamic wherein Congress (i.e., Congressional Republicans) doesn’t solve economic problems, it creates them. 

By over-riding them, blowing past them, ignoring them as irrelevant, and refusing to negotiate on the basis of the chief executive’s Constitutional responsibility to maintain the nation’s creditworthiness, the President can deal a fatal blow to these dangerous obstructionists. To do so would not only make a big positive difference to today’s politics and economy. It would be a precious gift to posterity.

DeLong:

"But by my back-of-the-envelope count, the deal the Obama administration has agreed to still leaves a net fiscal impetus of -1.75% of GDP to hit the U.S. economy in 2013. "

Commenter Sadowski at EV:

"If it's delayed for two months and then goes into effect that brings it to 0.67% of GDP. Add in 0.56% for the payroll tax increase and 0.1% for high income tax increase (it's actually less) and you get to a negative fiscal impulse of at most 1.33% of GDP. That's less than 46% of the 2.9% negative effect on GDP estimated by the CBO, not 60%, as estimated by DeLong."

Bernstein:

As I write, the House hasn’t passed the bill yet, but if they do, as expected–with mostly D’s, btw–then we’re looking at some serious negative fiscal impulse coming…I’d guess around 1% of GDP (maybe less with no sequester).

Dean Baker:

We are now entering a new round of negotiations over extending the debt ceiling where the Republicans would appear to hold many of the cards.

While the consequences may not be as dire as the pundits claim, no one could think it would be a good idea to allow the debt ceiling to be reached and force the government into default. The Republicans intend to use this threat, however, to coerce further concessions from President Obama. The president insists that there will be no negotiations over the debt ceiling: no further concessions to protect the country's financial standing.

At this point, though, is there any reason for people to believe him?

This is a president who encouraged members of Congress to vote for the Troubled Asset Relief Program (Tarp) in 2008 with a promise that he would put bankruptcy cramdown for mortgage debt (allowing restructuring of housing loans for people with distressed mortgages) at the top of his agenda once he took office. This is a president whose top aids boasted about "hippie punching" when they ditched the public option in the Affordable Care Act. This is a president who has explicitly put cuts to social security on the agenda, while keeping taxes on Wall Street speculation off the agenda.

And this is a president who decided to put deficit reduction, rather than job creation, at the center of the national agenda – even though he knows the large deficits are entirely the result of the collapse of the economy. And, of course, he is the president who appointed former Senator Alan Simpson and Morgan Stanley director Erskine Bowles to head his deficit commission, enormously elevating the stature of these two foes of social security and Medicare.

Given his track record, there is little doubt that President Obama can be trusted to make further concessions, possibly involving social security and Medicare, in negotiations on the debt ceiling. Oh well, at least we can laugh at the experts being wrong about the fiscal cliff "Mayan apocalypse".

I think it's more of an open question.

Shoegazing sound

Common musical elements of shoegazing consist of distortion, droning riffs and a "wall of sound" from noisy guitars. Typically, two distorted rhythm guitars are played together to give an amorphous quality to the sound. Although lead guitar riffs were often present, they were not the central focus of most shoegazing songs.

Vocals are typically subdued in volume and tone, but a strong sense of melody generally exists underneath the layers of guitars. However, lyrics are not emphasized and vocals are often treated as an additional instrument.[3] While the genres that influenced shoegazing often used drum machines, shoegazing more often features live drumming.

The name was coined in a review in Sounds of a concert by the newly-formed Moose in which singer Russell Yates read lyrics taped to the floor throughout the gig.[4] The term was picked up by the NME, who used it as a reference to the tendency of the bands' guitarists to stare at their feet—or their effects pedals; seemingly deep in concentration, while playing.

The Jesus and Mary Chain

My Bloody Valentine

In January 1988 My Bloody Valentine played a gig with Biff Bang Pow!, a band that featured Creation Records owner Alan McGee as a member. The performance convinced McGee that they were the Irish equivalent to American band Hüsker Dü, and he approached the band after the show.

Hüsker Dü

Hüsker Dü was particularly influenced by punk bands like D.O.A., Dead Kennedys, and The Fartz after having seen them play....

Through heavy touring they soon caught the attention of punk trailblazers like Black Flag and the Dead Kennedys' Jello Biafra, which helped introduce Hüsker Dü to new fans. Black Flag guitarist/songwriter Greg Ginn later signed the band to his label, SST Records.... 

Unlike other hardcore bands, Hüsker Dü did not disavow classic rock. "You know the whole deal with tearing down the old to make room for the new?", Hart posited. "Well, music isn't city planning."... 

The band also set an example by being one of the first bands from the American indie scene to sign to a major record label, which helped establish college rock as "a viable commercial enterprise."[28] 

Kim Deal joined the Pixies in response to a classified ad placed by Black Francis seeking a female bassist who liked both Peter, Paul and Mary and Hüsker Dü.[29] 

Nirvana bassist Krist Novoselic has been quoted as saying Nirvana's musical style was "nothing new, Hüsker Dü did it before us."

