Thursday , June 17 2021
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Tag Archives: Commentary

Meritocracy

Adrian Woolridge wrote a thought-provoking essay titled "Meritocracy, Not Democracy, Is the Golden Ticket to Growth," advertising a forthcoming book. Meritocracy, the secret sauce of growth?  To Woolridge, meritocracy is the secret sauce of prosperity: The surest sign that a country will be economically successful is not the health of its democracy, as some liberals like to think, or the leanness of its government, as some free-marketers imagine, but its commitment to...

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Vaccine slowdown?

 Source. Everyone seems tired of covid. And sure, inflation, debts, "infrastructure," competing voting narratives and so on are more fun. But covid is still with us. The graph summarizes what I've read in lots of news stories: vaccination is slowing down. There is plenty of supply, but we are running in to people who do not go get the vaccine. This strikes me as a tragedy. (Disclaimer: this is an exploratory post, and I'm anxious to hear about it from more knowledgeable...

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Eurosclerosis update

 All pre-covid. European GDP per capita fell in the decade following the financial crisis. US growth was nothing to write home about, but things could be worse. The we-should-be-more-like-Europe crowd has some explaining to do. (The Word Bank's software misplaced the UK label; it is the red line on the top of the European group.) From the World Bank, HT Marginal Revolution.The graph is in dollars, so part of the effect is that the dollar got more valuable relative to the euro. (Thanks to...

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Whither the Fed

I gave the UCSD economic roundtable lecture Friday June 11 on inflation and the future of the Fed. It summarizes quickly a number of themes from previous Grumpy writings, and if you enjoy videos you might find it fun. Youtube link in case the above embed does not work. I happened on the New York Fed website, proclaiming on its landing page that it is now"...dedicated to understanding and finding solutions to the numerous forms of inequality that communities of color experience and...

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The end of “the end of inflation”

This spring's spurt of inflation clearly already means one thing: The end of "the end of inflation." For 25 years inflation has seemed stuck on a downward trend. Those of us who worry about it seemed like end-of-the-world sign-holders that couldn't leave the 1970s behind. It's hard to buck the trend. A famous economist advised me to give up studying inflation -- inflation is 2%, he said, that's all you need to know. Apparently a new constant of nature. Well, apparently not....

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Why won’t banks take your money?

 Banks to Companies: No More Deposits, Please, says the puzzling headline at WSJ. Why would bankers not want to take any amount of deposits, park them in reserves at the Fed or short term Treasury bills, charge fees and a slight interest spread, and sign up for an early tee-time at the local golf club? Sure "net interest margin" or other metrics might not look good, but money is money and more money is more money. The answer: Top of mind for many big banks is a rule...

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What about Japan?

What about Japan? It's a question I often hear from advocates of fiscal expansion. Japan has huge debts and no crisis or inflation (so far). Doesn't that prove the US can borrow a ton more money painlessly? I offer two new points today: 1) Not every high debt country is so happy. 2) Just what did Japan get for all its fiscal stimulus? Indeed, I will start asking "What about Japan?" Japan seems a tough case for those who advocate that fiscal stimulus will save us from secular stagnation,...

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Proxies

A correspondent asked for comment on the new ESG trend among asset managers. For example, BlackRock, and the recent Exxon upheaval with two new green directors (here, but cautionary WSJ coverage here, pointing out how empty the whole Exxon affair really is).  I'm sad to see even Vanguard (which has a lot of my money) going along on this...trend.  Could you offer some thoughts about the trend of asset managers voting more critically this year? Are the big fund firms like...

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Brazilian Inflation

This marvelous plot comes from an interesting article, The Monetary and Fiscal History of Brazil, 1960-2016 by Joao Ayres, Marcio Garcia, Diogo A. Guillén, and Patrick J. Kehoe. The article is part of the Becker-Friedman Institute Project, complete with a big and now easily available data collection effort, and forthcoming book. If you want a deep historical and economic analysis of fiscal and monetary interactions, this is an amazing resource. And it summarizes historical episodes that...

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