Great Recession? What Great Recession?

Each January the American Economic Association has a conference that brings together thousands of economists from all over the world.  In May they publish the proceedings of the conference.  I just got mine today, and immediately began looking for papers on the role on monetary policy in the Great Recession.  After all, in standard New Keynesian theory monetary policy is the main stabilization tool, and it’s widely known among elite macroeconomists that there are all sorts of “foolproof” monetary tools available, even at the zero bound.

There were a total of 106 papers included in the May issue.  Here are the numbers:

Papers on bias at Wikipedia:  One

Papers on the role of monetary policy in causing or curing the Great Recession:  Zero.

So let’s go back to the May 2011 issue, which contains 116 papers:

Papers on “Topics in Wine Economics”:  Four.

Papers on the role of monetary policy in causing or curing the Great Recession:  Zero.

So I decided to go back to the May 2010 issue, which contains 121 papers: 

Papers devoted to online advertising:  Three

Papers on the role of monetary policy in causing or curing the Great Recession:  Zero.

Then I gave up.  The May 2009 issue contained papers from the January 2009 conference, which had to be submitted by February 2008.

Comments?


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62 Responses to “Great Recession? What Great Recession?”

  1. Gravatar of marcus nunes marcus nunes
    7. June 2012 at 12:36

    “keep mum”; See no evil, speak no evil and hear no evil!
    Much easier and rewarding to write about wine economics!

  2. Gravatar of Policy Wank Policy Wank
    7. June 2012 at 12:39

    Steve Levitt has ruined the field. You need to write that pop book on Macro that you’ve been toying with.

  3. Gravatar of Justin Justin
    7. June 2012 at 12:40

    Maybe there weren’t any papers on the role of monetary policy during the Great Recession because most people more or less have their minds made up: monetary policy was ineffective because of the lower bound, or monetary policy is effective if used properly but it wasn’t used properly.

    I’m not a professional economist, but if I was and I wanted to convince people that monetary policy wasn’t executed properly during the recession I’d simply link to your site and call it a day! Would another paper with fancy math really make much difference?

  4. Gravatar of Neal Neal
    7. June 2012 at 12:43

    Are you going to stand out front with a sign?

  5. Gravatar of dwb dwb
    7. June 2012 at 12:46

    That’s what we have blogs for.

  6. Gravatar of Greg Ransom Greg Ransom
    7. June 2012 at 12:49

    Incentives matter.

    Guilds generate selection processes with purely internal dynamics.

    The demand for a formal metric for “who’s smart” or “what is science” has consequences.

    You get what you filter for & what academic economics filters for is fake science, for example, it filters for statistical mining passed off as the “equivalent” of “hard science”.

    Etc.

  7. Gravatar of Joe Joe
    7. June 2012 at 12:50

    There’s bias at Wikipedia!?

  8. Gravatar of Greg Ransom Greg Ransom
    7. June 2012 at 12:52

    If economics were a science like biology, these conferences would be stuffed with field research reports, eg total population surveys of particular regions or economic sectors, or close up studies of particular populations, etc.

  9. Gravatar of SG SG
    7. June 2012 at 12:56

    Scott,

    Haven’t you said that the problem with macro scholarship is that NK stabilization models can get you whatever result you want as long as you rig the assumptions the right way? Maybe it’s more impressive to do papers on trivial problems with interesting data or theory than to work on very very serious problems that are difficult to analyze.

    Not making excuses, just trying to understand. I’m glad I’m not an academic.

  10. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 13:00

    Papers on the role of monetary policy in causing or curing the Great Recession: Zero.

    Central banks have bought off virtually the entire economics profession.

    Haven’t you figured this out yet?

  11. Gravatar of Cedric Cedric
    7. June 2012 at 13:01

    Book idea: “CRAZYnomics” by Scott Sumner. Subtitle: “How Ninjas, Cats, and Kate Upton Secretly Control Our World.” Have a picture of a flying Ninja, a cat with its head stuck in bread, and Kate Upton doing the Dougie. Make chapters 1-13 about stupid crap. Make chapter 14 about NGDPLT. Undeniable consequences:

    1. You will make eleventy billion dollars.
    2. The Times hires you to replace that troll Gail Collins.
    3. Everyone will walk around with these totally sweet t-shirts. http://www.cafepress.com/cp/customize/product2.aspx?from=CustomDesigner&number=654143869

  12. Gravatar of Cthorm Cthorm
    7. June 2012 at 13:04

    Academia today isn’t attracting a whole lot of grad students interested in the nitty gritty, i.e. real nominal economics. If you’re a good Econ student and you want to make money, you go into Finance; if you want to do new and interesting things, you go into tech; if you’re content writing obscure research papers, you go into Academia and write about Wine Economics. When I was a Sophomore I talked with a lot of grad students at UCSB, and none of them were doing any research I would call interesting. I distinctly remember someone doing a paper looking at the role of weather on school performance and attendance. At the professor level, most of the action was in behavioral economics, game theory, information theory, and ‘environmental economics.’ Actually I take that back, the LEIF institute at UCSB was working on better DSGE & DSPE models, but that was a total blackbox for undergrads.