How was your week? with Julie Klausner

In her recent podcast, she has a funny riff on watching the Exorcist the first time. She was struck by how dumb and immature the pre-possed 12-year old Regan was, and she should be masturbating at that age, if not with a crucifix. And that the devil's insults via Regan were hiliarious John Waters-level quality.

A Podcast That Has Old-School Smarts

Ms. Klausner, 34, delivers around 20 minutes of topical jokes, offhand theories, an occasional song. She might speak melodramatically about her cat, Jimmy Jazz, or describe one of her various Twitter feuds with marginal cultural figures.
...
Her assumption that her audience gets her references contributes to the show’s knowing, personal voice, which brings to mind Moss Hart’s description of the way actors talk among themselves: “gay, sardonic and very often sprinkled with a nice edge of malice.” 

Ms. Klausner might be at her most irresistible when the speed of her monologue picks up, and she seems to be working out ideas out loud. As critics develop and refine opinions into reviews, their first impressions, which is often the most honest ones, can get lost or muted. That rarely happens in “How Was Your Week?” In fact, Ms. Klausner, who studied at the Upright Citizens Brigade, makes you think that criticism could learn something from improv.
...
Recently she talked about spitting on a man who slapped her near the Vatican, chatted about the Holocaust, analyzed “Rosemary’s Baby” and mocked Ricky Gervais. But all these riffs were anchored, believe it or not, by her confession that she now believes in the Devil.

Demand Management

Noah Smith's contention that Japan is merely talking down the yen is thought-provoking, as is the commentary Yglesias has been writing. For example:

Currency Wars Aren't Zero-Sum

In a demand-deficient environment, currency wars would help. Perhaps in the far off distant future a sane IMF and WTO would weigh in so nations wouldn't go overboard.

Currently:

1) the US has a large output gap, high unemployment and low inflation

2) Japan is stuck in a deflationary rut

3) Europe also is treading water

4) China is sucking out demand of 1-3 by keeping its currency low.

1-3 have 4 options of adding demand to their economy.

1. Take from creditors/savers and give to debtors via inflation.
2. take from rich nationals and give to the government to spend via fiscal policy. Deficit spending would be taking for future generations.
3. devalue/bring your currency to down to take from foreign exporters and give to national exporters. This would also hurt savers as their savings is devalued and can purchase less from foreign exporters. It is more politically feasible than merely taxing rich nationals in that the rich are a powerful political constituency
4. there's the expectations channel which is more tricky. Investors move their money to riskier investments because of expectations of rising inflation and economic growth. See 1 above.

A future super-combo IMF-WTO global demand management institution could adjudicate a currency war.

The more inflation one had and the more progressive a tax system, the less one would have to depend on exports. 

Once a nation had closed the output gap and had full employment, it would no longer be allowed to manipulate its currency.

Should Japan Reflate? by Noah Smith

In the comments

• Absalom: "The Japanese unemployment rate is apparently 4.1%. There may be little that can be done through monetary easing that would make much difference. My understanding is that one of the things holding the Japanese economy back is that the domestic economy is heavily regulated. De-regulating the domestic economy might be a way to bring some dynamism to the economy (but at the potential cost of increased unemployment)."
• Noah Smith: "Once again, Absalon and I are in complete agreement...Absalon, you hereby win "commenter of the month"..."
• Me: "I'm a complete amateur and find the discussion thought-provoking.
  
  If the unemployment rate is so low, wouldn't talking down the Yen be inflationary as the export sector picks up and looks to hire more workers? Or would they just add more robots?"

What's Going To Matter In 2013 by Yglesias

Japan: If Shinzo Abe can bring Rooseveltian resolve to Japan and break the back of deflation, it'll be important not just for the world's #3 economy but as an example to the rest of the developed world. Noah Smith, who knows Japan much better than I do, says we shouldn't put our faith in Abe who's really just an ugly nationalist and not any kind of monetary policy wonk. I would say there's no contradiction there. The ugly nationalists running Japan in the 1930s were the first to ditch gold and beat the recession. Adolf Hitler ran a very intelligent and forward-thinking monetary policy regime. Sometimes it takes a national security hawk to beat the inflation hawks. That said, if the upshot is an invasion of Manchuria and a sneak attack on Hawaii we may end up missing the good old days of prolonged Japanese economic stagnation.

Smith seems to have rewritten his blog post ("OK, maybe I'm wrong. I'm no expert in Japanese politics, just a guy who has been reading about the LDP for a long time. If Abe follows through on his radical monetary proposals, I'll gladly eat crow. But think of it this way. ") and has a second update:

Update 2: I think Reddit puts it very succinctly by saying: "Shinzo Abe isn't reading Scott Sumner, he just wants a return to Japanese mercantilism." That's exactly it. A mercantilist in monetarist's clothing.

