Following the explicit path of orthodox monetary and economic theory delves into something very much like Lewis Carroll’s monstrous rabbit hole he devised for Alice all the way back in 1865. Like the story’s Wonderland, the other side of the hole leads to some version of nonsense that seems to project, in the book’s case, the reader’s own senses. In [...]
There was a robust debate inside economics earlier in the recovery period over Okun’s “Law”, the seemingly stable relationship between the unemployment rate and real GDP. The Great Recession was stunningly large in terms of the skyrocketing unemployment rate given that initial estimates for real GDP were bad but not as catastrophic. This was more than a theoretical problem for [...]
How did the world get this way? I don’t mean the oncoming recession, if that is indeed, as it appears, the economy’s fate. How did the payroll statistics ever attain this kind of deference and even religious zeal? U.S. manufacturing is shrinking, corporate profits are declining and goods are piling up on warehouse shelves. Those trends have elevated concern that [...]
The poor and impoverished state of the world is no true wonder given those that have claimed for themselves the “duty” of exceedingly routine disruption and wholesale distrust of markets in favor of their own very narrow interests and abilities. These are the people that give us such incompetence passing as expert and "useful" central planning: https://twitter.com/mattyglesias/status/666301870521102336?ref_src=twsrc%5Etfw Nothing like another [...]
Going all the way back to before last year’s Jackson Hole conclave, it was clear that there was inordinate trouble in the economy and global markets even though the central focus then was on how quickly to “normalize” everything and anything. The economy was assumed unassailably terrific and markets only reinforced that idea. The problem then, as now, was that [...]
In looking through the CBO’s litany of economic projections, past and present, I wrote yesterday that the major economic problem started to become clear by what was missing. The main orthodox models all view economic potential in much the same fashion, as if the economy exists completely upon a curve of inflation and employment, whereby the intersection of those two [...]
Just a few weeks ago the Swedish central bank, Riksbank, was being lauded for its courage and action in finally embracing QE as the ECB had done. The deflation problem in Sweden had been, so it is asserted, seemingly intractable and thus forcing the monetary hand once more. Riksbank has never been shy about fine-tuning here and there, so it [...]
There has been a quiet Tobin revival which mirrors the unsuitability with which monetarism has found itself in a serial bubble world. I am referring to James Tobin, who did some great monetary theory back in the 1960’s when IS-LM and the “exploitable” Phillip’s Curve were groping for monetary relief. Specifically, money was believed to be a constraint in the [...]
Part 1 is here, the history of defining systemic operation since 1907. The quest over equality or the “right” to impose optimal outcomes is one that cannot go backward. The inevitable failures lead no duty to re-assess overall, but only the means by which the results are to be commanded. That was the essence of Triffin’s Paradox, which was only [...]
Value as a foundation seems almost too literal to be an economic or financial concept, but it is perhaps the bedrock association that makes the economic system. We are used to aspects like profits and money, even inflation, but those are all symptoms of the ever-changing world surrounding value. Karl Marx understood very well how deeply embedded value was even [...]
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