  13. Gravatar of John hall John hall
    7. June 2012 at 13:10

    @Cedric I would buy that book.

  14. Gravatar of Cedric Cedric
    7. June 2012 at 13:11

    Ok, I’m taking the next two days off work to design the cover.

  15. Gravatar of Neal Neal
    7. June 2012 at 13:14

    Cedric, I would buy that t-shirt.

  16. Gravatar of ssumner ssumner
    7. June 2012 at 13:17

    Everyone, I agree with all the comments (except MF naturally) so I won’t respond individually.

  17. Gravatar of Cedric Cedric
    7. June 2012 at 13:18

    @Neal, I would too. This blog needs a merch section.

  18. Gravatar of dwb dwb
    7. June 2012 at 13:18

    and BTW when i say “thats what we have blogs for” i mean in whole heartedly: blogs have changed the perspective more quickly that 1000 academic papers, and now you see commonplace statements like Tim Duy:

    “The Federal Reserve would have been better off to buy a set quantity of assets every week, adjusting that number as they might the interest rate, until certain macroeconomic objectives are met. This would let the expectations channel shoulder some of the work by laying out a clear path for monetary policy.”

    and

    ” If policy was effective, longer term interest rates would rise in expectation of eventual Fed tightening. The collapse of rates – again – is an indication that the Fed needs to be doing much, much more. ”

    I am picking on Duy, but i could pick on a bunch of other economists who 2 years ago probably did not get it…

  19. Gravatar of Neal Neal
    7. June 2012 at 13:29

    Now, if I/we were to open a merch store of market monetarist paraphernalia, would Scott link to it … ?

  20. Gravatar of Steve Steve
    7. June 2012 at 13:31

    “Papers on “Topics in Wine Economics”: Four.”

    Krugman could do a column on this. Something about the Very Serious People being concerned about the affordability of the very finest wines, while being completely indifferent to the mass suffering of the unemployed.

  21. Gravatar of Liberal Roman Liberal Roman
    7. June 2012 at 13:33

    Welcome to the Dark Age of Economics

  22. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 13:34

    Everyone, I agree with all the comments (except MF naturally)

    That’s strong evidence for me that I’m right.

  23. Gravatar of Steve Steve
    7. June 2012 at 13:43

    “That’s strong evidence for me that I’m right.”

    You and Larry Summers, birds of a feather.

  24. Gravatar of Cedric Cedric
    7. June 2012 at 13:56

    @MF, what exactly are you right about, again? That central banks enforce ideological conformity via bribes? If that’s true, you wouldn’t see any criticism of central banks from economists (but you do), you wouldn’t see central banks embracing diverse ideologies (but you do), and you wouldn’t see vigorous dissent and debate within central banks (but you do).

    I think the reason Austrians get way more traction on fiscal/regulatory issues than monetary issues is because they are way more persuasive on fiscal/regulatory issues than monetary issues. No conspiracy is necessary to explain the world.

  25. Gravatar of Negation of Ideology Negation of Ideology
    7. June 2012 at 13:58

    Twenty-six bucks for a T-shirt? Does that mean the Austrians are right that we’re in a hyperinflation?

  26. Gravatar of Cedric Cedric
    7. June 2012 at 14:10

    @Negation

    But it isn’t just a shirt!

    It’s an opportunity for you to launch into a 45-minute exposition on monetary policy to the cute Applebee’s waitress when she asks you what it means!

  27. Gravatar of Mike Sax Mike Sax
    7. June 2012 at 15:08

    Steve do you really hate Larry Summers that much? I think that’s taking some license..

  28. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 15:10

    Cedric:

    @MF, what exactly are you right about, again?

    Money, and its implications.

    That central banks enforce ideological conformity via bribes?

    The powers the control the Fed do the bribing with Fed money.