And then weirdly Smith seems to be agreeing with Yglesias in a new post "Should Japan Reflate?"

Now, I've gone on the record as a skeptic regarding the power of central banks to fine-tune the macroeconomy. In that post, I mentioned the idea of an inflation "snap-up", where expansionary monetary policy suddenly and unpredictably pushes inflation from very low to problematically high. Also, I've cast doubt on the idea that Shinzo Abe, the current hero of the Japanese "reflationist" camp, is really committed to following through on the radical changes he's proposed. 

Still, I think that if Japanese politicians and policymakers were willing to try a big push for reflation, it would be a good idea.

IN THE ROUGH: Rihanna’s strange kind of fame. BY SASHA FRERE-JONES

ABSTRACT: POP MUSIC about Rihanna. Everything that the twenty-four-year-old R. & B. star Rihanna does comes with something extra: enormous numbers, awkward questions, unconfirmed stories, unclaimed responsibilities. Rihanna has sold more digital copies of her work than any other artist, including the Beatles. Her current No. 1 single, “Diamonds,” off her seventh album, “Unapologetic,” is her tenth. But all her accomplishments are sometimes overshadowed by her relationship with Chris Brown. Describes Brown’s assault on her, and its aftermath. It’s very hard to find a consistent Rihanna in any of her music. She has been, wisely, a carpetbagger from the beginning. Her voice isn’t particularly compelling; it conveys not emotion, but, rather, a position of powerful detachment. There’s so much Auto-Tune applied to her voice that it’s hard to say how she does or doesn’t sing. What she has done to remain a pop star is to choose very well-written songs.

Bernanke Helps the Economy and the Masses with Low Interest Rates by Dean Baker

William D. Cohan, a columnist for Bloomberg View, is the author of “Money and Power: How Goldman Sachs Came to Rule the World” and “House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.”

Baker rightly calls Cohan's op-ed bizarre.

AND JON HILSENRATH OF THE WALL STREET JOURNAL GETS ONE WRONG... by DeLong
Gauging the Guidance That Models Give the Fed by John Hilsenrath

The financial gaps in the models worry Nathan Sheets, a Citigroup economist who was Mr. Bernanke's top international adviser at the Fed from 2007 to 2011. Mr. Sheets points to 1994 as an example of why. Back then, small increases in short-term interest rates by the Fed led to a surge in long-term interest rates. The models didn't foresee the financial chaos that would ensue, including the collapse of investment bank Kidder Peabody & Co., the bankruptcy of Orange County, Calif., and the Mexican peso financial crisis…

 Because Citigroup has such a great track record. Sheets is arguing the same thing Cohan is.

DeLong writes:

Mr. Sheets's warning certainly warrants attention if you are a hedge fund or an investment bank thinking of replicating Kidder Peabody's or Orange County's portfolio--but you should have already known not to do that. 

But should Mr. Sheets's warnings have led the Federal Reserve to do something different than it has done? In retrospect the Federal Reserve certainly wishes that it had given more guidance at the start of 1994 as to the likely shape of its interest-rate tightening cycle and that it had at the start of 1994 incorporated the endogenous duration of MBS into its models in the way that it had incorporated them by the end of 1994. However, if the employment and output recovery evolves going forward as the recovery of the 1990s evolved in 1994 and thereafter, the Federal Reserve will be not dismayed but ecstatic.

The fixed-income lobby? The 1990s ended with a stock bubble however. And we had the East Asian financial crisis in 1997.

 

Lucky/smart actors: Giovanni Ribisi in Sofia Copolla's "Lost in Translation" shared scenes with Scarlett Johansson and Anna Faris. Paul Rudd and Adam Scott got to work with Elizabeth Banks, Zooey Deschanel,  and Rashida Jones in "Our Idiot Brother."

Central Planners

Wikipedia articles on:

Economy of Nazi Germany

Economy of the Soviet Union

The New Deal

commenter at DeLong's blog writes

Bob isn't quite as crazy as Greenspan though. Greenspan would say, "It is unfortunate that we haven't had 10% inflation because the markets might stop expecting inflation, producing a sense of complacency, and could render them ill-prepared when it does happen." 

Translation: "The markets are wrong." Perhaps he wants to use 'central planning' to force people out of bonds... oh, wait... that is what the debt ceiling default is for! The Republicans are central planners who wish to plan the end of the USA.

 It is ironic when libertarians say that the infallible market is wrong. It is quite often wrong as DeLong and Krugman point out, even if they take the market more seriously than glibertarians do.

