 Why Tax Rate Matters
by John H. Cochrane via PolicyEd Marginal tax rates – how much someone is taxed on the next dollar they earn – affect how much people work, save, and invest. Everyone is affected by their marginal tax rate, and lower marginal tax rates lead to more rapid economic growth.  The quest for legitimacy in central banking and the regulatory state
Stan Veuger | AEIdeas Parts of the public sector are not under the direct control of elected representatives. Instead, judges, the military, and independent regulators exercise delegated power over a range of areas and activities. The response to the global financial crisis and the recession has brought central bankers into the limelight.  How Capitalists Can Defend Capitalism – Clyde Crews, Forbes
 The Output Gap, The Federal Budget Deficit, And The Threat Of Debt Monetization quoting John H. Cochrane via Seeking Alpha In April 2018, Congressional Budget Office issued a report on the state of the federal budget in light of the "Tax Cuts and Jobs Act" enacted in December 2017, the "Bipartisan Budget Act" enacted in February 2018, and the "Consolidated Appropriations Act" enacted in March. Book Of The Week: Central Bankers And How To Hold Them To Account featuring Michael McFaul via Money Week Central bankers have played a huge role in both the economy and financial markets over the past decade, most notably through successive rounds of quantitative easing aimed at preventing economic collapse. However, critics allege that they now wield large amounts of power but lack accountability. Treasury Secretary Steve Mnuchin wins, America loses
Derek Scissors | AEIdeas The vague-to-the-point-of-useless deal and complete absence of American action could have been pulled straight from the Obama or Bush administrations. Secretary Steve Mnuchin is perfectly imitating former Treasury Secretaries Jack Lew, Timothy Geithner, and Henry Paulson, who led us here.  Raghuram Rajan Sees Possible "Magic Moment" On Inflation
interview with Raghuram Rajan via Bloomberg Hoover Institution fellow Raghuram Rajan explains why he is concerned about spillover effects on emerging markets from the policies of central banks in industrialized nations, adding that it’s appropriate for the Federal Reserve to be raising interest rates now as a precautionary move against the possibility of a "magic moment" when tighter labor markets around the world starts pushing up wages and causes inflation to accelerate.  Wages And Unemployment
mentioning David R. Henderson via Seeking Alpha A few people have been talking about wage growth and unemployment lately. I have put together a few posts on the Phillips Curve. (This was the latest.) David Henderson has a couple of posts about wage growth, building on a post from Paul Krugman.  Remembering Allan Meltzer and the Lessons He Taught Us Peter Ireland, E21 Allan Meltzer, distinguished Professor of Economics at Carnegie-Mellon University, founder of the Shadow Open Market Committee, and author of a monumental multi-volume History of the Federal Reserve, passed away one year ago today, on May 8, 2017. Great minds like Meltzer’s are all too rare and, once gone, can never be replaced. No one possesses anything like Meltzer’s extraordinary command over economic theory, sweeping knowledge of monetary history, and astute political acumen. Read more here... Toward A Rules-Based International Monetary System by John B. Taylor via CATO Journal Over the past few years I have been making the case for moving toward a more rules-based international monetary system (e.g., Taylor 2013, 2014, 2015, 2016a, 2016b, 2017). Normalizing Monetary Policy by Martin Feldstein via CATO Journal The current focus of Federal Reserve policy is on “normalization” of monetary policy—that is, on increasing short-term interest rates and shrinking the size of the Fed’s balance sheet. Short-term interest rates are exceptionally low, and the Fed’s balance sheet has exploded from $800 billion in 2008 to $4.4 trillion now. Priorities On The Path To Normalization by Kevin Warsh via CATO Journal I was honored to serve as a governor of the Federal Reserve System during the financial crisis. The times were tough, but the institution was strong—sustained by a Fed staff that was tired and tireless, hopeful and humble, brilliant without bravado. John Taylor On Wages, U.S. Economy And The Taylor Rule interview with John B. Taylor via Bloomberg Hoover Institution fellow John Taylor discusses US wage growth, how the Taylor Rule fits in with current US economic conditions, and he looks at inflation and the Federal Reserve's rate path. Allan H. Meltzer: A Life Well Lived
featuring Allan H. Meltzer via Cato Institute The world lost a great champion of liberty with the passing of Allan Meltzer on May 8, 2017, at the age of 89. A longtime Professor of Political Economy at Carnegie Mellon University, Allan was a prodigious worker who wrote hundreds of articles and more than ten books, including his monumental A History of the Federal Reserve and more recently Why Capitalism?  
