Economics Roundtable

March 2017 Fed Funds Rate

What is the effect of a 0.25% change in the Fed Funds rate?.

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March 2017 Payroll Employment

Payroll employment has not grown impressively since 2000. Some baby-boomers retired, but that does not totally account for this graph.

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May 2014 Payroll Employment

After 76 months, we finally got back to the prerecession level of payroll employment.

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The best summary of the state of our economy is the graph (below) of employment as a fraction of population for people over 16 years old. The decrease is large, but the most troubling feature of the graph is the flat trend .

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Graph-of-the-Year Candidates

Donald Marron likes European interest rates. Click on the image to get a bigger version. Can you find three distinct subperiods?

Brad DeLong favors the U.S. gdp gap.

Remember M1?

Money Supply M1 growth is now over 20% per year over a 12 month lag. M1 growth has touched 20% before, but not with excess reserves of $1.6 trillion. Where is M1 headed?

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The Economics Roundtable is sponsored by EconModel.

The Classic Economic Models cover micro, macro, and financial markets.

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Money and Banking

April 17, 2017, 11:33 am, 1738406

“…a small reduction in liquidity from regulatory changes—even if present, which is not obvious—may be a reasonable price to pay for greater safety.” FRB Vice Chair Stanley Fischer Speech, November 15, 2016

Prior to the financial crisis of 2007-2009, many people took market liquidity for granted. So, when the ...

April 10, 2017, 9:33 am, 1736379

U.S. monetary policy is tightening, as everyone who pays even the slightest attention to the financial news knows. But when and how? Here, the discussion is focused on two complementary aspects of Federal Reserve policy: interest rates and the balance sheet. The first of these concerns policy of the old-style ...

April 3, 2017, 9:33 am, 1734408

For several years, economists and policymakers have been debating the wisdom of raising the inflation target. Today, roughly two-thirds of global GDP is produced in countries that are either de jure or de facto inflation targeters (see our earlier post). In most advanced economies, the target is (close ...

March 27, 2017, 9:33 am, 1732025

No one should be surprised that the Fed is tightening monetary policy and expects to tighten significantly further over coming years. The U.S. economy will soon enter the eighth year of its current expansion. Unemployment is less than 5 percent, consistent with normal use of resources. Inflation is ...

March 20, 2017, 9:33 am, 1730108

“The Financial CHOICE Act espouses some principles that we heartily endorse. Chief among them is that the more well-capitalized institutions are, the less of a threat they pose to financial stability. And we endorse removing many inefficient parts of Dodd-Frank. But at the end of the day, the CHOICE Act ...

March 13, 2017, 7:33 am, 1728037

“We’re going to have insurance for everybody.” People covered under the law “can expect to have great health care. It will be in a much simplified form. Much less expensive and much better.” President Trump, Washington Post, January 15, 2017.

We see health as a basic human right. Every ...

March 6, 2017, 9:33 am, 1725981

“We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. […]The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.” Open Letter to Ben Bernanke, The Wall Street ...

February 27, 2017, 9:33 am, 1723801

“Don’t believe these phony numbers when you hear 4.9 and 5 percent unemployment. The number’s probably 28, 29 as high as 35. In fact, I even heard recently 42 percent.” Candidate Donald Trump, February 9, 2016.

When governments don’t like the numbers their statisticians report, they have two options. ...

February 20, 2017, 7:33 am, 1721454

“A key structural vulnerability from asset management activities is the potential mismatch in open-ended funds between the liquidity of fund investments and daily redemption of fund units.” Financial Stability Board, January 2017

In the aftermath of Britain’s July 2016 vote to exit the European Union, six U.K. open-end property ...

February 13, 2017, 9:33 am, 1719288

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” ECB President Mario Draghi, 26 July 2012.

In 2012, the ECB faced down a mortal threat to the euro: fears of redenomination (the re-introduction of domestic ...