US has 99 trade war problems, but inflation isn’t one
Desmond Lachman | The Hill
Powell Hints At Trouble With the Curve
Brian Chappatta, Bloomberg View
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.
Economists Don’t Actually Know How the Fed Affects Jobs
Tyler Cowen, Bloomberg View
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.
REMEMERING ALLAN MELTZER, JOHN TAYLOR ON A RULES BASED MONETARY POLICY FRAMEWORK & NORMALIZING FED POLICY
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....
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.
Econ Critics Stuck in the Past
Noah Smith, Bloomberg View
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.
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.
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.
An authority on Civil-Military Relations; Southwest Asian Political Economy, and Pentagon Acquisition Reform .
KEYNES VS. HAYEK RAP
KEYNES VS. HAYEK RAP ROUND 2