    If that’s true, you wouldn’t see any criticism of central banks from economists (but you do), you wouldn’t see central banks embracing diverse ideologies (but you do), and you wouldn’t see vigorous dissent and debate within central banks (but you do).

    Zero papers implicating monetary policy for the Great Recession. The math doesn’t lie.

    Diverse ideologies? Don’t make me laugh. That’s like saying diverse theft.

    I think the reason Austrians get way more traction on fiscal/regulatory issues than monetary issues is because they are way more persuasive on fiscal/regulatory issues than monetary issues. No conspiracy is necessary to explain the world.

    No conspiracy is needed for the Fed either, although it is one. Austrians gain less traction in money matters because the Fed doesn’t finance schools of thought that call for its abolition.

    Propagation of Ideology:

    Twenty-six bucks for a T-shirt? Does that mean the Austrians are right that we’re in a hyperinflation?

    Which Austrians are saying we’re in hyperinflation?

  29. Gravatar of Charles Charles
    7. June 2012 at 15:29

    Scott,

    I know you usually focus on persuading the median economist towards NGDP targeting. However, I wanted to know your opinion on institutional changes to the fed’s decision making procedure. I have a theory that the “Sumner Critique” works in theory but doesn’t in practice. This is because the federal reserve makes its decisions by near-consensus procedures. As a result, it is very slow to react to fiscal stimulus, or other changes to AD. Each of the members of the B of Gs and regional heads seem to have their own preferences and their own definitions of “maximum employment” and “low inflation”. Kocherlakota thinks we are at maximum employment right now.

    I believe there may have been a value at one time to having regional bank heads surveying the economies in their regions and reporting back to Washington. However, the procedure now seems to be encumbering action by the fed, or even the forming of strict targets with immediate corrections of deviations from those targets. Would a smaller FOMC make a difference?

  30. Gravatar of Cedric Cedric
    7. June 2012 at 15:52

    MF,

    I read Scott’s post as a perfectly sensible point that the AEA papers have paid insufficient attention to the role of monetary policy in the Great Recession. You appear to concede his argument, but you identify the cause of this phenomenon as a successful conspiracy by CBs to silence dissent. I think this explanation is ridiculous for the reasons that I explained above: you do see criticism of CBs from all over the place, including among and within CB members. You say:

    “Austrians gain less traction in money matters because the Fed doesn’t finance schools of thought that call for its abolition.”

    Some problems with this:

    1. Scott’s point was about any academic criticism of the Fed, but you’re only focused on Austrians — even if you’re right that there is a conspiracy to silence Austrians, that doesn’t explain why you aren’t seeing non-Austrian criticism of the Fed published. Scott’s point is that the profession is unfortunately letting a good opportunity pass it by because they’re focused on whimsy. Your alternative explanation is weird and does not account for the significant criticism of CBs we’ve seen in the academic blogosphere.

    2. Sorry, no. Austrians have plenty of platforms to make their monetary policy arguments. They generally don’t make those arguments, or make them poorly, because their core competency is fiscal/regulatory issues, as I said. Witness, for example, EconLog, or The Unbroken Window, or Cafe Hayek — they never touch monetary policy. Witness, for example, the usually smart and persuasive Amity Shales write the worst column of her career when she attempts to take on NGDPLT. [note, I've always associated Shales with Austrians, but I haven't verified that she is -- my apologies if I'm wrong].

    I think Austrians should (and do, for the most part) play to their strengths. Of course, I’m basically Austrian on everything except monetary policy, so maybe this is all just my-side bias and you’re a genius.

  31. Gravatar of Cedric Cedric
    7. June 2012 at 16:00

    *Shlaes, dammit.

  32. Gravatar of ChargerCarl ChargerCarl
    7. June 2012 at 16:33

    smart and persuasive…amity shlaes…

    does not compute

  33. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 17:12

    “It’s an opportunity for you to launch into a 45-minute exposition on monetary policy to the cute Applebee’s waitress when she asks you what it means!”

    I just want the cute Applebees waitress to get me drinks until it is her time to go onstage.

    If I wanted to chat about Monetary Theory for 45 minutes I’d go to a strip club.

  34. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 17:50

    Cedric:

    I read Scott’s post as a perfectly sensible point that the AEA papers have paid insufficient attention to the role of monetary policy in the Great Recession. You appear to concede his argument

    You say “concede” like I was reluctant to accept it, even though I already suspected it would be minimal or zero.

    but you identify the cause of this phenomenon as a successful conspiracy by CBs to silence dissent. I think this explanation is ridiculous for the reasons that I explained above: you do see criticism of CBs from all over the place, including among and within CB members.

