Category Archives: The dismal science

Mario Seccareccia: Larry Summers, Secular Stagnation, and the Crisis of the New Consensus Model

Over a week ago Lawrence Summers stunned the world of economics by the remarks he made at the IMF‘s 14th Annual Research Conference on the Economic Crisis, where he pronounced the dreaded “SS” words: “secular stagnation”.

Why Should Banks be the Only Ones with Accounts at the Fed?

Should everyone with a Social Security number have an account at the Fed?

Yanis Varoufakis: The Emerald Isle Remains in Chains

A conversation with Phil Pilkington on Europe’s disgraceful triumphalism regarding Ireland’s ‘exit’ from its ‘bailout’

Managing Bureaucrats

Yves here. I have to confess that the big reason I’m partial to this article is it is consistent with my experience. Metricization of business, and worse, employee performance, has become a fetish.

Krugman, Following Summers, Endorses Asset Bubbles

We have now passed the event horizon into a world run by Dr. Pangloss. In a Sunday afternoon post, Paul Krugman enthusiastically endorses an IMF presentation by Larry Summers which depicts asset bubbles as necessary and desirable. And that means they both agree they should not only continue, they should be encouraged.

Randy Wray: What If China Dumps US Treasury Bonds? Paul Krugman Inches Toward MMT

Our deficit hysterians love to raise the specter of China.

Richard Alford: On Grading the Bernanke Fed

We are certain to hear more and more appraisals of Bernake’s tenure as Fed chairman as he approaches the end of his term. But will they use good benchmarks? We suggest measuring his performance against his claims for the Fed’s objectives and what he said the central bank could accomplish. Not surprisingly, we find that he came up short.

Philip Pilkington: What Happened to Science and Research Funding?

Once again, if you want to understand what has gone wrong with the funding of research, economists bear a lot of the blame.

Has QE Stimulated Credit?

Yves here. As much as the post below is a very useful recap of data in terms of the impact of QE, I need to hector “Unconventional Economist” for being pretty conventional. His headline question, whether intentionally or not, reinforces the notion that it was reasonable to think that QE, or super low rates generally (as in ZIRP) would lead to increase lending….

Robin Hood Tax: How Reformers Sabotage Themselves with Terrible Branding

If I were a still a Wall Street type, I don’t think I could have done a better job of sabotaging an effort to impose transaction taxes on big financial firms than the left has managed to do itself with lousy branding.

Yanis Varoufakis: The US Treasury is Right About Germany’s Eurozone Policies: Here is Why

By Yanis Varoufakis, professor of economics at the University of Athens. Cross posted from his blog

On 30^th October, in its Report to Congress on Economic and Exchange Rate Policies, the US Treasury took a swipe at Germany, accusing it of exporting economic depression to the rest of Eurozone and, indeed, to the global economy. The German Finance Ministry responded the next day with a statement that: “There are no imbalances in Germany that need correction. On the contrary, the innovative German economy contributes significantly to global growth through exports and the import of components for finished products.” There are few occasions in any argument where one side is completely right and the other comprehensively wrong. This is one of them!

Greed, Revolution, and Governance

I’m generally very taken with Ian Welsh’s work, particularly two recent posts, A New Ideology and How to Create a Viable Ideology. He then continued with 44 Explicit Points on Creating a Better World. And I hate to say it, but the last piece was no where near as well thought out as the preceding pieces. What troubled me about his latest piece was its combination of confidence (as opposed to modesty and soliciting reactions and input) in combination with it having internal contractions and a lack of precision of language. But perhaps the biggest shortcoming was trying to finesse the question of governance.

Governments Need to Take the Reins Back From Central Banks and Deal with Economic Imbalances

Macrobusiness flagged a short interview with Ann Pettifor, a highly-regarded international finance expert who is the Director of Policy Research for Macroeconomics on the ABC program The Business. Pettifor argues that economists are responsible for the bias today to over-rely on monetary policy to solve problems that can only be addressed by government spending. Leaning too heavily on monetary policy to try to address weak growth simply generates asset bubbles.

Yanis Varoufakis: The Dirty War for Europe’s Integrity and Soul

As Lambert says, get a cup of coffee, or maybe two. This is a long piece, but that is in part because it includes many damning vignettes from the Eurocrisis, so this is the antithesis of a dry read.

The Man Who Won a Nobel Prize for Helping Create a Global Financial Crisis

Yves here. While there have been some good posts expressing consternation at the recently announced winners of the so-called Nobel Prize in Economics, this one is particularly useful in explaining how economists come to treat obviously ridiculous theories as gospel truth.