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.
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Economic Principals
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No, I don’t mean like jobs in general but Jobs in particular. Yesterday I had a hypothesis (unblogged here and proved wrong) that Apple was transitioning away from Steve Jobs and that the last thing they would want the first non-Jobs outing to be was uneventful. Hence, we ...
Well I finished the revised edition of Paul Krugman’s The Return of Depression Economics. He wrote the original almost 10 years ago with much the same theme: that we have not solved the boom and bust cycle and risk of prolonged recession and even depression remains. He deserves kudos ...
Steve Jobs didn’t do the keynote but Apple’s slot at MacWorld didn’t disappoint. Well, that is my opinion. Plenty of others were disappointed but let’s face it, they were all spoiled by that magic time 2 years ago when the iPhone was introduced as a “one more thing” ...
So I have been reading Paul Krugman’s updated The Return of Depression Economics. His thesis is that depressions are not ‘off the cards’ in advanced economies and the signs have been all around us for the past two decades. The big example is Japan’s decade-long slump ...
Hawaii rolls out e-health and it is for the routine rather than special stuff. Will we ever see the government overhauling liability and other laws to make this happen in Australia?
The Australian points to this report by OECD Financial Affairs Division Head, Sebastian Schich. It is an overview of deposit insurance schemes but The Australian seized upon its concerns about the potential for ‘moral hazard.’ Here is what the report said:
Deposit insurance ...
I just finished reading Ray Fisman and Ted Miguel’s book, Economic Gangsters. The book covers their research on the micro-impediments to economic development. In many respects it is more of a tease than a treatise. Rather than explain comprehensively, the causes of mass poverty it provides chapters — each ...
The American Economic Association will now award the John Bates Clark Medal (given to the best economist under 40) annually rather than every two years. The reduction in scarcity means that the prestige associated with the award will fall; perhaps dramatically. I certainly hope Australia does ...
Tyler Cowen today writes about the Singaporean practice of ‘choping’:
Choping, it seems, is a practice in Singapore when you reserve a table while you are getting your food at public eating areas. The problem (or is it one?) arises when ...
It was just last month that she became the world’s oldest person but her reign is over.
Maria de Jesus was … Born in 1893, she reached the age of 115 years and 114 days.
The title goes back to the US with Gertrude Baines now holding the crown.