    That’s not real criticism. It’s softball criticism. It’s criticism that indirectly sanctions and validates the CBs.

    I know the difference between real criticism and pleading type criticism. Sumner is the pleading type critic. He’s not a real critic.

    I think that it is ridiculous for you to simply hand wave the two links I posted, which show very strong evidence in my favor.

    “Austrians gain less traction in money matters because the Fed doesn’t finance schools of thought that call for its abolition.”

    Some problems with this:

    1. Scott’s point was about any academic criticism of the Fed, but you’re only focused on Austrians — even if you’re right that there is a conspiracy to silence Austrians, that doesn’t explain why you aren’t seeing non-Austrian criticism of the Fed published. Scott’s point is that the profession is unfortunately letting a good opportunity pass it by because they’re focused on whimsy. Your alternative explanation is weird and does not account for the significant criticism of CBs we’ve seen in the academic blogosphere.

    I wasn’t focusing on only the Austrians. I said the reason there is a lack of academic criticism, real academic criticism, of the Fed, is due to the Fed influencing monetary economics.

    2. Sorry, no. Austrians have plenty of platforms to make their monetary policy arguments. They generally don’t make those arguments, or make them poorly, because their core competency is fiscal/regulatory issues, as I said.

    Nope. They do make those arguments, and they make them well. Their core competency is actually monetary matters. It’s why, for example, the Austrian school is the only school that explains the credit cycle.

    Your judgment that the arguments are “porr” is noted, but just like 99.9% of the other critics, you probably don’t even understand Austrian theory.

    Witness, for example, EconLog, or The Unbroken Window, or Cafe Hayek — they never touch monetary policy.

    Cafe Hayek has posts on monetary policy all the time.

    Witness, for example, the usually smart and persuasive Amity Shales write the worst column of her career when she attempts to take on NGDPLT. [note, I've always associated Shales with Austrians, but I haven't verified that she is -- my apologies if I'm wrong].

    She is apologetic towards Austrians, but she isn’t an Austrian. And who cares if Austrians make mistakes regarding NGDPLT. I would rather be viewed as me, not as a member of a group. I don’t even agree with everything Austrian anyway. For example I reject the traditional Austrian theory of interest. My own theory is in part dependent on it, but I don’t think Austrian theory gets it quite right.

    I think Austrians should (and do, for the most part) play to their strengths. Of course, I’m basically Austrian on everything except monetary policy, so maybe this is all just my-side bias and you’re a genius.

    The strength of Austrianism is monetary policy. It’s why the Austrian school is the only school calling for the abolition of central banking, with explanations why.

  35. Gravatar of Saturos Saturos
    7. June 2012 at 19:34

    What did the paper on Wikipedia conclude? :-)

  36. Gravatar of Cedric Cedric
    7. June 2012 at 20:01

    Morgan, I like the strip club idea, but don’t eat the strip club food — it’ll make you sick. Instead, be sure to wolf down a Sizzling N Awlins Skillet first. It’s so money. http://www.applebees.com/menu/entrees/seafood/sizzling-n-awlins-skillet

    MF, I didn’t think your links were worth responding to. One of them is a blog post summarizing a HuffPo article, which probably ran at HuffPo next to an article explaining why everyone KNOWS that vaccines cause cancer, but doctors aren’t allowed to say it out loud because they are all bought off by Big Pharma. The White article measures the pervasiveness of Fed influence, but expressly declines to endorse your argument.

    I didn’t find them persuasive.

    I’m going to go Eat Good in the Neighborhood(tm). And then go to a skin bar.

  37. Gravatar of W. Peden W. Peden
    7. June 2012 at 20:46

    Scott,

    IIRC, your reasoning behind a 5% target (i.e. a 3% trend output + 2% trend inflation target) is because of the zero-lower bound.

    What do you think of proposals to replace the discount window function of central banks entirely with a general supply of liquidity to anyone with presentable assets? The US primary dealer system is an anachronism given the past few years and now everyone should be agreed that it harms more than it helps.

    I’ve only seen a talk by George Selgin on the matter, so I don’t really know all the objections, but it would be one way to stop people thinking about monetary policy in terms of interest rates (alongside eliminating the moral hazard of a LOLR function into the bargain).

    If it was a potential alternative, would you support a move to a 3% NGDP target i.e. the abolition of long-run increases in general prices?

  38. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 21:01

    More blog discussions should link gratuitously to commercial websites, it helps to knit brands into the fabric of our discussion.

