Economics Roundtable
Payroll Employment
The December figure for U.S. payroll employment comes out Friday. The November figure was down over 500,000 jobs. Is a loss of 1,000,000 jobs possible for December?
Charts to watch:
2004-2009
1988-2009
12/31/08 -- The growth in excess reserves has slowed, at least for the past two weeks. Excess reserves have grown to $798 billion, which is an increase of only $24 billion.
12/18/08 -- Excess reserves increased from $590 billion to $774 billion over the past two weeks. Required reserves are now $53 billion. Total reserves equal about 52% of M1.
12/4/08 -- Excess reserves decreased from $605 billion to $590 billion over the past two weeks.
11/20/08 -- Reserves with the Fed increased by $237 billion over the past two weeks. Required reserves are now $48 billion, and total reserves are $653 billion, leaving excess reserves of $605 billion. Reserves are now equal to about 44% of the money stock M1.
August, 2008 -- Excess reserves are $2 billion, a figure that is typical of recent years.
Monetary Policy in Three Steps
Step 1: Buy private assets from banks while selling Treasuries, effectively trading private assets for Treasuries, leaving reserves with the Fed unchanged.
Step 2: Buy private assets from banks, paying with deposits with the Fed (new money) because the portfolio of Treasuries is shrinking. Banks make little attempt to convert deposits with the Fed into loans. Nothing much happens to loans and the money supply, but excess reserves explode.
Step 3: Banks start to expand loans on the basis of massive excess reserves. The Fed has to drain hundreds of billions in excess reserves to regain control of the money supply. The Fed does this by selling private assets back to the banks.
We are now well into Step 2. Step 3 should be interesting.
Why AIG was in the CDS Business
Felix Salmon explains how taxpayers get to pay the claims after AIG collected the premiums. It is really very simple.
VoxEU -- Free Online Book
Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis -- Contents Page
Richard Baldwin, Barry Eichengreen
"Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection of essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks."
Economic Principals
Congratulations to David Warsh on the occasion of the 25th anniversary of EP.
The First Global Financial Crisis
of the 21st Century
A VoxEU.org Publication
Edited by Andrew Felton and Carmen Reinhart
Read the announcement
and/or download selected chapters.
Review: the topic itself is important, but this book also marks a new direction for online discussion.
Great Articles by Famous Economists
The Library of Economics and Liberty includes The Concise Encyclopeida of Economics. To see how many well-known economists have contributed browse by category .
EconModel
The Economics Roundtable is sponsored by EconModel.
The Classic Economic Models cover micro, macro, and financial markets.
Tax Foundation
So the National Taxpayers Union (NTU) wrote a letter to Tennessee congresswoman Marsha Blackburn in support of her proposal that would allow taxpayers to write off both state income taxes and state sales taxes on their federal income tax each year. In it, they use arguments that actually make ...
A humorous article from today's St. Petersburg Times discusses Florida's entry into Powerball. Florida is the last state, among those that have lotteries, to join a multistate game such as Powerball or Mega Millions. Like legislators in other states, Florida policymakers are not content with the huge amount of ...
So part of Barack Obama's stimulus plan is this, as explained in today's New York Times:
To encourage businesses to expand their workforces and operations, Mr. Obama wants a tax credit for each new job created. During the campaign, he proposed $3,000 for each new job. Advisers said he is ...
The IRS sent James Howarth a bill for 5 cents and demanded he pay. Then they sent him a refund notice for 4 cents but said he'd have to request payment since it was under $1. He tried to call to sort it out but couldn't get a live ...
This morning, the New York Times and the Wall Street Journal outlined President-Elect Barack Obama's economic stimulus package worth anywhere between $675 billion to $775 billion, both news organizations saying that the tax cut proposals are there largely to woo Republican support for the entire plan. The NYT's Peter ...
Allegheny County Judge Judith Olson issued an injunction against the county on Friday which limits the use of the county’s alcoholic drink tax revenue exclusively to Port Authority projects. This means that county officials will not be allowed to use any of the revenue to fund road or ...
I recently appeared on C-SPAN's Washington Journal to discuss the economic situation facing the states and how individual states are dealing with budgets and related tax issues. Click here to watch the video.
Below is each state's situation in more detail; these blog posts have been going up over the ...
Arkansas Gov. Mike Beebe (R) has introduced a balanced $4.4 billion budget, including $145 million in unfunded spending, and a $30 million cut in the sales tax on groceries from 3 percent to 2 percent (the general sales tax is 6 percent). The budget also proposes adding $120 ...
Negotiations recently broke down between Arizona Gov. Janet Napolitano (D) and the legislature over $400 million of spending cuts to the $9.9 billion budget. Officials estimate a $1.2 billion shortfall. In the last five years, Arizona's government spending has grown at twice the rate of inflation and population ...
Alaska Gov. Sarah Palin (R) has proposed a 7 percent spending cut in the $11.2 billion budget to close a $402 million shortfall (the comparison does not count $746 million in checks mailed out last year from windfall profits tax proceeds). Alaska's general fund derives much of its ...