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Monday, June 5, 2017

Monday morning reading


Stuff worth looking at:


CEPR - job growth slows sharply as unemployment hits new low. Except the 90s taught us that 4.3% is not the natural rate of unemployment in the US. So maybe you shouldn't read too much into a one-month blip, buddy. Despite what the Fed's mandate says, they actually don't give a shit about unemployment: it's all about inflation, and wage inflation is never going to happen with the plutocrats in charge.


FT Alphaville - one of Trump's Fed picks is the right kind of crazy. Yes, Marvin Goodfriend is a fan of the idiotic Taylor Rule, which means he's at least 80% moron. But he's also very much into the idea of a really thermonuclear negative rate policy. This is him in 2016:
The zero interest bound is an encumbrance on monetary policy to be removed, much as the gold standard and the fixed foreign exchange rate encumbrances were removed, to free the price level from the destabilizing influence of a relative price over which monetary policy has little control—in this case, so movements in the intertemporal terms of trade can be reflected fully in interest rate policy to stabilize employment and inflation over the business cycle.

[...]

The zero bound encumbrance on interest rate policy could be eliminated completely and expeditiously by discontinuing the central bank defense of the par deposit price of paper currency. The central bank would still stand ready to exchange bank reserves and commercial bank deposits at par; and it could stand ready to convert different denominations of paper currency at par. However, the central bank would no longer let the outstanding stock of paper currency vary elastically to accommodate the deposit demand for paper currency at par.
I don't know enough about monetary operations to evaluate this, but this seems to work. And work frighteningly. And comparing the zero interest bound to the inflexibility of the gold standard makes sense. And he worked at the Fed so he actually knows how money supply works in the real world.


Noah Smith - the shouting class. This is a money shot right here:
Seeing this, a thought suddenly occurred to me: the ratio of people who expressed support for the thread to those who expressed annoyance with it was over 20 to 1. But if you scrolled down the thread, the ratio of words devoted to support vs. words devoted to annoyance would be more like 1 to 100. Or pixels, or square centimeters of screen space, or whatever. In other words, the "annoyed" group, though far far smaller than the "supportive" group, grabbed a vastly larger amount of attention.
In other words, the internet has broken the human species' millenia-old heuristic for evaluating normativity. You can't use the internet to determine whether a belief is popular, because the most unpopular opinions take up the most space.

For a hardcore social constructionist, that spells doom for humanity.


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