ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
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Great post Arnold! Here's what I said when TARP was first voted down:
"The Paulson bailout failed in the House. If it isn't a death blow to the plan, it should be. This is not an economic plan: it is a heist.
It will go down as The Great Bank Robbery of 2008.
The economics behind it are nonsense, but we are naïve if we spend much time even considering the "arguments" for it. This is a money and power grab, pure and simple.
...
Austrian economists tend to be libertarians in their political views, and they are often chided for not keeping these systems hermetically sealed and separated in their minds. Fortunately, this alleged vice is a virtue in our present situation. Because of all the mumbo jumbo thrown around to show why the plan is necessary, some very sharp academic economists are in a tizzy trying to treat this as an extra-credit question, rather than a crime scene. That is a waste of time."
I agree, trying to come up with a theory to explain buying Mortgage Backed securities, is no different than trying to explain the Fed buying stocks or commodities (if banks balances sheet were dominated by theses). I would actually would think that policy would of been more easily explainable because the future value would be a lot more predictable and easier to analyze than mortgage backed securities.
Any explanation trying to show that the Fed is still wholly independent after this type of behavior becomes to convoluted and complex to make it worth anything.
Quite cynical, but quite possibly true.
"It is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier"
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To be fair, stanfo, it was posed as a hypothetical...!
Despite likely being true, your views will be taken as "conspiracy theory" by much of the media if publicized.
:-(
Arnold, you wrote:
"With regards to its interest-rate policy, the Federal Reserve has followed the advice from theory by committing to deflation and to keep interest rates at zero for the foreseeable future."
It should read, "committing to _fight_ deflation"
P.S. Like most modern monetary theory, this paper is blinded by a focus on interest rate targeting.
It's claim that the quantity of reserves have no impact on inflation is true given the constraint that the federal funds rate is targeted to control inflation. And while changing the interest rate on reserves impacts the demand for reserves and can make just about any quantity of reserves consistent with equilibrium, the notion that keeping the Fed Funds rate and the interest rate on reserves equal allows any quantity of reserves to be consistent with equilibrium is more an artifact of the model that reality.