Try this out for an entertaining video with economic wisdom!
Short video on YouTube (6:48)
Quantitative Easing for Dummies
Friday, November 26, 2010
Monday, November 8, 2010
Dave's 10 Reasons Why the Fed's Quantitative Easing Won't Work
November 4th, 2010
By David Goldman
10. No-one to whom banks want to lend wants to borrow.
9. The kind of businesses that create jobs, namely start-ups, need equity rather than debt in any case.
8. The Fed will flatten the yield curve out to five years, competing against the banks, reducing their profitability and their capacity to lend.
7. The deflationary tendency in the US, such as it is, is mainly demographic: as the Boomers retire, they sell real assets (the US may have a 40% oversupply of large-lot family homes by 2020), and buy financial assets, just like the Japanese during their great retirement wave of 1990-2000 (which coincided with the lost decade). It has nothing to do with monetary policy which has been extremely lax throughout.
6. If you keep interest rate slow in the advent of an enormous retirement wave, then people will save more and spend less, because they expect to earn less income on their savings.
5. If you increase the inflation rate, prospective retirees will save more and spend less, because they expect to have less future purchasing power. That is the opposite of what the Keynesian short-term model predicts, namely that inflation prompts people to spend money (why keep it in the bank if its value is falling)? That’s the trouble with the Keynesian approach: it’s a blindered, short-term view of things. But some times the long-term, for example demographics and the retirement cycle, affects the short term.
Wednesday, November 3, 2010
Missed Opportunities: Critique of Obama Presidency
On election night six years ago, I wrote: The Tragedy of the Bush Administration. In it, I despaired that...
Colleagues: Cousin Brucie will blog on this article and topic shortly. I am not sure I agree with this line of attack, a left assault on Rubin, Summers, Gaithner, etc. and the banking industry.
- “Once in a generation, the stars align for a political leader. There is this perfect moment – too often based on some enormous danger of long-lasting consequences for generations to come.
- Once every half century, the perfect combination of leadership and threat, of challenge and response meet. The leader – imperfect, fallible, yet ready to rise to the occasion – grabs the brass ring.
- Think Winston Churchill fighting the global threat of the Nazis, Thomas Jefferson writing the Declaration of Independence, JFK’s dare to send a man to the Moon . . .”
Here we sit, not half a century later as originally surmised, but a mere six years later. I once again find myself lamenting the opportunities wasted by a US President in response to a great cataclysm. In the case of President Obama, it was his response to the financial crisis. The opportunity for greatness presented itself, and was . . . ignored.
The President was swept into office on a wave of Anti-Bush sentiment. The stock market was in free fall, credit was frozen, the recession already 13 months old. As Rahm Emanuel said, “Never waste a good crisis.” A strong leader would have taken advantage of the moment, of the opportunity.
Tuesday, November 2, 2010
Why Obama is No Roosevelt by Dorothy Rabinowitz
This oped from the Wll Street Journal by Dorothy Rabinowitz is a thoughtful analysis of our current ills, making a key point about political experience as a crucial ingredient in our leaders. I knew Dorothy when I lived in New York and taught at Columbia. She was invariably tough-minded and shrewd, with a gift for trenchant analysis and utterly no illusitons. She also was (and I assume still is) very funny. I haven't seen her in years, but I follow her editorials in the Journal with great interest. Give 'em hell, Dorothy!
Here is the link:
Here is the link:
Thanks to Barbara Littell for sending me along the link.
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