Category Archives: Macroeconomic policy

Ilargi: The American Consumer Will Never Be Back

I don’t see a time in the future when American consumers will start spending again at a rate near that required for economic recovery.

Should We Be Spooked by Deflation? A Look at the Historical Record

Concerns about deflation – falling prices of goods and services – are rooted in the view that it is very costly. This column tests the historical link between output growth and deflation in a sample covering 140 years for up to 38 economies. The evidence suggests that this link is weak and derives largely from the Great Depression. The authors find a stronger link between output growth and asset price deflations, particularly during postwar property price deflations. There is no evidence that high debt has so far raised the cost of goods and services price deflations, in so-called debt deflations. The most damaging interaction appears to be between property price deflations and private debt.

Herr Schäuble’s Foibles: The Eurozone Rebalancing Conundrum

Until we jettison the neoliberal liturgy repeated daily in the press, universities, central banks, and Treasury departments, Schäuble’s Foibles will continue to rule.

Wolf Richter: FOMC Minutes Show Fed Doesn’t Know How to Unscramble the ZIRP Omelet

FOMC members are discussing an exit from QE, even the Fed has no clue how to get the financial markets through it in one piece.

Ilargi: Russia’s Central Bank Governor Is Way Smarter Than Ours

Just like the Bank of England hired Mark Carney from Canada, maybe our central bank, the Fed, should hire Elvira Nabiullina from Russia?

Jeffrey Sommers: Comparing Apples to Oranges: The Baltic States and Greece

Greece’s crisis is a public debt crisis enabled by membership in the Eurozone. The Baltic crisis was a private sector property bubble crisis.

Secular Stagnation and Capital Flows

Can capital flows mitigate or even eliminate the problems generated by secular stagnation?

Greece Submits Insufficiently Detailed Reform List; Tsipras Tells Parliament of “Peace with Honor,” Um, “Honorable Compromise”

The Greek government continues to climb down substantively on its promises of resistance to the dictates of its creditors as time pressure intensifies.

Maya MacGuineas of Fix the Debt’s Profound Fiscal Irresponsibility

Budget season brings out the deficit/debt burden propagandists, and Maya MacGuineas of Fix the Debt is a prominent fixture. Sadly, her type needs to be debunked often.

Negotiations with Greece Close to Breakdown as Budget Strains Worsen

Things are not looking good for Greece.

Yanis Varoufakis: Presenting an Agenda for Europe at Ambrosetti

If you followed Yanis Varoufakis before he became a household word (at least in Europe and in finance circles), you’ll recognize that he is making a layperson-friendly case for the Eurozone reforms that he, Stuart Holland, and Jamie Galbraith call A Modest Proposal. A new wrinkle is that he argues that the scarcity of bonds eligible for QE argues for one of its ideas, infrastructure spending funded by the EIB (those bonds would presumably be eligible for QE purchases).

Bernie Sanders Blasts “Robin Hood in Reverse” Subsidies to the Rich, Calls for Full Employment

Bernie Sanders gave a forceful, if sobering, assessment of the state of the economy from the perspective of working men and women, as well as retirees, and focused on the hypocrisy of corporations and the wealthy that poor-mouth as a way to extract even more subsidies and tax breaks.

Penciling Out Greece’s Payment Deadlines and Budget Needs

Yves here. Unlike many other comments on the state of Greece’s finances, this post takes a stab at Greece’s ongoing budget needs as well as its various debt due dates. Note that one uncertainty flagged here has been resolved in Greece’s favor. The Greek government will receive €550 million this month from the Hellenic Financial Stability Facility.

Rob Parenteau: Why Understanding Money Matters in Greece

As Greece staggers under the weight of a depression exceeding that of the 1930s in the US, it appears difficult to see a way forward from what is becoming increasingly a Ponzi financed, extend and pretend, “bailout” scheme. In fact, there are much more creative and effective ways to solve some of the macrofinancial dilemmas that Greece is facing, and without Greece having to exit the euro. But these solutions challenge many existing economic paradigms, including the concept of “money” itself.