Bullard Joins Dudley in acknowledging that market monetarists were right in 2009

From the WSJ:

Mr. Bullard noted that in 2009 the Fed may have kept monetary policy too tight, but that was before the Fed embraced bond buying as a tool of policy stimulus.

Pay no attention to the “may.”  Officials don’t acknowledge that the institution they are responsible for may have screwed up, unless they actually think it screwed up.

HT:  Steve

Off topic.  A commenter named “Cornflour” produced what I thought was the most persuasive explanation of the “Driftless Area Mystery.”

I don’t have the numbers at hand, but I’m an ex-geologist who grew up in Iowa, so I have some observations that aren’t entirely imaginary.

It’s already been noted that Rochester and the Quad Cities are on the edges of the driftless area, and have their own stories. For the rural part, this is a gentrification story.

The driftless area is very pretty country, and by Midwestern standards, the climate isn’t too bad. It was always poor land for farming, and earlier generations ran small hog and dairy farms. These were never very competitive, and don’t survive in large numbers. Starting in the 1960′s, back-to-the-land people started buying land and lived (some still living) a vaguely hippie lifestyle. Later migrants were more middle class, or even wealthy. They started B&B’s, organic dairy farms, organic apple orchards, goat farms, restaurants, etc. A few are artists and craftsmen. There are quite a few hobby farms. Most of these people have come from the Chicago area and are very liberal. A very small number of them are conservatives of the “crunchy con” sort.

Not all of the local people have left, but they are now called “the locals.” It’s the newcomers who swing votes to Democrats like Obama, but not necessarily to more old-fashioned local Democrats. For those with Midwestern myopia, think of New York and Vermont a generation earlier.

So it’s sort of the upper New England of the Midwest.  I guess one can live in a state without really understanding it.  BTW, do you recall the famous Maine catalog company “L.L. Bean.”  Guess where “Land’s End” is located.  That’s right, the Driftless Area–Dodgeville, Wisconsin.

I have to disagree with him on one point, however.  There is no such thing as a Midwestern climate that “isn’t too bad.”

PS.  I mentioned the 1966 film “Blow Up” in the Driftless Area post.  I just saw the film last night at Harvard (a perfect print, BTW) for the first time in 40 years.  Blow-Up obviously influenced the directors of The ConversationBlow OutA Clockwork Orange, and many of the films made in Asia over the past 25 years.  After the film I thought about all of the great films made between 1958-75; Blow-Up, The Passenger, Vertigo, Psycho, The Godfather I and II, Laurence of Arabia, Dr. Strangelove, 2001, Touch of Evil, Chinatown, etc.  And that’s just a partial list of the classic English language films.  We haven’t even gotten into all the Italian/French/Japanese classics.  Or the films of Tarkovsky, Bergman, Ray, etc.  And yet today far more aspiring directors have access to “film schools,” or to cheap digital cameras where they can show their chops.

Why don’t they make “great” films like “Blow-up” anymore?  Is it because they’ve already been made? Or because we can’t recognize them? Because we just aren’t seeing what future generations will see. Or to put it another way, does this comment by Susan Sontag also apply to film?

IS LITERARY GREATNESS still possible? Given the implacable devolution of literary ambition, and the concurrent ascendancy of the tepid, the glib, and the senselessly cruel as normative fictional subjects, what would a noble literary enterprise look like now?

Answers can be provided in the comment section.


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60 Responses to “Bullard Joins Dudley in acknowledging that market monetarists were right in 2009”

  1. Gravatar of Bogdan Bogdan
    11. November 2012 at 12:04

    Hmmm…I never liked a “Clockwork Orange”!…Anyway, in search of an answer to the question, here’s a great film (about making one of the first films and many, many other things at the same time)that I recommend you watch :

    http://www.youtube.com/watch?v=HaGRpaoaM3U

  2. Gravatar of Becky Hargrove Becky Hargrove
    11. November 2012 at 12:26

    Re Cornflour’s summation of the driftless area and its comparisons with certain beautiful areas in the Ozarks: I’m trying to understand why those same processes from the sixties on didn’t “take”, for instance, in the Ozark’s beautiful Boston mountains. Is it just that there weren’t enough roads going through those little, but steep mountains? Lots of trucks trying to deliver goods of all kinds end up at the bottom of the hill on their side, way too often! Whatever the answer, the transplants seem to become more like the locals or natives, rather than the other way around.