    Movies that show(d) actors with prop products that had fake brand names (after Repo Man) jarred suspension of disbelief – why not just use a real bottle of Coke as a prop? Then it became an ad, a paid placement, but the reality is, tv and movies kinda suck if they don’t show brand name stuff around us all the time.

    Instead of paying to be in it..

    Just on purposes of better art policy, real life products should be part of the artistic freedom.

    As if every brand is “pre-agreeing” on commercial sale of their atomic product to allow you to use it in your own atomic artistic endeavors.

    “BUY this box of Cheer, and you the rights to digitally film yourself with it, because the atomic rights outweigh.”

    (funny stuff, the cannibal with a bottle of Labatt beer.)

    But in discussion, arguments, econ theory, it always moves off to an abstracted layer of widgets rather than the here and now where every real life example is a click away.

    More realistic discussion, I say! More unpaid commercial links, for authenticity.

    My favorite quote ever, end of story, is this one:

    “Advertising ministers to the spiritual side of trade. It is a great power that has been intrusted to your keeping which charges you with the high responsibility of inspiring and ennobling the commercial world. It is all part of the greater work of regeneration and redemption of mankind.”

    - Calvin Coolidge

  39. Gravatar of Cedric Cedric
    7. June 2012 at 22:13

    I’m really glad I could brighten your day.

    And hey, why not let the world know exactly what you think about inflation targets with this stylish t-shirt? http://www.cafepress.com/cp/customize/product2.aspx?from=CustomDesigner&number=654143869

    /considering putting the phrase “that’s so money” on the back

  40. Gravatar of Saturos Saturos
    8. June 2012 at 00:31

    Here’s an interesting Glasner post (rebutting Peter Fisher at FT): http://uneasymoney.com/2012/06/07/how-monetary-policy-works/

    I think both Fisher and Glasner are guilty of reasoning from price changes. And as pointed out earlier in the comments on this blog, a currency war would surely be a good thing. Of course, Hawtrey got there first: http://uneasymoney.com/2012/02/28/hawtrey-on-competitive-devaluation-bring-it-on/

  41. Gravatar of Saturos Saturos
    8. June 2012 at 01:28

    This might interest people: http://blogs.wsj.com/economics/2012/06/07/companies-sitting-on-much-less-cash-than-first-thought/

  42. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 02:09

    Ryan Avent would seem to be right about Bernanke based on yesterday’s testimony

    Bernanke says monetary poicy no panacea http://diaryofarepublicanhater.blogspot.com/2012/06/bernanke-is-not-market-monetarist.html

  43. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 02:12

    Interestingly the bond guy on CNBC Rick Santelli was arguing with Steve Liesman over the Don Evan’s comments yesterday .

    Santelli who is the bond reporter guy thinks that nothing the Fed can do now would do much though he does think that higher interest rates might help at least smaller community banks.

    http://www.cnbc.com/id/15839285

  44. Gravatar of bm bm
    8. June 2012 at 03:00

    Off topic but DeLong has an interesting article on fiscal dominance over monetary policy here:

    http://delong.typepad.com/sdj/2012/06/a-fragment-on-the-interaction-of-expansionary-monetary-and-fiscal-policy-at-the-zero-nominal-lower-bound-to-interest-rates.html

    that you might like to address.

  45. Gravatar of Morgan Warstler Morgan Warstler
    8. June 2012 at 04:03

    Sax,

    We ought to only let Local Mutual Banks (they can be virtual, but they have to only loan locally) participate in FDIC Insurance.

    Depositor Money in big banks would always be at risk.

  46. Gravatar of Morgan Warstler Morgan Warstler
    8. June 2012 at 04:20

    bm,

    In my opinion DeKrugman really steps in it there, opening himself wide to the MM response of:

    With the LT in NGDPLT, all actions taken are brutally credible, including the neutralization of Fiscal.

    HOWEVER, see how when confronted by this analysis, he opts to try and reverse it – Fiscal with abandon and force the Fed to Monetize it!

    With his historically inaccurate, as we saw with Greenspan / Clinton, so DeKrugman has no excuse.

    In fact, during a slow down, Clinton was instructed to give up on Fiscal, and accept Austerity, and the Fed would do the heavy lifting.

    The QUESTION we now HAVE TO ASK is this:

    What if Ben had “forced” Obama to not do Fiscal, and then to do Obamacare UNLESS the market itself CREDIBLY thought it would reduce Govt. Spending?

    Would we have more QE?

    And the answer is yes. And we know it.

    It isn’t enough to admit that Monetary can neutralize Fiscal.

