tag:blogger.com,1999:blog-582368152716771238.post1580781765067898148..comments2024-03-29T07:18:14.271-05:00Comments on The Grumpy Economist: Job market doldrumsJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger32125tag:blogger.com,1999:blog-582368152716771238.post-15916132032681727942013-07-05T13:26:54.424-05:002013-07-05T13:26:54.424-05:00I believe it means Ed Lazear has not been followin...I believe it means Ed Lazear has not been following monetary policy in the US very closely since 2008. <br /><br />Let's recap -- during the financial crisis in 2008, the Fed increased its balance sheet to over $2 trillion. So far so good. But then, in 2009, while employment was dropping like a stone and the CPI was deflating, the Fed was actually shrinking its balance sheet instead of "working overtime". In 2010, the Fed was "gone to November" -- it twiddles its thumbs as the economy burned, acting only after the election. This was good, but then the Fed didn't act again until the fall of 2012... Thus in 4 1/2 years the Fed has made two moves. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-84070835212717529292013-06-22T20:36:05.832-05:002013-06-22T20:36:05.832-05:00Edward: You are bonkers. Go to Zimbabwe and try y...Edward: You are bonkers. Go to Zimbabwe and try your theories out. Maybe they will want a second helping of what they had.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-51154604025987550872013-06-22T16:45:29.700-05:002013-06-22T16:45:29.700-05:00The far more likely outcome is that the money will...The far more likely outcome is that the money will go into banks' excess reserves and just sit there. It's not like their vaults are a hole that you can fill up by throwing enough money into them in the hope that it'll start to spill out into the rest of the economy.<br /><br />http://research.stlouisfed.org/fredgraph.png?g=jET<br /><br />That's where the money has been going, and why monetary policy isn't having much of an effect.Pax Empyreanhttps://www.blogger.com/profile/04889654524008462887noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-57375307647476092772013-06-18T06:03:38.705-05:002013-06-18T06:03:38.705-05:00I concur, a small decrease in our taxes will hardl...I concur, a small decrease in our taxes will hardly make up for the damage caused by endless changes to the tax code. This means that business cannot plan ahead. The increased uncertainty is bad both in tax and regulatory policy.KyleNhttps://www.blogger.com/profile/15766641765942339253noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-19838458607022065422013-06-16T11:55:07.803-05:002013-06-16T11:55:07.803-05:00"More Inflation helps debtors"
True, bu..."More Inflation helps debtors"<br /><br />True, but only if debtors have locked in interest rates. If debtors have floating rates, the cash flow demands of their debts go up and the fact that inflation is reducing the real principal does not help them much with the resulting cash flow squeeze.Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-52383765251997263322013-06-15T18:17:36.453-05:002013-06-15T18:17:36.453-05:00I see you cite (without link) Casey Mulligan, who ...<br /><br />I see you cite (without link) Casey Mulligan, who sometimes seems to be making a career of contriving ways to see worker benefits as abuses. On the issue of abuse of disability readers might be interested in research reported in a 6/13/13 WSJ story, "Are Long-Term Unemployed Taking Refuge in Disability?" The study shows that the rise in disability claims does not come from people "exaggerating real disabilities or through outright fraud."<br /><br />http://blogs.wsj.com/economics/2013/06/14/are-long-term-unemployed-taking-refuge-in-disability/ Johnhttps://www.blogger.com/profile/13718398994164216979noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-72436218462545919352013-06-15T13:46:13.610-05:002013-06-15T13:46:13.610-05:00Yaron Brook referred to this economist in a debate...Yaron Brook referred to this economist in a debate with respect to the peak wage assertion of 1973 (J.C. refutes this claim).<br /><br />Anyone know where I can find his work on it?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-69056493075835914432013-06-15T08:51:30.232-05:002013-06-15T08:51:30.232-05:00Look to demographics, capabilities of replacements...Look to demographics, capabilities of replacements... <br />look to feminism, reporting today that one class population has collapsed<br />not to mention the idea that fathers teach sons (and daughters) how to do things more than moms do, and that with a over 40% single parenthood social situation, all that information that existed hand me down has been erased and cant be depended on as a way to be resourceful. <br />add to it programs that so overwhelmingly help protected classes the one unprotected class, if not already successful, cant not get capital or a hand in the game (i know, i have tried, and can tell an interesting story given family coming from refugee dp status in Europe, and so on, including bronx science, and self making despite such situations, but never quite making it. there is even a control in the experiment)<br /><br />then add the taking of resources