I want to follow up a little on my discussion of the liquidity trap that we are have been in. Brad Delong has an excellent post today called "Four Years After the Wakeup Call". In it he shows some graphs which illustrate very well our the liquidity trap. Delong first serves us two graphs on … Continue reading What a Liquidity Trap Looks Like in Pictures
When people think about "income distribution" there's a tendency to think of it only in terms of what different people or households have available to spend. In other words, we focus on the fairness or equity of whether some households should only have a small amount of money to live off of vs. others who … Continue reading Income Distribution Does Matter. It’s Wrong Now and Stopping Growth.
It looks like we are going to repeat the past. In this case, it's 1937. In 1937 the general discussion in U.S. politics had turned to concerns about debt and deficits. The conservative view that opposed both the New Deal and efforts to alleviate the Great Depression began to get the upper hand. Keep in … Continue reading Learning From the Past – Or Maybe Not.
In yesterday's release of the 2nd quarter 2011 GDP numbers for the U.S., the BEA also revised some past numbers. This is not an unusual event. It's routine. But the news and revisions this year were disturbing and sobering. First, a little about how GDP numbers are reported. In this day and age of instant … Continue reading The Great Recession Was Even Worse Than Thought
Brad Delong has had enough. So have I. "The Little Depression" Back in late 2008 people asked me: is this a recession or a depression? I said that I would call it a depression if the unemployment rate kissed 12%. I said that I would call it a depression if the unemployment rate stayed above … Continue reading What to Call This Unpleasantness? Little Depression or Workers’ Depression?
The Great Recession of 2007-9, like the Great Depression in 1929-33, was triggered by a massive financial crisis: stock market crash, falling asset prices, bank failures, and liquidity crisis. One of the key triggers of instability in banking and the resulting financial crises is what economists call "over-leverage", meaning too much (private) credit and too … Continue reading Income Inequality and Financial Crisis
As I've feared, it looks like a long, slow recovery. For employment, it hardly looks like a recovery at all. Even if employmnent (# of jobs) grows by say 100,000 per month, that means no improvement in unemployment rate because population and workforce participation continue to grow. Also note the reference that inflation is NOT … Continue reading “We do not expect substantial further declines in unemployment this year”
I know I sound like a gloomy-gus when considering the prospects for the economy, but I'm not totally alone. Calculated Risk quotes from Cleveland Fed President Sandra Pianalto: When the Small Stuff Is Anything But Small. A few excerpts: (bold emphasis is CR's, red is mine): ... The recovery from the recession may also end … Continue reading The Details Make The Future Look Dark