    We also have to REQUIRE that the DeKrugman’s of the world admit the only VALID choice is Clintons, not Obamas.

    Since Monetary will neutralize Fiscal, any attempts at Fiscal are morally wrong, because they extend the suffering.

    We’re seeing this argument made even once removed in the new book that has Summers saying that EVEN IF Obamacare kept us from passing Fiscal 2, and that would slow down the economy, he was for it.

    The point here is that to some thinkers a govt. that slows down slowing down private economic growth for social ends is acceptable.

  47. Gravatar of Brian Brian
    8. June 2012 at 04:49

    How many articles on the importance of fiscal policy have there been in the past few years?

  48. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 05:14

    “I just want the cute Applebees waitress to get me drinks until it is her time to go onstage”

    Morgan I’ve never been to a strip club where the waitresses go on stage. I should know I go to Appelbee’s every Sunday during the NFL season as they have a specail NFL deal where al the games are on and they give you $.25 wings-you have to buy in orders of 10.

    They have some buy one mixed drink get the second free though to be honest I just get their free refills on orange soda all day.

    Name me the strip club where the ladies will talk monetary policy with you and I’m there.

  49. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 05:16

    Wait that should read I’ve never been to an Applebees where the waitress’s go on stage!

  50. Gravatar of Major_Freedom Major_Freedom
    8. June 2012 at 05:17

    Cedric:

    MF, I didn’t think your links were worth responding to. One of them is a blog post summarizing a HuffPo article, which probably ran at HuffPo next to an article explaining why everyone KNOWS that vaccines cause cancer, but doctors aren’t allowed to say it out loud because they are all bought off by Big Pharma.

    Ah, the spoiling of the well fallacy rears its ugly head. And this one isn’t even real. Kudos.

    That Journal of Finance paper? Bah, it’s in a volume sitting on my shelf right next to a L Ron Hubbard scientology book. How accurate could it be? I mean come on!

    The White article measures the pervasiveness of Fed influence, but expressly declines to endorse your argument.

    Apparently you didn’t read the conclusion.

    “These incentives and filtering mechanisms may produce a result as if the Federal Reserve were deliberately subsidizing research that takes the institutional status quo for granted. This should not be surprising, nor is it scandalous. We naturally expect the research that any organization sponsors to tend to promote rather than to undermine that organization’s interests. When (say) the insurance industry sponsors a report on the advisability of federal subsidies for terrorism insurance, the sponsorship alerts cautious readers to scrutinize the research methods and findings for pro-industry bias. Raising the question of the Fed’s status quo bias alerts us that the same sort of scrutiny is appropriate to monetary policy research, to avoid employing a double standard. The Fed has an institutional interest in preserving the legal restrictions that generate its seigniorage revenues and the privileges that give it discretionary monetary policy and regulatory powers. Fed-sponsored research generally adheres to a high level of scholarship, but it does not follow that institutional bias is absent or that the appropriate level of scrutiny is zero.”

    I didn’t find them persuasive.

    Your being persuaded is not the light bearer of what constitutes truth.

  51. Gravatar of ssumner ssumner
    8. June 2012 at 05:18

    dwb, Great quotes from Duy, do you have links?

    Neal, Yes, I would link to it.

    Charles. I agree that only the Board should vote on monetary policy, bankers should not have a vote.

    Saturos, I forgot–even though I actually wend to the presentation!

    W. Peden, I tend to agree with Selgin on the monetary reform issues. The 5% number was chosen because that had been the policy in the past. In my view the optimal policy would be a bit lower with level targeting, and a bit higher with growth rate targeting. It also depends on the rate of population growth, and whether we have taxes on capital.

    Inflation doesn’t exist, so I don’t see any reason to shoot for zero inflation. It’s just a number put out by the government.

    Saturos, Thanks, I’ll take a look.

    Thanks bm.

    Brian, I’m not sure, but I recall the 2012 conference had one session with two papers on fiscal policy during the Great Recession.

  52. Gravatar of ssumner ssumner
    8. June 2012 at 05:20

    BTW, I already do very poorly with the female demographic, please don’t make it worse by obsessing over strip clubs.

  53. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 05:25

    Major as usual you flatter yourself

    “Your judgment that the arguments are “porr” is noted, but just like 99.9% of the other critics, you probably don’t even understand Austrian theory”

    I guess it’s just as well, no one else will flatter you. Austrianism is not at all complicated. What does it believe policy wise?

