Irma, the devastating hurricane that hit Florida with its full force, was not as destructive as it could have been. But the impact on the economy, beginning with unemployment, has already been felt. As the Hurricane made its way toward the US mainland, damage estimates ratcheted up. But the ‘Bermuda High’ dampened the impact. Here’s how Bloomberg describes it: The […]
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Policy divergence revisited
Three years ago, the Fed had begun tightening and all other central banks were still on easy street. Now, we are at an inflection point where other central banks are likely to tighten more than the Fed. That’s negative for the US dollar and positive for longer duration US Treasuries.
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Trump’s working class sellout, tactical nuclear weapons, government shutdown, tax reform and immigration
Since Donald Trump became president, his core economic agenda has been sidetracked repeatedly by so-called cultural issues. However, now the administration is stepping up its tax reform effort. Even so, other issues threaten to derail this agenda item too. Moreover, it’s not even clear we’re talking about tax reform here. Thoughts below
Read more ›Quick thoughts on the failure of Fed-engineered unemployment
I am a sceptic of thinking about low unemployment as a bad thing – which is what people who think about policy in terms of the Phillips curve do. Now a study by the Philly Fed is saying that the Phillips Curve is a poor forecasting tool. Will this have any meaningful impact on policy? Some thoughts below
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On the coming failure of Trump’s tax plan
Recently I wrote that Donald Trump has failed to deliver any signs that tangible economic benefits are coming down the pike for his working class and blue collar base of support. It seems Trump has ‘sold out’ and is turning to corporate tax cuts at the expense of middle class tax relief. Some comments below
Read more ›The failure of the Trump presidency
We are only seven months into Donald Trump’s presidency. And I think we can call it a failure. I’ll have a lot more to say on that momentarily. But I want to flag this as not being a dealbreaker for the US or global economy because people put too much emphasis on the political economy in Washington. But Donald Trump is failing.
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The limits of monetary policy in today’s fiat currency world
As the Federal Reserve meets at Jackson Hole this week, I thought now would be a good time to talk about the limits of monetary policy – and why monetary policy alone cannot restore robust growth. And as I write this I want to make clear the goal of policy and the assumptions I am making.
Read more ›Understanding what a neutral macro-economic policy looks like
This is going to be a quick follow-on to the last post on monetary policy as the only game in town. I feel like the obvious question that post doesn’t answer is this one: what other policy tools we should use? And I want to tee up that question with this post.
Read more ›Some thoughts on full employment and this asset-based economic recovery
I see that Dartmouth economics professor Danny Blanchflower is talking about slack in the US labour market because he believes the Fed is premature in assessing its full employment mandate as fulfilled. I have a few thoughts on this issue I want to flesh out below and the crux of my narrative revolves around the over-dependence on monetary policy as a policy lever.
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An anecdote on the German housing bubble
I don’t know if there is a German housing bubble or even whether there will be one. I do know that we hear a lot about it in the press – the result of zero, even negative, interest rates. So let me give you a little anecdote from my trip to Germany last week.
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How the Fed handles financial stability is key to avoiding a crisis
I’ve got two objectives here. One is to talk about the Fed and the other is to discuss the evolution of the US economy. Most of what I want to say is upbeat, both on the Fed and the economy. And I’ll lead with that. I do have some doubts about the long-term though – and I want to give […]
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US economic growth still in the 2ish% channel
In the aftermath of the shale oil bust that sent the US economy to stall speed in 2015, growth has rebounded, but only to a sort of 2%ish level. Continued low inflation insures further low nominal GDP growth aka secular stagnation. But so far, this stagnation has not made the economy more susceptible to recession. Some brief thoughts below Here’s […]
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