Economics Roundtable

January 2014 Payroll Employment

We are getting closer to the previous peak.

Click on the image to get a bigger version.


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 .

Click on the image to get a bigger version.

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?

Click on the chart for a larger version.


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Economics and …

February 11, 2014, 4:44 pm, 1221351
I’m not saying it will happen, or even that it’s likely. As a matter of fact, if you offer me less than 6:1 odds, I won’t even consider a bet on deflation, even taking into account its hedge value (since deflation is likely to be associated with bad real ...

February 11, 2014, 4:44 pm, 1221352
I admit I supported Barrack Obama in both the Democratic primaries and the general election. I still think he’ll make a better president than either John McCain or Hillary Clinton would have. And I think he’s quite an intelligent person, with a reasonable layman’s understanding of economics. ...

February 11, 2014, 4:44 pm, 1221353
In my last post I argued

...the general purpose of stimulus packages is to mobilize the economy's unused resources, and, in this particular case, to...prevent prices from plummeting. Does the presence of pork in a any way hinder the pursuit of such purposes? As far as the deflation ...

February 11, 2014, 4:44 pm, 1221354
(My apologies to those with religious dietary restrictions...and to those who hate the letter P)

Greg Mankiw's hypothetical alliterative stimulus critic worries that the stimulus package will be "pointless, political, and pork-filled." Perhaps. But it's hard for this person to perceive how a proposal that is ...

February 11, 2014, 4:44 pm, 1221350
I put together a series for commodity prices as measured by various CRB indexes. Since there have been a couple of new CRB indexes introduced at certain times, and the new indexes have each eventually supplanted the earlier version, I patched together a series going back to 1950 using ...

February 11, 2014, 4:44 pm, 1221349
Just a quick thought. Ben Bernanke suggested today that the Fed might start buying longer maturity Treasury securities now that it has done about all it can at the short end of the yield curve. Sounds like a good idea, but here's my question: If reducing yields ...

February 11, 2014, 4:44 pm, 1221346
Paul Krugman makes the case for deliberately providing too much of an economic stimulus. Here I want to examine the counter-case, for which I think there is a valid argument, although it doesn’t seem to be the argument that anyone is actually making. In the end, though, ...

February 11, 2014, 4:44 pm, 1221347
As a postscript to my last two blog entries, I want to imagine a possibility.

Suppose that the Treasury were to retire all its outstanding long-term debt, and suppose that the Fed were to buy enough of its short-term debt to keep the interest rate ...

February 11, 2014, 4:44 pm, 1221348
For Sepetmber 2008, the monetary base was reported at $903.5 billion. For October, it was reported at $1.1285 trillion. That's an increase of $225 billion. That's how much money the Fed created directly in one month. A couple of months of that would be enough to ...

February 11, 2014, 4:44 pm, 1221345
Back of the envelope analysis:

UE rate is now 6.7%.
Almost certain to rise over next couple of months.
Probably at 7% early in '09.

The most optimistic estimates have recession ending about halfway thru '09.
Stimulus program heavy on public works will be slow to implement.