    It believes that there’s no such thing as a demand shortfall, as it believes in Say ‘supply creates it’s own demand’

    It believes that in a depression that the government should do nothing and that deflation is a good thing because at some point-some period during Keyne’s “long run”-the market will reach equilibrium when prices are low enough. At that point the economy will grow again.

    Yet the Depression doesn’t seem to do much for this view-we had price deflation for 6 years where producer prices fell by 50% and things did nothing but got worse. Your answer would be that it still wasn’t far enough that we should wait, longer, that the “long run” was coming at some point.

    The reality is that Americna society would have likely imploded in the meanwhile wating for your long run.

  54. Gravatar of dwb dwb
    8. June 2012 at 05:26

    dwb, Great quotes from Duy, do you have links?

    last two posts, Jackson Hole and Yellen.

    http://economistsview.typepad.com/timduy/

  55. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 05:30

    Ok anyone want to talk more about strip clubs come to Diary of a Repuublican Hater-my demographics actually show I do pretty well with women interstingly enough.

    Most of my regular commentators are men but according to the Alexa ratings it’s more popular with women. This might well be because more men are Republcian than women and are therefore immediately turned off by my provocative title.

    It also suggests that women tend to comment much less in at least certain kinds of websites even if they visit a lot.

  56. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 05:40

    BTW Scott maybe I didn’t make it clear by the format of my comment but I was asking a question with this:

    Interestingly the bond guy on CNBC Rick Santelli was arguing with Steve Liesman over the Don Evan’s comments yesterday .

    Santelli who is the bond reporter guy thinks that nothing the Fed can do now would do much though he does think that higher interest rates might help at least smaller community banks.

    http://www.cnbc.com/id/15839285

    Of course we know you don’t agree with Santelli about monetary policy being powerless-though his view is intersting only because he’s not an economist, he may well not even know what a “liqiudity trap” is-he’s a bond reporter-but what about his idea that raising rates could actually be beneficial?

    I mean I would agree raising the Fed funds rate would be absurd right now but you do hear the idea sometimes that higher interst rates wouold stimulate certain types of activity.

  57. Gravatar of Saturos Saturos
    8. June 2012 at 06:11

    I’m surprised that MF doesn’t believe in Scientology. He’s in for a rude shock when Xenu comes for his vengeance.

  58. Gravatar of adam adam
    8. June 2012 at 06:30

    Maybe it’s because I’m not in the field but… why didn’t you present at the conference? If there’s one way to build an audience…

  59. Gravatar of Eric Eric
    8. June 2012 at 15:26

    Can I ask a probably embarrassingly dumb question? What WERE all the papers on?

  60. Gravatar of ssumner ssumner
    9. June 2012 at 18:48

    Thanks dwb.

    Mike Sax, It depends HOW rates are raised. If they are raised with tight money it hurts the economy. If they are raised with easier money it helps the economy.

    Adam, I did, but my presentation didn’t make the proceedings.

    Eric, All sorts of topics–the list is probably online somewhere.

  61. Gravatar of Major_Freedom Major_Freedom
    11. June 2012 at 10:58

    Mike Sax, It depends HOW rates are raised. If they are raised with tight money it hurts the economy. If they are raised with easier money it helps the economy.

    What if they are decreased by loose money, which is how the Fed targets a lower fed funds rate, by injecting new bank reserves, which is actually how they target a lower rate?

  62. Gravatar of Major_Freedom Major_Freedom
    11. June 2012 at 11:29

    Mike Sax:

    “Your judgment that the arguments are “poor” is noted, but just like 99.9% of the other critics, you probably don’t even understand Austrian theory”

    I guess it’s just as well, no one else will flatter you.

    You sound mad that I don’t have a slave mentality like you, so you can only think to insult me, the way you insult yourself.

    Austrianism is not at all complicated.

    Austrianism is incredibly complicated, because it requires one to be able to use praxeology and thymology at the same time. Those who don’t understand it tend to say it’s not complicated.

    What does it believe policy wise?>

    It doesn’t believe in anything policy-wise. It’s not a moral framework. It’s not a political doctrine. It’s economics. It describes the nature of human action, and what that entails.

    Austrian economists leave the politics to statist economists, and educate them as to how what they want, won’t be accomplished by their chosen means.