to fund those things making it nigh impossible to get enough capital. the destroying of rights in the removal of first to invent ie. the right of the discoverer has been supplanted by the right of the economically and politically strong. <br /><br />third generation engineer... son was to be a geneticist, graduated with honors, then the social engineers declared that there was too many of him in STEM, so now he has to give that up as he nor i are wealthy enough. <br /><br />[many articles on plummeting birth rate in the news ranging from psychology today feminist claiming victory in replacements, to others taking other angles to the census announcements]<br /><br />right now, i am looking to see if i can do stuff outside the US. from taxes, to laws against me that negate any effort in merit (being informed i will never have promotions or raises, and foul treatment too at a medical school). I know lots of others are looking to do the same, as the weight is way too heavy to get anything going. <br /><br />this is why you have so many experienced, skilled people who cant meet at a coffee shop, link up and do something. they havent the capital given the fixes to our culture, society, relationships, schooling, asymmetric laws of race and gender, and on it goes. <br /><br />you don't have to look farther than that to see a larger population attempting to live off of the smaller dwindling population that they openly hate and despise under social justice (forgetting father Coughlin, and lots of other things). <br /><br />kind of obtuse to have people celebrating it and crowing how good it is, but it not being PC to be part of assessments and influences in economics. after all, people not born do not economically output much, do they? <br /><br /><br /><br /><br /><br />Artfldgrhttps://www.blogger.com/profile/13594241837693535704noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-60012755137809851202013-06-15T01:31:58.087-05:002013-06-15T01:31:58.087-05:00Unless it puts the debtors out of work.Unless it puts the debtors out of work.Andrew_M_Garlandhttps://www.blogger.com/profile/02855052302054611917noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-31820838433113886082013-06-15T01:16:36.236-05:002013-06-15T01:16:36.236-05:00Time to get serious about growth.
Forget punk &qu...Time to get serious about growth.<br /><br />Forget punk "helicopter drops."<br /><br />Send in the money B52s for blanket bombing runs.<br /><br />Cut federal taxes by a trillion dollars or two, and monetize all of it through QE and maybe more.<br /><br />Dudes, the problem is not inflation. We are now at 0.7 percent, btw, on the PCE headline y-o-y. The inflation-hysterics are right: The Fed could not keep inflation at single digits if it went to QE. It is now below single digits.<br /><br /><br />We have an economy much less inflation-prone than in the 1960s, and we were in single-digit inflation then. That was before we deregged transportation, telephones, banking, and with a 91 percent top tax rate, and a unionized workforce and with a Fed that opined that a monetary policy could not fight inflation. In other words, a perfect storm for inflation But that has changed now.<br /><br />Today, little-boys-in-short-pants half measures do not do the trick. Forget your namby-pamby "helicopter drops" and $85 billion a month in QE.<br /><br />QE $3-4 trillion and cut taxes by an equal amount in next two years. <br /><br />Send in the B52s, and do not make "drops," make multiple blanket bombing runs. Monetize federal debt until there isn't any left, if you have to. Yes, how terrible to pay down the federal debt. <br /><br />Jeez, how much more sissy-talk about macroeconomics do we have endure before we get serious about growth? Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-19630700324022908692013-06-14T15:08:28.955-05:002013-06-14T15:08:28.955-05:00If people are unemployed then there are idle resou...If people are unemployed then there are idle resources that could be applied to create more stuff. And if there were more stuff we would all be richer.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-55892433446735485822013-06-14T15:05:34.928-05:002013-06-14T15:05:34.928-05:00JB,
You have hit on something that I have been th...JB,<br /><br />You have hit on something that I have been thinking about for a couple of years.<br /><br />You point out that government creates uncertainty with its schizophrenic policies. Then you say, cut taxes for the middle class.<br /><br />Tax policy has been some of the most schizophrenic policy! There should be a moratorium on tax policy changes. Every year congress closes a set of loopholes and opens up a new set of loopholes. Every year, half of congress says raise taxes on the rich, and the other half say cut taxes for everybody.<br /><br />I would like to pay less taxes, personally. And the current tax code is byzantine, slightly corrupted, and inefficient. Comprehensive tax reform might be a good thing. But, if congress actually does get their heads together to tackle the subject, the new tax law should include a provision that would make it require a super-majority to any further changes to the tax code.