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...
View ArticleAllow 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...
View ArticleWhich 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...
View ArticleFed 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...
View ArticleThe 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...
View ArticleFourth 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...
View ArticleDefending 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...
View ArticleThe 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...
View ArticleHow 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...
View ArticleThe 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...
View ArticleFalling 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...
View ArticleReal 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...
View ArticleForeign 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...
View ArticleMoney 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...
View ArticleBank 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...
View ArticleKnown 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...
View ArticleGood 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...
View ArticleThe 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...
View ArticleThe 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...
View ArticleReserve 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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