It seems that everyone wants to know the future course of interest rates. For a variety of reasons, it is less predictable than in “normal” times. But a quick look at a few numbers places the recent history of Fed policies in stark relief, possibly presaging what is to come. Consider the following quantitative measure that we call the Fed Accommodation Index. In our view, it approximates the degree to which the Fed’s monetary policy has been “accommodative” over the …
How Attention to Fed Policy Distracts Us from the Real Problem
June 5, 2023Can US financial markets remain robust even without ultra-low interest rates? While not often stated openly, many on Wall Street believe the answer is no. Some have been trying to persuade the Federal Reserve to stop raising interest rates, and even to begin lowering them. The recent collapses of Silicon Valley and Signature Banks, largely a consequence of rates rises, will probably only bolster their case. But why should any of this matter to ordinary Americans? Whether or not we like …
The Urgency for an Enlightenment 2.0
April 30, 2021When you automate an industry you modernize it; when you automate a life you primitivize it. (Eric Hoffer) It is well known that rationality and science emerged during the Age of Enlightenment. Many indeed attribute human progress over the past few centuries to reason and discovery. Despite a Romantic reaction against some of the worst excesses of the Industrial Revolution, there is little doubt that human reason, empiricism, and science ultimately became the dominant world view. The “defeat” of Romanticism …
A Millennial-Z Moment
April 27, 2021Perusing the Financial Times this morning, I came across three important articles that seemed unrelated. On further reflection, however, I discovered a common thread. All three address future prospects for the Millennial and Z generations, even if two only indirectly. Jointly they suggest, in my analysis, that a Millennial-Z moment may be approaching. Sarah O’Connor’s piece focuses on the economic insecurity faced by many in either the Millennial or Gen-Z cohorts. By itself there is nothing remarkable here, nor even …
A Debt Jubilee Is Unavoidable
April 11, 2021I am truly sorry not to be teaching my macroeconomics principles class this semester. Debt is invariably an under-remarked topic in such classes, never mind a debt jubilee (or debt forgiveness). Yet everything recently happening both in the markets and politics offers a “real-time” tutorial. So, here I will try to explain why, in my view, a debt jubilee is unavoidable – sooner or later. “Debt” may be an abstract and confusing concept to many. Largely it is because we …
Biden Can Make a Difference
April 3, 2021As I’ve conceded elsewhere, I am not one to exaggerate whatever differences there might be between the U.S. Democratic and Republican parties. I have always viewed the Democrats as “Republican-lite,” since both parties have been beholden to corporate America for many decades. Even the thought of voting for the “lesser evil” last November disgusted me, as I noted in an earlier piece. Yet now I believe that Biden can make a difference. The unprecedented challenges that we face, along with the …
Bidenomics: The Broader Context
March 14, 2021This past Thursday President Biden signed into law his coronavirus relief package, which amounts to $1.9 trillion of new outlays. Even the most hardened cynic would be hard pressed to find much here that smells rotten. The new policy is indeed far removed from anything advanced by Trump and his manipulators over the past four years. It alone provides reason for hope, perhaps even for a new era of “Bidenomics.” The package contains money for a variety of purposes. Notably …
Do We Fear Inflation or Hope for It?
February 28, 2021Fear of inflation again appears to be rising to a fever pitch. Yet confusion about it persists, both among the uninitiated and the cognoscenti. It calls for a quick review of the basics. My students invariably state that inflation means the value of their money is going down. But of course, it is not what it means. Erosion of monetary value is a mere consequence. They will also sometimes claim that they can no longer afford Knicks tickets due to …
The Inevitability of a (Probably Massive) Green New Deal
February 21, 2021Did I get your attention? Ok, let me preface by adding “at some point” to the title. After all, to say that the present political climate in Washington makes a Green New Deal impossible might even be an understatement. And there really is nothing inevitable about such a policy breakthrough. One could alternatively imagine an endless political war of attrition. Yet most thinking people are coming to realize, however slowly, that continuing to ignore the global environmental crisis spells ruin …
The 1.9 Trillion-Dollar Question
February 14, 2021The truth is that approval of the Biden Administration’s proposed stimulus package is inconceivable without major revision. We know that. But let us for the moment ignore the partisan political challenges that make passage impossible. Pretend, in other words, that Congress is unified and ready to rubber stamp whatever plan Biden advances. The 1.9 trillion-dollar question then becomes whether the size of his present proposal is too large – or not large enough. The political arguments on each side are …