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Tag Archives: Commentary

r < g

r<g is an essay on the question whether r<g means the government can borrow and not worry about repaying debts. No. Abstract: A situation that the rate of return on government bonds r is less than the economy's growth rate g seems to promise that borrowing has no fiscal cost. r<g is irrelevant for the current US fiscal problems. r<g cannot begin to finance current and projected deficits. r<g does not resolve exponentially growing debt. r<g can finance small...

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Lipson on basic decency

Why are people gloating over Rush Limbaugh’s death? Charles Lipson writes The gloating over Rush Limbaugh’s death ought to shock the conscience. That’s not a political statement. That’s a cri de coeur about how our basic sense of human decency has been warped by political differences.To take one example, a Yale Law professor tweeted he wasn’t just happy Limbaugh had died, he was euphoric.He’s not some drunk being carried out of a rowdy bar. He’s the Charles F. Southmayd Professor of...

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Institutional culture

Arnold Kling has an intriguing series of blog posts on the nature of universities and other institutions that are, as he says, cancel-bait. I removed the cancel-bait part and pass on his observation on the shift in institutional culture, visible in universities but also in corporate and nonprofit institutions and in our politics. 1. The older culture saw differential rewards as just when based on performance. The newer culture sees differential rewards as unjust.2. The older culture...

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Vaccine math. $500 per shot?

I'm reading up on the $1.9 trillion "stimulus." This caught me eye: Biden's plan would set out $160 billion for a nationwide vaccine program that would help state and local governments get the vaccine into people's arms.There are 328 million people in the US. $160 billion is just about exactly $500 per person. Now, I am of the view that the government should have spent a lot more on vaccines, testing, public health and so forth, given the $5 trillion and counting it has cost the...

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Test snafu

Wouldn't it be nice if there were a $5 test that works in minutes, and can find asymptomatic people who might transmit covid? Imagine how many schools, businesses, restaurants, weddings, churches, and so forth could safely open with such a thing. Imagine how much the reproduction rate of the virus could be crushed. There is! And it's sitting on shelves, one of the biggest casualties of the US federal monopoly on this simplest of all consumer goods. From detailed Wall Street Journal...

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The wages of stimulus

 Discussing stimulus, a colleague passed along a factoid -- wages and salaries, he said,  are running $20 billion a month or $240 billion a year below where they should be. If the "stimulus" were to aim entirely to replace all lost wages due to the pandemic, that would stop at $240 billion, not $1.9 trillion. (My colleague is usually a pro-stimulus type.) I forgot to get the source, so I tried to recreate it. Here are some documented numbers, total compensation of employees, wage...

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Inflation issues

 In analyzing whether inflation is coming, Mickey Levy at Berenberg Capital passes along the above graph. These are price indices, so the upward or downward slope measures inflation. Is there inflation? That depends on whether you ask durable goods or services. Why are we experiencing durable good deflation, and will it last? Part of the answer is quality adjustment: The Bureau of Economic Analysis' (BEA's) official inflation indexes are based surveys of product prices that are...

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Trading halts and game over

David Battan writing in the WSJ brings come clarity to Robin Hood's trading stop.  It raises some questions for me, however. Much of the problem seems to stem from two-day clearing and settlement, and brokers lending people money to trade. Instant settlement and at least separating the lending activity from the trading activity ought to help. The institutions are really stuck with relics of a pre-computer world, it seems. OK, first the facts, then speculation, and an invitation for...

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Long and short of bubbles — Grumpy podcast with Owen Lamont

The long and short of bubbles. A conversation with Owen Lamont on Gamestop and other matters. See my  last post for background and great papers by Owen. A direct link in case the above embed doesn't work. Owen views the current situation more as a classic short squeeze than a replay of 3com/Palm and similar affairs in 1999. These are established companies with short markets, and there is little technological news about them.  We talk a bit about bubbles in general, short sales,...

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