<br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-32895165147896327552013-06-14T11:53:41.179-05:002013-06-14T11:53:41.179-05:00"The Federal Reserve has worked overtime to s..."The Federal Reserve has worked overtime to spur job creation, and there is not much more it can do."<br /><br />I have always found the idea that monetary policy could help with unemployment completely fanciful. It is an idea born out of misconstrued academic research. In essence, the idea is that one can take the Phillips curve and reverse the causality flow, whereby employment can be created by influencing inflation. This defies any possible common sense.<br /><br />Let's go back to basic. The US and Europe face major structural problems with their economies. There is an increasing low-income class that has less and less skills and is increasingly dependent on government handouts. On the other hand, there is a high-income class that controls and increasing proportions of the resources and capital. Such is the result of misconstrued, old-keynesian, elitist socialist thinking that has prevailed mainly in Europe but even in the US to a larger extent that was preciously thought.<br /><br />Fixing this requires that especially the younger generations regain the taste for developing skills and entrepreneurial initiatives. At the moment young people are over-burdened by and over-inflated education that provides little in terms of real skills and knowledge.<br /><br />Tax incentives are just another way to conduct monetary policy, so they are likely to remain ineffective. What is needed is a set of regulations that favor small enterprises and not only large corporations.<br /><br />Unfortunately this is not what the US governing class is interested in.<br />AMhttps://www.blogger.com/profile/05972255665912176572noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-71515942999351887682013-06-14T11:25:21.346-05:002013-06-14T11:25:21.346-05:00"What makes them so sure they could wring inf..."What makes them so sure they could wring inflation out?"<br /><br />They could just ask Paul Volcker.Big Ednoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-75703890965567676722013-06-13T23:13:54.230-05:002013-06-13T23:13:54.230-05:00More Inflation helps debtors, JamesMore Inflation helps debtors, JamesEdwardnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-363314174157335632013-06-13T21:26:46.846-05:002013-06-13T21:26:46.846-05:00Stop thinking the economy is like an engine. They ...Stop thinking the economy is like an engine. They are similar but human beings are much more complicated. So the structural problem is there is no demand because people won't borrow? People won't borrow because of the dumb decisions they made from borrowing already. Young people have debts they can't pay? Why does are genius fed chairman think giving them more credit is going to make a difference. This is bad Keynesism that dr cochrane has been highlighting in this blogJameshttps://www.blogger.com/profile/15211759382579305536noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-17810407535072931662013-06-13T20:40:53.285-05:002013-06-13T20:40:53.285-05:00I ask again
WHY is it so hard for "structur...I ask again<br /><br /><br />WHY is it so hard for "structuralists" to admit a demand problem?<br /><br />Professor Cochrane, you might be a spiritual descendant of the people on the Fed board who oversaw the great contraction that Milton Friedman was talking about. in the Monetary History. I'm curious, why are you SO determined to find anything other than demand to explain our slump?<br /> Many "structuralists" saw causes other than demand for the length of the Great Depression, FDR policy (high wages) skills mismatch, zero marginal revenue product, etc. <br /><br />In the buildup to war in the late 1930'sa early 40's unemployment was solved in a matter of months with a big enough stimulus, both monetary and fiscal Edwardnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-62918850133547409282013-06-13T20:27:40.508-05:002013-06-13T20:27:40.508-05:00Conquering inflation is technically a very easy th...Conquering inflation is technically a very easy thing to do. Either slow down the growth of the base to zero, i.e., buy zero bonds, even regular t-bills, or raise interest rates sky high, past the inflation rate. Paul Volcker did it.<br /><br />What's difficult is the political costs. You have to have a brutal recession to stop inflation. Yet, when Volcker lowered interest rates, the recession in the early 80's stopped, and inflation did not return to its previous levels.<br /><br />And I reject your ridiculous premise that the Fed cannot conquer deflation. There has never been in history an example of a determined central bank that has truly tried to conquer deflation and failedEdwardnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-20849258283457098792013-06-13T17:55:44.776-05:002013-06-13T17:55:44.776-05:00That would be a complete catastrophe. That's ...That would be a complete catastrophe. That's the kind of irony tower thinking that needs to go away. You won't fix the economy turning a deflation problem into an inflation problem. The fed hasn't been able to conquer deflation. What makes them so sure they could ring inflation out? Jameshttps://www.blogger.com/profile/12183085827525696523noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-8255139486991423652013-06-13T15:24:13.842-05:002013-06-13T15:24:13.842-05:00Low unemployment isn't predominantly structura...Low unemployment isn't predominantly structural.