By Dan Kervick
Driving home from work last night here in New Hampshire, I ended up behind a man in a tidy red pickup truck. The man had written a very elaborate message on the back of the truck, carefully arranged with block letter decals of the kind you use to put a name on a mailbox. I couldn’t read the entire message without tailgating, and some of the letters toward the end of the message were smaller, but here was the part I could read:
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By Dan Kervick
Lacy Hunt reports on three recent academic studies indicating that the Fed’s unconventional asset purchasing programs have failed. Antonio Fatas is “sympathetic to the argument that Quantitative Easing has had a limited effect on GDP growth”, but takes issue with some parts of Hunt’s analysis, and argues that the way Hunt analyzes the relationship between reserves and the money multiplier “is not consistent with the conclusions reached about the lack of effectiveness of monetary policy actions.” I believe there are problems with both Hunt’s analysis and Fatas’s analysis of that analysis. My best guess is that QE has had negligible macroeconomic effects. But some of the considerations Hunt and Fatas adduce in attempting to evaluate that question are red herrings, and don’t get us closer to an answer.
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By Dan Kervick
A dogma can be a very powerful thing. When dogma is sufficiently powerful, the people in its grip can lose sight of who they are, where they have come from, and how they got from the place where they started to the place they now occupy. Americans during the past few decades have been in the grip of an especially strong dogma, the dogma of Market Fundamentalism. Falling in with the preachers and zealots of this charismatic sect, they have convinced themselves that their once lofty economic place in the world was primarily due to an American preference for miniscule government coupled with the visionary leadership of free-wheeling entrepreneurial heroes, latter-day secular saints who were able to set the economic agenda and pursue it unencumbered by regulatory ties. For some Americans, this mythic free enterprise utopia, bestridden by business titans, represents the very essence of American freedom. And so the free market faithful have pursued a neoliberal political agenda in order to see to it that the tablets of this magnificent ancestral wisdom are carried down unbroken into the present all-too-errant age.
But the creed is bunk. It is a fictive concoction filled with tales of an imagined past that never existed. And yet, the more enthusiastically the apostles of Market Fundamentalism have attempted to put the spurious creed into practice, the further they have taken us away from historical truth and the real-world sources of our actual prosperity. We need to drop the totemic legends and look that real history squarely in the face, so we can remember who we really are.
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By Dan Kervick
As I write, American conservatism has gone mad: openly, disturbingly and resoundingly bats. There is no mistaking it. But the furious imprecations and cracked laughter of the lunatic conservatives echoing loudly down the halls of our sad American bedlam have helped obscure the fact that liberalism in the United States is moribund. While conservatives strive to tear down our rotten and unjust system and replace it with something even more terrifying, liberals offer nothing but a determination to patch up some of the superficial rot while approving the general injustice.
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By Dan Kervick
Evan Soltas is hoping that President Obama’s appointment of Janet Yellen signifies a new administration commitment to jobs and economic growth. Unfortunately, Soltas seems to be one of those folks who is convinced that our failures over the past five years have much to do with a monetary policy that has been insufficiently “accommodative”, and he strongly suggests that the national plague of mass joblessness and stagnation could be alleviated if the Fed would only do more aggressive quantitative easing without political pressure to taper prematurely.
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By Dan Kervick
I take time out from our latest national celebration of curmudgeonly misery and political decadence, which features an intense bipartisan struggle over whether to cling to liberal or conservative forms of long-term economic stagnation, in order call the reader’s attention to an economist whose innovative ideas are so insightful, so well-informed and so right that they stand in terrifying contrast to almost everything that most Americans in 2013 hold dear.
The economist is Mariana Mazzucato of the University of Sussex, who recently presented several of the leading ideas from her new book, The Entrepreneurial State, to an audience at the London School of Economics. Mazzucato ties a vast number of themes together in a sparkling, rapid-fire talk followed by a stimulating round of Q&A. Among the economists who come in for discussion along the way are Polanyi, Keynes, Schumpeter, Stiglitz and Krugman. Mazzucato pulls no punches on the inadequacies of bastard Keynesianism with its limited emphasis on economic pump-priming, and on the dead-enders of neoliberal thought represented, for example, by the editorial staff of The Economist magazine. Here is the link to the presentation:
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By Dan Kervick
It is being reported that the President will nominate Janet Yellen to be the next Chair of the Federal Reserve Board of Governors. Yellen was the obvious candidate all along, and it’s a very good thing that Obama’s earlier preference for Lawrence Summers, a key architect of the deregulated neoliberal regime of the 80’s and 90’s that helped bring us the financial collapse of 2008, was vigorously shot down by critics. The most important challenges for the next Fed chief will be in the area of financial system regulation, and despite the efforts by some of Summers’s closest friends and colleagues to give him a rush makeover as a born-again regulator, Summers was clearly not the right person for the job.
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By Dan Kervick
The Bitcoin phenomenon has always been an interesting concoction: part radical libertarian currency scheme inspired by the anti-government monetary musings of Ron Paul and Austrian school of economics; part black market drug exchange empowered by a hackertopian computer architecture providing anonymity to its aliased participants; and part speculative Ponzi-scheme-in-the-making based on a strange built-in deflationary coding that seems designed to make its early adopters filthy rich – if they can somehow succeed in getting enough other suckers Bitcoin enthusiasts to buy in.
The speculative dimension of Bitcoin has sometimes crashed up against its alt-monetary aspirations in comical ways, as was noted earlier today by John Carney:
Was talking to someone with large amount of bitcoins that he isn’t spending b/c “that would be giving away money.” #tulipmania
— John Carney (@carney) October 2, 2013
But now Bitcoin has really broken bad in a whole new direction, as federal prosecutors have indicted one of the Bitcoin marketplace’s star performers for a variety of crimes, including conspiracy to commit murder. The FBI claims to have unmasked and apprehended the man behind the Bitcoin-powered online drug market Silk Road. His name is Ross William Ulbricht, and the charges are rather amazing:
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By Dan Kervick
Stephanie Kelton interviews L. Randall Wray in the excellent new podcast series from New Economic Perspectives. The initial part of their discussion deals with the Fed, the “taper” and the inadequacies of monetary policy in dealing with the problems of unemployment and aggregate demand shortfalls. They then turn to a lengthy discussion of the three legs of the stool for retirement security: pensions, private savings and Social Security. Wray makes the point that defined-benefit pension programs have become decreasingly viable as developed economies have changed demographically, and that private savings were devastated by the 2008 financial meltdown and remain at risk as the potential for further financial crises looms. That leaves Social Security, which is under political attack in Washington by the likes of Pete Peterson and his acolytes in both parties.
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By Dan Kervick
Brad Delong recently presented what he impishly called ‘The Seven Cardinal Virtues of Equitable Growth’. For me, DeLong’s list is a mixed bag. But there are a few items on the list I would unreservedly endorse. One is his second virtue:
2. Invest. Invest in ideas, in equipment capital, in structures capital, in education: we need more of all forms of investment. Boost public and private investment: we need both kinds.
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