The Fed did something on Wednesday: it announced a new program of open-ended quantitative easing, and it announced that it likely won’t pull back on the new round of monthly asset purchases once the economy begins to recover more strongly, but will keep the purchases going for some indefinite period of time afterward. After what exactly was left unsaid. The Fed apparently has a target it intends to overshoot, but hasn’t said exactly what the target is. But whatever itis, we have been given forward guidance that the reaching of that unspecified target won’t stop the asset purchases – at least not right away.
By Marriner S. Eccles
(via e-mail from Thorvald Grung, Central Bank of Norway)
Marriner Eccles was Chairman of the Federal Reserve under President Franklin D. Roosevelt. This note consists of excerpts from an address he gave to the US Senate’s Committee on Finance in 1933 before he was called to Washington for public service by FDR. The original address contained in the Congressional Records has been reduced from over thirty pages (including questions and answers) to only three pages here that contain his essential message. The address has been edited by Thorvald Grung Moe, Visiting Scholar at Levy Economics Institute. Some parts have been slightly modified to fit the current time and crisis. Additions or alteration to the text has been marked by square brackets. All original figures used by Eccles in the address have been inflated by a factor of 16.4 according to the official US CPI index.
Germany’s Constitutional Court gave a green light on Wednesday for the country to ratify Europe’s new bailout fund, boosting hopes that the single currency bloc is finally putting in place the tools to resolve its three-year old debt crisis.
If we look at the structure of the discourse produced by academic economists after Smith whether in print or in media appearances, moral frameworks provide a structuring role that often outweighs the technical aspect of the content which is presented. Well-known among MMT-oriented and post-Keynesian economists are the arguments of austerity advocates, who ignore the analytically obvious monetary and economic consequences of austerity in pursuit of the seeming virtue of every economic actor becoming a “saver” of money. Continue reading →
Bob Woodward’s releasing a new book, so we are now seeing articles based on it. A few days back, The Washington Post published the “Inside story of Obama’s struggle to keep Congress from controlling outcome of debt ceiling crisis.” This account is a pretty downbeat one of how our political leaders and President Obama handled the debt ceiling crisis of the summer of 2011. I want to comment on what for me was the most salient point: that during the crisis, the President had no “Plan B” to get around the debt ceiling beyond negotiating a deal with Congress.
Readers of this blog will know that the austerity drive is based on faulty macroeconomics and austerity itself is a self-defeating economic strategy. Austerity relies and capitalizes on critical misunderstandings within economics, misunderstandings that were not conclusively and clearly enough debunked by John Maynard Keynes and others 75 years ago and in subsequent years. Continue reading →
Florida A&M (FAMU) has just filed a legal pleading that exemplifies the moral bankruptcy and the shirking of accountability by elites that has become emblematic of the last ten years. The headline of the LA Times article says it all: “Robert Champion was to blame for his own hazing death, FAMU says.” The context is FAMU’s motion to dismiss the Champion’s parents’ “wrongful death” suit against FAMU. Continue reading →
William Black appears on The People & Power in segment titled “Prosecuting Wall Street”. The episode concerns failure in the U.S. to prosecute in relation to the financial crisis. It airs beginning on 9/12 on Al Jazeera English (Time Warner channel 92 in NY and Comcast channel 275 in D.C.).
When in the Course of human events, it becomes necessary for one school of economic thought to dissolve the bands which have connected it with others, and to assume among the powers of the earth, the separate and superior station to which the Laws of Science entitle it, a decent respect to the opinions of humankind requires that the members of their school should declare the causes which impel the separation.