Economics Roundtable

NOTICE 9/30/177

The Economics Roundtable website has been up and running for a couple of days now. Further periods of testing will be necessary. The RSS feed is still not working. The left sidebar links are also probably not updating correctly.

The problems were caused by updates to the programming language php and to the Apache operating system. It is taking time to track down the problems this causes with my system. - Bill Parke

March 2017 Fed Funds Rate

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

Click on the image to get a bigger version.

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 .

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.


The Economics Roundtable is sponsored by EconModel.

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

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Money and Banking

September 25, 2017, 9:03 am, 1779081

“If you give someone the opportunity to manipulate, they’ll do it. […] If you’re not being detected you will continue – it’s human nature.” Nick Leeson, cited in Mirror, 24 February 2015.

The term moral hazard originated in the insurance business. It was a reference ...

September 18, 2017, 8:05 am, 1776614

“There are only two types of organizations: those that know that they’ve been hacked and those that don’t yet know.” Dmitri Alperovitch, Crowdstrike (CNBC, December 15, 2016)

Recent disasters—both natural and man-made—prompt us to reflect on the relationship between operational risk and financial stability. Severe weather in ...

September 17, 2017, 9:04 am, 1776414

“The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating.”

BNP Paribas press ...

September 17, 2017, 9:04 am, 1776416

“Global banks are global in life but national in death.” Mervyn King

Courses in international economics usually introduce students to the impossible trinity, also known as the trilemma of open-economy macroeconomics: namely, that a fixed exchange rate, free cross-border capital flows, and discretionary monetary policy are incompatible ...

September 17, 2017, 9:04 am, 1776413

Information is the basis for our economic and financial decisions. As buyers, we collect information about products before entering into a transaction. As investors, the same goes for information about firms seeking our funds. This is information that sellers and fund-seeking firms typically have. But, when it is too difficult ...

September 17, 2017, 9:04 am, 1776415

A few months ago, one of us (Steve, who lives near Boston) needed to send some money to his son (Dan, who lives in Chicago). Hoping to use the most up-to-date technology, Steve checked out the person-to-person (PTP) transfer options on his bank’s website. The first three choices required standard ...

September 17, 2017, 9:04 am, 1776411

“We lowered our rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term [budget] progress … will remain a contentious and fitful process.” S&P Global Ratings August 5, 2011.

During the 2016 ...

September 17, 2017, 9:04 am, 1776409

“Monetary policy and concerns about the structure and condition of banks and the financial system more generally are inextricably intertwined. […]neither monetary policy nor the financial system will be well served if our central bank is deprived from interest in, and influence over, the structure and performance of the financial ...

September 17, 2017, 9:04 am, 1776410

“…the volume of unsecured wholesale lending has declined markedly…. This development makes LIBOR more susceptible to manipulation, and poses the risk that it may not be possible to publish the benchmark on an ongoing basis if transactions decline further.” FSOC 2016 Annual Report, page 5.

The manipulation of the ...

September 17, 2017, 9:04 am, 1776412

Guest post by Lawrence J. White, Robert Kavesh Professor of Economics, NYU Stern School of Business.

In the summer of 2008, Fannie Mae and Freddie Mac’s financial positions deteriorated sharply: the result of inadequate capital (equity financing) for the risks in the residential mortgages that they held and had ...