I’ve got to really buckle down in the office, so you won’t be seeing much from me in the next few weeks. Here are some links to keep you from losing it.
==> My flights got screwed up so I missed this live, but Lew Rockwell gave a great antiwar talk on Saturday for the Ron Paul Institute.
==> My reflections on 9/11 and the political uses of crisis.
==> A really interesting Sowell column on income inequality statistics. I didn’t know some of these.
==> Tom and I talk about lead poisoning and Republicans on the latest Contra Krugman.
==> I sure hope Scott Adams wasn’t one of my students:
One of the the most important things I learned while getting my degree in economics is that economies are driven by psychology. If people expect tomorrow to be better than today, they make investments. If they think things are in decline, they wait it out, and that lack of investment makes things decline further. Psychology rules. Almost everything else is just scenery.
==> I know some might regard this as nitpicking, but the following from Scott Sumner really frustrates me:
For several years the Fed has been tightening monetary policy. This started with tapering, then with signals of an increase in interest rates, then an actual increase in interest on reserves. Now Fed officials are signaling that more rate increases are likely to occur. The Fed does this for one reason, and one reason only, to prevent overshooting of their target. If they were in fact “struggling” to hit their inflation target, it’s not clear how they would respond. But one thing that is 100% clear is that if they were truly “struggling”, THEY WOULD NOT BE RAISING THEIR FED FUNDS TARGET INTEREST RATE. This is a really basic point, which is taught in every single EC101 textbook. The Fed raises rates to prevent high inflation, not when it is struggling to achieve it. If you don’t believe me, look at the monetary policy chapter of any recent econ text. No central bank that is raising rates is also struggling to hit its inflation target. They may be failing to hit it (I agree with that claim) but they are not “struggling” to hit it.
OK, I have no problem with the above, *except* for the fact that if I wrote the following, or if (say) someone in Bloomberg wrote the following, Scott would go ballistic and wonder why he and Milton Friedman are the only decent economists since Hume.
[HYPOTHETICAL COMMENTARY THAT WOULD MAKE SUMNER FLIP OUT, WRITTEN CIRCA 2013]: “For several years the Fed has been loosening monetary policy. This started with signals of rate cuts, then rate cuts, then massive expansions of the monetary base. Now Fed officials are signaling that more asset purchases and possible rate cuts (negative rates) could occur. The Fed does this for one reason, and one reason only, to prevent undershooting of their target…This is a really basic point, which is taught in every single EC101 textbook. The Fed cuts rates to stimulate a weak economy, not when it is trying to stifle growth. If you don’t believe me, look at the monetary policy chapter of any recent econ text. No central bank that is cutting rates is also causing a recession. They may be failing to prevent it (I agree with that claim) but they are not causing the economy to tank.”