Monday , September 21 2020
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Tag Archives: Commentary

Storm coming

I am very worried about how the next election will play out. I am more worried than most commenters, hence this post, because as an economist I predict people's behavior by asking what is natural given their incentives and the rules of the game as they are. That thinking leads to a dark place.  Our democracy has one essential function: a peaceful transfer of power. There are rules of the game. A winner is determined even in a close race. Both sides agree who won, and that the winner is a...

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Muni haircuts

"Municipal bond investors have to share the burden in state bailouts" writes my colleague Josh Rauh, and he is exactly right.Background: State and local governments borrowed a lot of money and blew it. They borrowed further by not funding their pensions. Now covid comes along, people are fleeing cities, and they don't have tax revenue to fund ongoing expenses. The big question hanging over Washington: If we are going to help state and local governments weather the storm of their current...

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Altas agonistes

A group of Stanford faculty recently circulated, and then posted, an open letter objecting to my Hoover colleague Scott Atlas, who serves as a senior adviser to the Administration on health policy. Read the letter. Then come back for a little reading comprehension test.****Q1: What specific "falsehoods and misrepresentations" do they accuse Scott of making?Q2: Which of the following do they claim Scott is publicly denying, contrary to scientific evidence? Face masks, social...

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Debt podcast and reconciliation

 The Grumpy Economist podcast is back, with some thought on the debt issues from my last posts here and here.David Andofatto had some final thoughts at macro mania, with which I mostly agree. Yes a twitter/blog debate in macroeconomics produces agreement! Central points: 1) For these purposes a large sharp inflation and a default are not much different. In fact, the event I have in mind is most likely an inflation, as the US is likely to choose inflation over default. I don't...

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Fintech in chains

"Fintech can come out of the shadows" is the title that Wall Street Journal editors gave to  Brian Brooks and Charles Calomiris' oped last week. I have not in a long time seen a title that more utterly contradicts the content of the essay.  For what they advocate is exactly the opposite: Fintech in chains, hemmed in by  the sort of regulatory stranglehold that fintech was created to escape. What is fintech? Basically companies that offer  services—consumer loans,...

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Deflation

 For another purpose, I had reason to look up TIPS yields. The current Treasury Inflation-Protected Security (TIPS) yields are -1.27% (5 years) -0.98% (10 years) and, amazingly, -0.35% (30 years). You pay them 0.35% per year for a stable real value. I did not realize it was this low. The context. I serve on the advisory board of a small nonprofit that has an endowment. The endowment is intended to be perpetual. We're discussing the equity vs. fixed income allocation. I wanted...

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Smoke and Nukes

 I was driving in Northern California on Labor Day, contemplating the 1-2 mile visibility in thick smoke through the Central Valley, and listening to NPR, when an enticing story came along. Amna Nawaz:For a closer look at what's behind that heat wave and what's fueling these fires, I'm joined by Leah Stokes, she's a professor and researcher on climate, energy and political policy at the University of California, Santa BarbaraGreat, I thought. We're going to hear some real science...

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More on debt

Following my last post on debt I've thought a bit more, and received some very useful emails from colleagues. A central clarifying thought emerges. The main worry I have about US debt is the possibility of a debt crisis. I outlined that in my last post, and (thanks again to correspondents) I'll try to draw out the scenario later. The event combines difficulty in rolling over debt, the lack of fiscal space to borrow massively in the next crisis. The bedrock and firehouse of the...

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Debt Matters

Debt Matters(This is a draft of an oped. I got done and saw it's 1500 words, so I'm posting it for your enjoyment rather than go through a painful 600 word diet. Diet later. Maybe. ) Last week, the U.S. passed a milestone — US federal debt in private hands exceeded 100% of GDP. But does all this debt matter, or is worrying about debt passé?This debate has been going on among economists for a while. One does not need to go to the incoherence of "modern monetary theory" to find support for...

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On looting

A good read: Graeme Wood's Atlantic essay covering Vicky Osterweil, her popular book In Defense of Looting, and NPR interview. (HT Niall Ferguson) NPR summarizes the book as an argument that “looting is a powerful tool to bring about real, lasting change in society.” If the real, lasting change you wish to effect is burning society to cinders and crippling for a generation its ability to serve its poorest citizens, then I suppose I am forced to agree. That's as nice a...

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