Recovery from the employment losses suffered in the Great Recession (worker's depression?) of 2007-2009 has been excruciatingly slow. As I write this post in November 2013, total employment in the U.S. is still more than 1% fewer jobs than when we started this mess 5 years and 10 months ago. That's 976,000 jobs still missing … Continue reading Employment Is Likely to Improve – Morale Improves When the Beatings Stop
fiscal policy
Obama’s So-Called Keynesian Stimulus Efforts Aren’t Very
The simple version of Keynesian economics suggests that if the economy is suffering from too little economic activity and high unemployment there are some policy options. Specifically Keynes suggests there are three general kinds of policy options: The central bank (The Fed in the case of the U.S.) could lower interest rates and create money … Continue reading Obama’s So-Called Keynesian Stimulus Efforts Aren’t Very
Government Budget Cutting SLOWS the Economy – That’s Why It’s Called Contractionary Fiscal Policy
America's attention has been focused lately on the unnecessary debate in Congress over the debt-ceiling law. Part of the motivation (at least the vocalized motivation) for cutting the deficit and trying to limit the national debt, according to both Republicans and the President, is that supposedly government deficits are holding back the economy. They assert … Continue reading Government Budget Cutting SLOWS the Economy – That’s Why It’s Called Contractionary Fiscal Policy
The “Tax Cut” Bill
I have problems calling the bill currently in Congress about tax rates a "tax cut" bill. Yes, there are some genuine "cuts". But most of it is fake cuts. Congress and the Bush administration made a promise 10 years ago to raise our taxes at this time. Now the current Congress decides to not actually … Continue reading The “Tax Cut” Bill
Tax Cuts, Deficits, Debt
The current bill finding it's way through Congress from Senate to House regarding "tax cuts" will add to the deficit. How much? $857 billion worth. That means that this bill, which is in fact a stimulus bill, is actually a bigger stimulus bill than the one Obama and Congress passed in February 2009. The earlier … Continue reading Tax Cuts, Deficits, Debt
Washington Post – FAIL on Fiscal vs. Monetary Policy
I have long observed that any students who pass Econ 201 and Econ 202 with good grades and then remember what they learned are far and away more knowledgeable about economics than the majority of Congress. Now I must add "far more knowledgeable than the nation's leading(?) newspaper editors." Observe the Washington Post in an … Continue reading Washington Post – FAIL on Fiscal vs. Monetary Policy
Ireland: “Responsible” Policy Punishes Citizens for Bankers’ Sins
Poor Ireland. For some unknown reason, the Irish seem doomed to suffer under the misguided rule of others, despite being the source of great music, culture and a brew so good For centuries, the oppressor was the English. In this century Ireland has fallen under the boot of the bankers and The Powers … Continue reading Ireland: “Responsible” Policy Punishes Citizens for Bankers’ Sins
Why the Deficit Increased
The deficit increased over the last 2 years, but it wasn't because of any "surge" or "explosion" in government spending. It was because the real economy, which generates the tax revenues, collapsed because of a financial crisis, as the following graph shows. It wasn't an increase in govt spending. Spending continued to increase at the … Continue reading Why the Deficit Increased
Monetary Policy: The Wrong Tool for the Job
Generally, there are two broad policy approaches to having the government (or it's appointed representative, the central bank) manage the macro economy. One, fiscal policy involves deliberate management of the government budget (spending and tax policy) with a view to stimulating or slowing the economy. The other is monetary policy where the central bank (or … Continue reading Monetary Policy: The Wrong Tool for the Job
Automatic Stabilizers
A good article from Mark Thoma explaining what automatic stabilizers do, how they work, and why they are such an important policy in fighting recessions and keeping booms from getting out of hand. See here at The Fiscal Times.
EconProph 