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Scott Sumner: August 2017

An Author Archive by Month (17 entries)
Alan Goldhammer directed me to a very interesting article on the Texas housing market (which avoided the worst of the housing boom and bust): A cash-out refinance is a mortgage taken out for a higher balance than the one on... MORE

The Real Problem was Nominal: Example #259

Macroeconomics
Scott Sumner
For most of the past decade, I've been arguing that people have underestimated the role of falling nominal GDP in the financial crisis of 2008, and that falling NGDP was almost completely to blame for the Great Recession itself. Now... MORE

When an area is hit by a natural disaster, the media tends to focus on the proximate cause---a storm, earthquake or some other unusual event. But in many cases there are also deeper causes, which offer a more powerful explanation.... MORE

Precursors of NeoFisherism

Monetary Policy
Scott Sumner
In a series of posts I've argued that NeoFisherism is wrong as usually presented, but in a quite interesting way. More specifically, higher interest rates don't generally reflect easier money (as NeoFisherism claims), but they can do so on certain... MORE

The Fed can do what King Canute could not

Monetary Policy
Scott Sumner
Alex Tabarrok has a new podcast on monetary policy, over at Marginal Revolution University. He presents a fairly standard view of the Great Recession, emphasizing how an easy money policy during the early 2000s led to low interest rates and... MORE

Just how political is the Fed?

Monetary Policy
Scott Sumner
The Fed likes to portray itself as being a bunch of selfless, well-meaning technocrats, who faithfully try to carry out the mandate they have been given by Congress. Is this true, or has the Fed been politicized? There's a certain... MORE

Never say never

Tax Reform
Scott Sumner
I've been extremely critical of the Trump administration, but if the following Politico story is true it could be a very good sign going forward: President Donald Trump's top aides and congressional leaders have made significant strides in shaping a... MORE

Atlantis is on the gold standard. The unit of account is called the "dollar" and it's defined as one gram of gold. Atlantis has a state-owned gold mine with a monopoly on gold production, near limitless reserves, and a very... MORE

Fifty years ago

International Trade
Scott Sumner
Fifty years ago, the Red Guards were rampaging through the streets of Beijing. Chairman Mao issued weird, over-the-top statements about the evils of American capitalism. Free markets were seen as exploitation, as a sort of winner-take-all. Meanwhile, the US was... MORE

In recent years, the political situation in the US has become highly polarized. But I'm not convinced that this necessarily prevents the two sides from coming together on monetary policy. Consider: 1. The idea of NGDP targeting has considerable (and... MORE

Some thoughts on stock prices and risk of nuclear war

Finance: stocks, options, etc.
Scott Sumner
Lars Christensen and Alex Tabarrok have some interesting posts on the question of how the risk of nuclear war might impact the stock market. A few comments: 1. I basically agree with Alex's post, but would frame it slightly differently.... MORE

Neoliberalism is making the world much more equal

Cross-country Comparisons
Scott Sumner
It's puzzling to me that so many progressives view the term 'neoliberalism' with disdain. A new article by Cardiff Garcia shows that the world is becoming much more equal. And that trend is being spurred by less between country inequality---within... MORE

More markets please

Free Markets
Scott Sumner
I've devoted much of the past ten years to advocating the creation of a highly liquid nominal GDP prediction market. I believe this sort of market would eventually revolutionize macroeconomics. Over time, people would stop thinking of the stance of... MORE

Don't be early in bubble predictions

Finance: stocks, options, etc.
Scott Sumner
Alex Tabarrok has an interesting new post on trends in housing prices: In 2005, I thought housing prices were rising above the fundamentals and I said so. In 2008, as the fall in housing prices was well under way, I... MORE

I warned the Swiss that this would happen

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
After pegging the Swiss franc at 1.2 per euro for a period of about three years, the Swiss National Bank suddenly revalued the franc sharply higher in January 2015, in a surprise contractionary move. They also cut interest rates sharply,... MORE

The term 'natural' has multiple meanings and even more connotations. It often means something like free from human interference, and sometimes comes with a connotation of better or healthier. When economists refer to a "natural rate of interest", however, those... MORE

Which bus would you take?

Monetary Policy
Scott Sumner
Over at TheMoneyIllusion I did a post discussing the issue of whether central banks should be thought of as "controlling" interest rates. Here's one excerpt: There are powerful cognitive illusions here. The day-to-day Fed "control" over rates creates the illusion... MORE

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