    It believes that there’s no such thing as a demand shortfall, as it believes in Say ’supply creates it’s own demand’

    Please note that Say’s Law was misinterpreted by Keynes, which is why today we have so many people who don’t understand that expression. They tend to believe if individual entrepreneurs invest in and produce fake dog poop, then there will be a guaranteed demand for them. No, that’s not what Say’s Law says. I recommend you read James Mill, for he originated the idea of Say’s Law. The key is understanding that supply creates its own demand when the supply is in the correct proportions in terms of the components of supply, namely goods and services. When goods and services are produced in their proper proportions, then there is no limit to demand. Supply will be the foundation for demand. People will demand goods with what they themselves produced, using money as a medium of exchange.

    Say’s Law was just a refutation of a common myth believed at the time, and unfortunately is still believed today, which is that there can allegedly be a general over-production of wealth in the aggregate. No, there can only be relative over-production of some goods, and a corresponding relative under-production of other goods that could not be produced because of the relative over-production of goods in question.

    For example, I am sure even you are not dense enough to not grasp the fact that too many houses were built during the housing boom. This is a relative over-production of houses. Because too many resources and labor went into building houses, there was a relative under-production of other goods and services, that could not be produced because the resources were tied up in housing.

    There was no general overproduction of goods as such, which would support your claim that there is such a thing as a general demand shortfall.

    No, there are only relative demand shortfalls and relative demand overshoots. There is no problem of lack of money and spending in the aggregate, the same way there is no problem of over-production of goods and services in the aggregate.

    The “lack of aggregate demand” stems from a depraved, consumptionist view of economic life, where the primary problem is not to produce the most given scarce resources, but to “produce” enough consumption. It is a parasitic mentality writ large, that views businessmen and producers as nothing but miserly money hoarders, who produce for the sole sake of acquiring dollars, which makes it appear that there is a need for an external class of individuals who must spend money to buy the producer’s goods. It is a pathological view of capitalism that fails to grasp that businessmen and producers produce and sell not to earn money, but ultimately to increase their own consumption, which rests on the productivity of other producers. Productive people do not need an external parasitic class of money printers and money spenders to ensure that all their products are able to be profitably sold.

    If producers make mistakes, if they expect to earn more sales than they planned for, then it is of no help to the consumers if the state should print and spend money so that investors who erred can be rewarded, and to continue to make errors. It will only redistribute wealth from the productive to the unproductive, and also from the poor to the rich, as the rich typically take control of the newly created money first.

    It believes that in a depression that the government should do nothing and that deflation is a good thing because at some point-some period during Keyne’s “long run”-the market will reach equilibrium when prices are low enough. At that point the economy will grow again.

    That’s exactly what it did during the 1920-1921 depression. The wartime inflation below up an unsustainable boom, after which the Fed and Treasury did nothing, which allowed market participants to do everything, so that the market ended up shaped in accordance with market desires, rather than political desires.

    Only the market process can cure problems that occur in the market. State intervention introduces new problems, because state intervention is backed by guns and threats of violence, rather than consent as is the case in the market process.

    Yet the Depression doesn’t seem to do much for this view-we had price deflation for 6 years where producer prices fell by 50% and things did nothing but got worse.

    The state did not do nothing during the 1930s. It is precisely because they didn’t do nothing that the correction lasted so long. See Cole and O’Hanian for how the New Deal prolonged the correction.

    Your answer would be that it still wasn’t far enough that we should wait, longer, that the “long run” was coming at some point.

    No, you misunderstand. You’re talking about a time with government intervention, not the market process solving the problems. You can’t say the government waited and waited, when in reality it is precisely the government not waiting and waiting, but intervening and intervening, that prolonged recovery after the crash of 1929.

    You’re like an animal torturer who keeps “tinkering” with his victims, wondering why they aren’t recovering faster, then blaming the victims for taking so long, and then believing his tinkering wasn’t intensive enough!

    The reality is that Americna society would have likely imploded in the meanwhile wating for your long run.

    False. You’re just fear mongering because you lack a cool, calm, and collected intelligence.

    Next thing you’ll tell me is that if the US military didn’t kill 100,000 Iraqis, Saddam would have taken over the world by now. Then I point to Kim Jong Il, and you have nothing to say except “that’s different!”

    You’re calling for innocent people to be hurt, and yet you believe you’re actually helping people. This is exactly why progressives are so insidiously corrupt and dangerous. They actually believe they are helping the people they are hurting. The mass of people depend on saving and investment to sustain their livelihoods, not the state printing and spending on itself and its friends. Printing and spending money corrupts the saving and investment process, and so harms the interests of the people most dependent on it. You fallaciously believe consumers are benefited if the state consumes resources and distorts investments? You need to do some serious self-education. You’re so lost.

    Saturos:

    I’m surprised if you are even able to dress yourself at night.

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