  3. Gravatar of Greg Hill Greg Hill
    11. November 2012 at 12:48

    No Country for Old Men

  4. Gravatar of Eorr Eorr
    11. November 2012 at 12:56

    I asked my father in law this question and he bas fiscally said that was the artsy peat of Iowa. My wife first thought when I mentioned it was to ask if that was the artsy part of Iowa where the shop from American Pickers (TV Show) was.

  5. Gravatar of Major_Freedom Major_Freedom
    11. November 2012 at 13:24

    Mr. Bullard noted that in 2009 the Fed may have kept monetary policy too tight, but that was before the Fed embraced bond buying as a tool of policy stimulus.

    The Fed has been “buying bonds as a tool of monetary stimulus” for many decades.

    It’s how they target price inflation, it’s how they lower interest rates…it’s the bread and butter of “monetary stimulus”.

    Bullard Joins Dudley in acknowledging that market monetarists were right in 2009

    It’s actually more accurate to say that Bullard joins Dudley in BELIEVING market monetarists are right.

    “Acknowledging” conveys the false impression that Bullard is accepting an actual truth.

  6. Gravatar of 123 123
    11. November 2012 at 14:21

    The whole Bullard presentation is based on the Taylor rule. He basically argues that after Twist the shadow short interest rate has increased, and this may indicate this policy action was ineffective. And vice versa, he praises the cumulative effect of other policy actions for lowering the shadow short term interest rate, and predicts a boom.

  7. Gravatar of wufwugy wufwugy
    11. November 2012 at 16:17

    Adaptation, Inglourious Basterds, Winter’s Bone, The Proposition, Match Point, O Brother Where Art Thou, Fight Club, Silence of the Lambs, City of God, American Beauty, Office Space, the list goes on….

  8. Gravatar of Lucas Lucas
    11. November 2012 at 16:53

    US politics are fascinating.
    @Becky Hargrove,
    “I’m trying to understand why those same processes from the sixties on didn’t “take”, for instance, in the Ozark’s beautiful Boston mountains.”
    I see a map of the Ozarks and I don’t see close sources of liberals. Vermont had NY, for instance.
    Those processes may also be producing enclaves of progressivism in the Mountain West

  9. Gravatar of ssumner ssumner
    11. November 2012 at 17:41

    wufwugy, The list of what?

  10. Gravatar of Benjamin Cole Benjamin Cole
    11. November 2012 at 17:51

    On why great films are always old films:

    Is it that we “forgive” aspects that we would regard as posing or amateurish or banal in films of our own era?

    I am listening to Charles Dickens novels while planting beans and corn. Dickens is in a revival, again regarded as a towering figure of English literature.

    Yet one must “forgive” incredibly maudlin passages. Some have noted the complete absence of sex in Dickens novels–even when young love is the topic– although I do not find that a minus. Others have commented that Dickens novels often have no plot, as in Pickwick Papers.

    But I forgive all of that when listening to Dickens. In a modern novelist, this would all stop publication, let alone savage reviews.

  11. Gravatar of Lorenzo from Oz Lorenzo from Oz
    11. November 2012 at 18:12

    On films: Serenity; Amazing Grace.

    On the Driftless Area, in Oz, we call them “tree change” folk. Not to be confused with “sea change” folk. It creates rural Green voters; otherwise a bizarre oddity.

    And, in incumbent bureaucrat-speak, “may” has the usage you say — I say that as a former bureaucrat.

