Ironic Juxtaposition
I’m not reading too much into this, just saying I noticed that in back-to-back posts (though one was a re-run) on EconLog this was funny:
==> Bryan Caplan has a post (which was front and center on my phone, but they actually re-ran from June 3) wondering why immigration is even a contentious issue among classical liberals. There is a big cartoon of Milton Friedman with his Nobel Prize and his famous quote, “You cannot simultaneously have free immigration and a welfare state.” Bryan runs through some of the ways otherwise pro-freedom intellectuals try to justify controls on immigration, but finds them wanting and in any event says “The plot thickens when you notice that pro-freedom immigration skeptics routinely use arguments that almost never use in any other context…”
==> Scott Sumner has a post on how the Trump Administration is rolling back capital requirements on banks and he comments:
After the banking crisis, Congress passed the massive Dodd-Frank bill, which somehow “forgot” to address most of the actual causes of the crisis. One concrete step in Dodd-Frank that its supporters often point to was the higher capital requirements. But now that’s also being chipped away.
In a perfect world, there would be no capital requirements at all, but also no FDIC, no t00-big-to-fail, no Fannie Mae and Freddie Mac, no FHA, etc. Given all the moral hazard in the system, there needs to be some way of discouraging excessive risk-taking.
Deregulation doesn’t always reduce the footprint of the government, in this case it makes the government even more involved in the financial system.
I found David Stockman a bit disappointing on the Contra Krugman.
He argues from what he feels should be happening … doesn’t check the data and look closely at what is happening.
There WAS something of a mini-boom under Trump, although mostly a boom of enthusiasm and positive sentiment rather than a change in anything intrinsic. For sure if Hillary had won it would be in recession already so Trump has bought at least an extra 3 years for the US economy, and that’s not trivial. What’s more, Trump bought 3 years of above-zero interest rates, so now there IS some room for the Fed to cut rates, while if the recession had landed in 2017 it would have been a whole different story.
Stockman says the Fed has no ammo for monetary stimulus … sorry buddy they have heaps of monetary ammo. They could choose to cut rates ONLY on excess reserves and just doing that would flood a lot of money into the economy (stop paying banks not to loan). We can argue about whether that’s a good thing or not … but forget about arguing as if we are still sitting in 2017 and nothing has happened since then.
The other thing is that all the way since 2008 there has NOT been any sort of big boom. It’s been slow and steady recovery with a few stops and starts. Austrian theory predicts that if there was no big boom, then you won’t get a big bust. Therefore the next recession should be mild, in the USA it will be mild at least.
Compare the USA to the EU where the USA is on 2.4% interest and the EU is flat to the boards 0% and the USA is showing some growth, maybe not wonderful growth but something, the EU is struggling to even tread water. Don’t get me started with Australia … we are trending into a slump which very likely will be long and grinding. The RBA only knows cutting rates, and they are cutting more and more. Home loan interest rates in Australia are down around 3.5% which is very low by historic standards around here, and our Aussie Dollar was trading one for one with the USD back in the mining boom years but now it’s worth about 70c and there’s a neat downward trend. Stockman wants to dis the US dollar, well if he doesn’t like them he can hand them to me.