Thursday , August 22 2019
Home / Free Exchange Economist
The author Free exchange
Free exchange
Our economics correspondents consider the fluctuations in the world economy and the policies intended to produce more booms than busts

Free Exchange Economist

Why scan-reading artificial intelligence is bad news for radiologists

THE better artificial intelligence gets, the greater the popular concern that smart machines will soon usher in a labour-market catastrophe. In Chandler, Arizona, Americans can at this moment hail a ride from a car without a human at the wheel. Web users can read high-quality, instant translations of foreign-language newspapers—no professional translation service needed. And developers of machine-learning technologies are moving rapidly to apply their tools across a vast array of medical...

Read More »

Why the Fed is likely to raise rates, despite low inflation

CREDIBILITY is a thing you have to worry about with toddlers. You cannot reason with them. The best you can hope to do is respond consistently to undesirable behaviour. Get this wrong and your work becomes harder. If your correspondent doesn’t actually go and hide the box of Legos every time he has to count to three, for example, his child will not find his threats to be credible, and will fail to respond to them. Get our daily newsletterUpgrade your inbox and get our Daily Dispatch and...

Read More »

Religious competition was to blame for Europe’s witch hunts

IN EUROPE, a belief in witchcraft is widely associated with medieval superstition. But this is not quite accurate. Before the 15th century popes denied the existence of witchcraft and forbade the prosecution of anyone accused of practising it. It was only after 1500 that churches reversed their position. Over the following three centuries 80,000 people were tried for witchcraft, half of whom were executed, mostly by hanging or burning. But in the 18th century the practice of putting people on...

Read More »

Donald Trump’s budget ignores what is ailing American workers

PRESIDENTIAL budget requests are worth exactly nothing. They carry no force of legislation. They land, heavy, bound and shrink-wrapped, so they can be immediately binned as Congress continues its now yearly stumble toward a “continuing resolution”—a supposedly temporary legislative act that in recent decades has almost entirely replaced the statutory budget process. The request from the President is the least consequential part of something that is completely broken. It functions like a...

Read More »

Richard Thaler’s work demonstrates why economics is hard

RICHARD THALER has won the Nobel prize in economic sciences this year for his contributions to behavioural economics. It's a well-deserved prize and a clarifying one, as far as economics is concerned. For a very long time, economists hoped to treat individuals a bit like particles in physics, whose activity can be described by a few well-understood rules, which allow researchers to model and understand complex interactions between particles. The rules, they reckoned, were things like perfect...

Read More »

The case against shrinking the Fed’s balance-sheet

AS EXPECTED, the Federal Reserve announced on September 20th that it will soon begin reversing the asset purchases it made during and after the financial crisis. From October, America’s central bank will stop reinvesting all of the money it receives when its assets start to mature. As a result, its $4.5trn balance-sheet will gradually shrink. However, the Fed did not give any clues as to what the endpoint for the balance-sheet should be. This is an important question. There are strong...

Read More »

The hubris of ten-year budgets

IN February of 2001, Alan Greenspan, then still the chairman of the Federal Reserve, and still called the “Maestro”, testified to the Senate Budget Committee. The committee wanted to get started on the tax cuts George W. Bush had promised during his campaign. Mr Greenspan gave them his qualified blessing, with an argument that now sounds incredible: he was worried that America would pay down its debt too soon. That week the Clinton administration’s Office of Management and Budget had released...

Read More »

Bitcoin is fiat money, too

FINANCIERS with PhDs like to remind each other to “read your Kindleberger". The rare academic who could speak fluently to bureaucrats and normal people, Charles Kindleberger designed the Marshall Plan and wrote vast economic histories worthy of Tolstoy. “Read your Kindleberger” is just a coded way of saying “don’t forget this has all happened before”. So to anyone invested in, mining or building applications for distributed ledger money such as bitcoin or ethereum: read your...

Read More »

How to interpret a market plunge

FOR much of the past two years, market watchers have had little to write about, apart from the passing of one stock-index milestone after another. The events of the past week, however, have shaken the financial world awake. A recent, upward zag in bond yields seemed to signal the arrival of a new theme in market movements. Stock prices confirmed it, and then some. Over the past week, American stocks have dropped about 7%, punctuated by a breathtaking, record-setting plunge on Monday. The Dow...

Read More »