Markets can be subject to panic (see 2008) and bubbles (pre-2008). As Yglesias writes in a thought-provoking post in the context of Shinzo Abe and the LPD's landslide election:

From time to time sheer economic desperation will give us a Junichiro Koizumi or a Franklin Roosevelent but Koizumi didn't last and FDR plunged the country back into recession in 1937 with contractionary policy. Foreign policy crisis is the main thing that drives a national establishment toward heterodoxy and growth. Nobody tried to finance either world war on a sound money basis, and in most respects Keynesian theory followed wartime practice rather than vice versa.

The Signal of Inflation Expectations and the Noise of Everything Else

ROBERT MURPHY'S BET THAT INFLATION WAS JUST AROUND THE CORNER HAS GONE ABSOLUTELY HORRIBLY WRONG by DeLong

During the housing bubble, inflation was under control. What was needed (and will be needed) were anti-bubble-blowing policies on taxes and regulations. Bernanke contends that the Fed didn't blow the bubble, but as Dean Baker and others point out they could have talked it down.

Questions for Joe Gagnon: What is Quantitative Easing, Does it Work, and Should We Do QE3? by Mike Konczal (June 14,2011)

MK: So did QE2 work? And if so, how can you tell? 

JG: It did work. I think QE2 had two elements. One element was of moderate importance, one element was of minor importance. The moderate one is that QE2 convinced markets that the Federal Reserve would not allow deflation or a double dip recession to happen. This is good because it inspired confidence and kept inflation expectations from falling any further. That was the most important step, because it convinced financial markets that the United States wouldn't turn into Japan, which they were worried about. The element of minor importance was that it lowered long-term bond rates a little bit. It takes a lot of purchases to move these interest rates even a little bit, and QE2 wasn't big enough to move them dramatically. It's not nothing, but it is small in the scheme of things.

...
MK: So how do you know that QE has worked? What kind of studies are conducted, and how do they draw their conclusions? 

JG: I have a paper that looked at two things. When the Fed made announcements on QE1, what happened to bond yields? Yields on the things the Fed was buying went way down, but yields on things the Fed wasn't buying also went down. All yields went down. So that was one piece of evidence. As for the other piece of evidence, we looked back thirty years and ran a regression of how the government's net supply of long-term bonds affects bond yields. We found when the government issues more long-term bonds, bond yields increase. When the government buys back long-term bonds, bond yields go down. QE, really, is like the Treasury buying back long-term bonds and issuing short-term bonds. There's a long history of this, including in non-crisis times. So for both pieces of evidence, when the government buys long-term bonds and issues short-term bills, it can push down the yield curve. 

MK: So QE2 helped with the job growth of the past year? 

JG: It definitely contributed by relieving businesses' fears of a double-dip recession and deflation. This helped with some growth in the economy. But really, not enough. The Fed has not been aggressive enough, it has been too timid.

Can't find the article on inflation expectations at Konczal's blog so will have to look in my archives where I know I linked to it. Did find this nice quote of DeLong's on Jim Grant:

Or take Brad Delong's six minute debate about QE with Jim Grant from last year.  As Delong summarized it (my bold):

I found it depressing because the major unfairness Grant focused on is that, because of the Federal Reserve, investors in money market funds can get only one basis point of interest. The 9% unemployed: they are not the victims. Those who cannot sell their houses because of the foreclosure overhang: they are not the victims. Those whose businesses crash because of slack aggregate demand call they are not the victims. The real victims are the rentiers who have a right to a nice solid well above inflation safe return, and from whom the Federal Reserve is stealing that right.

And I found what I could gauge of Jim Grant's worldview depressing as well. He seemed to be selling rentier-populist ressentiment. Grant's world is full of "takers"--and the Federal Reserve is helping them. And the biggest takers in Jim Grant's mind are the hedge fund operators of Greenwich, Connecticut. Why are they the biggest takers? Because they can borrow cheap, at low interest rates, and put the money they borrow to work making fortunes. If only the Federal Reserve would shrink the money stock and raise interest rates! Then the hedge funds would have to pay healthy interest rates for their cash! Then the profits would flow to the truly worthy: the rentier coupon-clippers now suffering with their one basis point yields.

Never mind what a policy of monetary restraint to "normalize" interest rates would do to the unemployed...

You can read that in the recent statement by Mohamed A. El-Erian of Pimco, who, as Karl Smith noted, wants the Federal Reserve to focus on microeconomic goals instead of the macroeconomic problem of full employment.  This isn't new.  As Keynes noted, "the most stable, and the least easily shifted, element in our contemporary economy has been hitherto, and may prove to be in future, the minimum rate of interest acceptable to the generality of wealth-owners."

The implicit argument is that the interest rate compatible with full employment is too low for financial investors to accept.  Do we then just accept mass unemployment and the subsequent hysteresis-induced slowing of growth and human potential so Jim Grant and Pimco can make a profit they feel is worthy of their financial talents?  Of course not.