<br /><br />If it were, the unemployment rate, would be something like 5%, resulting from a higher employment population ratio, rather than people dropping out.<br /><br />Take a look at Europe, particularly countries like France and Spain. Spain's unemployment rate is a disastrous 27%. If it were structural, the unemployment rate would be more like pre-great recession france- 10%.<br /><br />I'm not denying that there are of course structural problems that make AD problems much worse. <br /><br />But why is so difficult for some people to comprehend that its all about. A.D. right now and that the Fed needs to do vastly more?<br /><br />Professor Cochrane, Akerlof, Dickens, and Perry demonstrated that low inflation, (not deflation) can persist for in PLOG (Prolonged output gap) and far from a sign that the CB is doing its job, it means that the CB is disastrously underperforming. The reason this is true is that nominal wages are super-sticky according to their study even more so than originally thought, <br />The Fed is undershooting its "price stability" mandate as well. Current core CPI increases is 1.1, one the lowest recorded. So even if you don't believe in the "full employment" part of the Fed mandate, the Fed is failing its price stability mandate as well.<br /><br /> I have a question for you, Professor. You believe in the EMH, right? What does it say that their was turbulence in the stock markets around the world because of fears that the Fed would taper off its purchases and the BOJ would wobble on 2% inflation? The markets are screaming, yelling at the tightfisted Fed for easier money.<br /><br />Finally, I hear this all the time. the fed has been ultra easy. (It hasn't) You often hear about the "unprecedented" increase in the MB. It may be unprecedented, but thats not how we should judge things. When there is a raging firestorm in a national forest, you don't judge the correct amount of water by how much you used to fight previous fires! You do what is necessary to fight this one. Buy the entire national debt if need be. Obviously I'm being facetious, but all the FED needs to do is make the markets BELIEVE that they'll do that, by buying 1 trillion a month instead of a pathetic 85 billion. People and businesses will attempt to spend cash before it loses its value, and the markets will clearEdwardnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-60469320093693066582013-06-13T15:09:05.522-05:002013-06-13T15:09:05.522-05:00People on the other side of the partisan divide wo...People on the other side of the partisan divide would say that the biggest political risk is that the Republicans will trigger a financial crisis on the debt ceiling issue. Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-17602828716365746132013-06-13T14:45:13.404-05:002013-06-13T14:45:13.404-05:00I suppose that the costs and uncertainties generat...I suppose that the costs and uncertainties generated by the Affordable Care Act had a little bit to do with these numbers.KyleNhttps://www.blogger.com/profile/15766641765942339253noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-45057124905841008632013-06-13T14:30:47.580-05:002013-06-13T14:30:47.580-05:00Have you considered the following: fundamentally,...Have you considered the following: fundamentally, our economy is built on the fact that we constantly spend a bit of extra income on stuff that goes above and beyond purchasing food and basic necessities. And when economy is weak, we cut back on purchasing all that stuff - we probably didn't need it in the first place. And that will result in lower employment, because a lot of the stuff that makes up our GDP, we don't need even at lower prices.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-35607746613066429402013-06-13T14:06:24.765-05:002013-06-13T14:06:24.765-05:00If there's one universal thing all economists(...If there's one universal thing all economists(both left and right) agree on, its the current tax code is horrible. Just flat out awful with no sound economic logic to it whatsoever. The real question is, what bolder is in the way that is squashing any discussion about reforming the tax system, not just modifying it for rates on the rich or tax credits for the poor and middle class?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-69581609474271571232013-06-13T13:00:34.752-05:002013-06-13T13:00:34.752-05:00I guess my sarcasm wasn't clear enough about g...I guess my sarcasm wasn't clear enough about government spending. People directly spending money into the system on things they actually need/want is far more efficient than running money through all the frictions, malinvestments and inefficiencies of government.<br /><br />I disagree with you about what Federal Reserve Notes actually are but it's off-topic. JB McMunnhttps://www.blogger.com/profile/15468282698533043544noreply@blogger.com