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Fiscal Cliff Notes

If the Bush tax cuts were only “tax cuts for the rich,” as we’ve been told over and over, then what does it mean to keep them for those earning less than $200,000/$250,000? Keep what? Have you noticed...

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Allow Interest Rates To Rise While Keeping Monetary Policy Accommodative

The minutes of the December 11-12 FOMC meeting, released today, have emboldened me to come out of the closet with a monetary policy suggestion and the reasoning behind it that I’ve been reluctant to...

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Which Is More Important For Monetary Policy: The Growth Of The Fed’s Balance...

In my previous post, I noted that the FOMC has apparently begun to think of its low interest rate policy and its quantitative easing/balance sheet expansion policy as two different things. Their latest...

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Fed Profits and Treasury Financing, the Good and the Bad

We learned today that the Federal Reserves turned over $89 billion of its profits, primarily from interest on its securities portfolio, to the U.S. Treasury during 2012. The amount repatriated in...

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The Debt Ceiling Debate: My Two Cents Worth

It would be nice if the proponents of reducing the deficits and the debt could achieve those essential goals by threatening to block an increase in the debt ceiling. But they can’t. Trying to do so...

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Fourth Quarter GDP: It’s Just a Number

  Okay, so the negative 0.1 percent real GDP number surprised me, even though I was expecting weakness. After arguing that recent GDP numbers were worse than the headline, primarily because of...

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Defending Lubbock Texas from Governor Moonbeam

In the war of words between the Governors of Texas and California over the obvious advantages of the Texas business climate, the latter went nuclear and singled out Lubbock as the Texas weak spot. He...

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The State of the Union: My Take

In anticipating the President’s State of the Union speech, I asked myself what I consider it to be. I’m sorry to say that the first thing that came to mind was the Ogden Nash quote, “I find it very...

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How Fracking Can Reduce the Budget Deficit

The direct way fracking can reduce the budget is by stimulating economic activity and thus tax revenues. This is obvious. This piece is about another, less obvious, less intuitive, indirect way...

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The Fed Has Not Been Printing Boatloads of Money

As I listen to commentary on cable TV about the Fed’s quantitative easing, I find it amazing that people smarter than I, as well as better trained and more knowledgeable about many things, keep making...

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Falling Inflation Takes Gold Down With It

This morning we learned that the Consumer Price Index declined at a 0.2% annual rate in March for an increase of 1.5% over the past year. Last week we learned that the Producer Price Index declined...

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Real GDP Up; Real Final Sales Down/Was the Economy Stronger or Weaker in the...

Casual consumers of economic data, i.e. normal people, probably understand instinctively that the details behind the headline numbers matter. However, they can at least rest assured that such a large...

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Foreign Trade’s Impact on GDP

The treatment of foreign trade statistics in the GDP estimates is tricky, confusing, and may contribute to an unwarranted aversion to imports. The reason is that we add categories of spending to get to...

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Money Hoarding Versus Reserve Hoarding

Jesse Eisinger, in a provocative article in today’s New York Times, purportedly summarizes an argument on Fed policy between hedge fund managers and economists. “After several such managers at a recent...

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Bank Reserves: A Hot Potato

During the Q&A following Chairman Bernanke’s testimony before the Joint Economic Committee today, Senator Sanders said he was preparing legislation to prohibit the payment of interest on excess...

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Known Unknowns

Writing about unknown unknowns would be more interesting, but I don’t know what they are. Instead, I will focus here on some unknowns that have been bothering me. Most have to do more or less with the...

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Good News For A Change: Real GDP Revised Down

The third estimate of the first quarter real GDP came in at an annual rate of 1.8 percent, down from a second estimate of 2.4 percent and a first estimate of 2.5 percent. It looks as though our two...

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The Revenge of the Doves

The recent WSJ article on the relative forecasting results of some of the Fed’s hawks and doves stirred some old memories regarding the hawk/dove divide. I got an unfair reputation as a dove back in...

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The Syrian Dilemma–Lessons From Tall Tales

[This was posted on August 30 under a different title] The late, great, country comedian, Jerry Clower, spun some funny yarns in his day. My favorite was his coon huntin story. Long story short, Jerry...

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Reserve Currency Status–A Mixed Blessing

I was recently invited to give a talk in China on the topic of reserve currency status for the Chinese currency, the Reminbi or Yuan. I had to decline, but the invitation got me thinking about what I...

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