Fed’s Balance Sheet Strategy: What Now? Mickey Levy, E21 The Fed left its policy rate unchanged at 1.5 percent to 1.75 percent at its May 1–2 FOMC meeting, as expected, and its official post-meeting policy statement reflected an upgraded assessment of inflation conditions.Since the Fed’s unconventional, emergency purchases of mortgage-backed securities (MBS) and Treasuries at the height of the severe financial crisis in November 2008, the Fed’s perception about a dramatically-enlarged balance sheet has evolved towards believing that it is conventional and normal. Read more here.... Why Worry About Inflation quoting John B. Taylor via Business Mirror
Inflation affects everyone—rich, poor and the middle class— but it can be tamed.  LIGHTHIZER, ROSS & NAVARRO Trump’s trade team to China: Root for Lighthizer and Navarro Claude Barfield | AEIdeas As is often the case with the Trump administration, there is confusion regarding the agenda and goals for the upcoming trip. Whatever their faults, both Lighthizer and Navarro know the elements of China’s state capitalism and its mercantilist protectionism — and their impact on the US and the world trading system. Satellites to Authoritarian Regimes: Your GDP Is Inflated
Charles Hughes, E21 Access to high-quality data on economic growth, employment, and other indicators is vital when evaluating the effectiveness of different public policies. Gross Domestic Product growth rates are often used as metrics to compare broader economic performances of different countries. Because of its prevalence in these comparisons, some leaders have an incentive to manipulate GDP growth to make their own economies look more impressive, particularly in countries with authoritarian regimes and a lack of checks and balances to protect data integrity. Read more here....  Stock Market Gyrations by John H. Cochrane via Defining Ideas The volatility of the markets is alarming, but it suggests that we are entering a period of higher growth. Private sector, not government, is key to job creation
Michael R. Strain | Bloomberg View Through programs such as the earned income tax credit, public policy should support low-wage workers, helping ensure that no one who works full time and heads a household lives in poverty. And public leaders shouldn’t denigrate the jobs held by millions of American workers. That message is counterproductive. All leaders should encourage work. 
Monetary Policy Conference: Examining Central Banking
via Hoover Daily Report Economists and policy makers engaged in robust discussions on the Federal Reserve’s proper role in U.S. monetary policy at the Hoover Institution on May 4. LABOR PRODUCTIVITY WITH SOARING DEFICITS & THE NEW KEYNESIANISM, FISCAL THEORY OF MONETARY POLICY4/17/2018  An economics chart that every policymaker should keep handy James Pethokoukis | AEIdeas Worrying about trade deficits while pushing fiscal stimulus doesn’t make sense James Pethokoukis | AEIdeas Fiscal Theory Of Monetary Policy
by John H. Cochrane via Grumpy Economist Teaching a PhD class and preparing a few talks led me to a very simple example of an idea, which I'm calling the "fiscal theory of monetary policy." The project is to marry new-Keynesian models, i.e. DSGE models with price stickiness, with the fiscal theory of the price level. The example is simpler than the full analysis with price stickiness in the paper by that title.  Congressman to Mattis: Prepare for ‘a lean future’ as national debt continues to rise
(Defense News) The Pentagon’s two-year budget boost may be as good as it’s going to get for the military, the House Armed Services Committee’s top Democrat warned Defense Secretary Jim Mattis on Capitol Hill on Thursday.  Understanding The Unemployment Rate
by John B. Taylor via PolicyEd.org The unemployment rate is the percentage of unemployed workers in the total labor force. The economic models utilize the unemployment rate to explain short-term fluctuations and long-term trends, such as job loss and recession. This makes the unemployment rate important as it determines the health of the economy when establishing economic policies.  Milton Friedman On Steel Tariffs featuring Milton Friedman via Cafe Hayek I cannot recall if I earlier shared this video of Milton Friedman speaking about steel tariffs. Whether I did or not, it’s worth sharing here and now. Trade Deficit And Tariffs: It's Complicatedquoting Martin Feldstein via Investing
President Donald Trump's announcement that he is instituting tariffs on imported steel and aluminum came as a surprise to some although reducing the trade deficit was one of his campaign promises.  Arnold Kling On Economics For The 21st Century
by Russell Roberts via EconTalk Economist, blogger, and author Arnold Kling talks with EconTalk host Russ Roberts about the state of economics in the 21st century. Kling argues that economics would be more useful if it took account of intangibles like culture, incorporated the role of financial intermediation in the economy, and modeled some of the the subtleties of the labor market--how wages are set and the role of team production.  The Market Dogs That Didn't Bark
Anatole Kaletsky explains why energy, bond, and currency investors have been unaffected by newly volatile equity prices.  The Composition Of Gross Domestic Product
by John B. Taylor via Policyed.org Gross domestic product is made up of the total market value of final goods and services produced in an economy. |
AuthorAn authority on Civil-Military Relations; Southwest Asian Political Economy, and Pentagon Acquisition Reform . 
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