Paul Krugman writes that wages are stagnant because unemployment is high and the owners of capital/corporations like that just fine. Their profits are up 60% above where they were before the recession began whereas compensation of employees is only up…
Blog Archives
It Is Rich to Blame Robin Hood For Recessions
A recession is a decrease in total production. There are two possible reasons why this could happen. One is a decrease in aggregate supply caused be a decrease in productivity and the other is a decrease in aggregate demand caused…
Monetary Policy for the People
Many economists have blamed Alan Greenspan for creating the housing bubble by keeping interest rates too low. This is wrongheaded. As Blinder’s excellent new book explains, low interest rates only contributed slightly to the housing bubble which was mainly caused…
The Fed’s Primary Aim Is Helping The Banks
John Cassidy has an excellent article about the banking industry, but I quibble with his ending: Helping the banks isn’t the Fed’s primary aim, of course. Ben Bernanke’s monetary policy was designed to stimulate the over-all economy… But one of its…
Keynesians don’t understand their own theory when they leave out hoarding
Updated 10/31/2016 Mathematical economists are attracted to equilibrium solutions like moths to a flame. One reason is because mathematicians like the aesthetic beauty of finding a unique solution to a mathematical puzzle. An equilibrium is a solution where everything is…
Posted in Macro
Do Monetarists Understand Their Own Models?
I have learned a lot from Nick Rowe. For example, he wrote a great post where he pointed out a place where many Keynesians don’t understand their own models. But the following section suggests that Nick doesn’t completely understand his…
The Fed is of the banks, by the banks and for the banks.
Brad Delong recently remarked that it is “good to know” that the Fed doesn’t have a double mandate (1. fight inflation, 2. fight unemployment), but rather a triple mandate (3. keep the financial system strong and stable). The idea the the…
Medianism 