  12. Gravatar of Mark A. Sadowski Mark A. Sadowski
    11. November 2012 at 18:28

    Scott,
    If you haven’t already you really need to read Bullard’s latest presentation (123 mentions it above).

    http://research.stlouisfed.org/econ/bullard/pdf/Bullard_CFAR_StLouis8Nov2012final.pdf

    Bullard cites work by Leo Krippner on the “shadow rate”. The shadow rate suggests that policy was too tight in 2009 (see slide 18).

    On the other hand the shadow rate also suggests that policy was too loose throughout 2008 (huh?!?) and has been too loose since at least the middle of 2011 (huh?!?). Thus you are mistaken if you think Bullard has come to his senses. This is just another example of Bullard using anything and everything to suggest that current policy is too loose.

    Bullard lists three papers by Krippner that are worth reading.

  13. Gravatar of Saturos Saturos
    11. November 2012 at 19:14

    Do you agree with the Economist’s analysis of the “Asian Great Moderation”? http://www.economist.com/news/finance-and-economics/21565978-some-worlds-stablest-economies-are-asian-time-worry-asias-great

    (Sorry, there was some economics stuff in the post, so I thought…)

  14. Gravatar of John S John S
    11. November 2012 at 20:04

    Does QE disproportionately benefit the rich?

    “Britain’s richest 5% gained most from quantitative easing – Bank of England”

    http://www.guardian.co.uk/business/2012/aug/23/britains-richest-gained-quantative-easing-bank

  15. Gravatar of StatsGuy StatsGuy
    11. November 2012 at 20:11

    I don’t know what literary means anymore. You observed film was the art form of the 20th century. The 21rst century? No idea, although if I’m looking for truly interesting stories I often do not look for books that win literary awards.

    Recall, Dickens was popular _in his time_, not merely after it. He wrote for money, he was paid by installment, and people bought his stuff. While literary purists insist that it’s because taste has devolved, perhaps it’s because taste has evolved and literary purists have not.

    Some would decry the ubiquity of interconnectedness as destroying the introspection and separation necessary to create. Others would observe that self-obsessed and narcissistic literary giants of “old” were so wrapped up in their own inner turmoils that even if they were alive today they would not have been capable of extending the literature to account for the impact of technology, let alone the anticipation of how technology might alter us in the future.

    As for me, I never could tolerate dickens or dostoevsky – but I did read the Iliad cover to cover twice when I was a kid. Somehow, between Shakespeare and Joyce, the phrase “it takes good characters to make a good story” was twisted into “good characters don’t need a real story”. For this reason, I tend to think that a lot of the literature written between 1830 and 1950 was basically cr2p.

    On the other hand, if you believe in the efficient market hypothesis, then the storyline associated with a video game like Halo 4 is in fact “great literature”

    http://www.youtube.com/watch?v=GbjA6rB98Yk

  16. Gravatar of Mark A. Sadowski Mark A. Sadowski
    11. November 2012 at 21:01

    John S,
    Financial asset values have had a positive correlation with inflation expectations only since 2008. There’s also evidence that this was true during the Great Depression. Thus QE may raise wealth inequality (but not income inequality). But this is likely true only because aggregate demand is so depressed.

    Under normal circumstances expansionary monetary policy is unequivocally inequality reducing. This comes about through four main channels:

    1) Factor Shares of Income
    2) Savings Distribution
    3) Earnings Heterogeneity
    4) Financial Income

    I commented about the distributional consequences of monetary policy here:

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/06/does-monetary-policy-have-bad-distributional-consequences.html?cid=6a00d83451688169e20163062ed969970d#comment-6a00d83451688169e20163062ed969970d

    You’ll find links to research papers there supporting my claims.

    And doesn’t this make intuitive sense? I mean, assuming there’s economic slack, wouldn’t you expect expansionary economic policy to reduce inequality?

  17. Gravatar of John S John S
    11. November 2012 at 22:06

    Mark,

    Thank you for directing me toward your post. OK, so the effect of QE on wealth inequality is something we can live with if it boosts agg demand.

    Still, why can’t we carry out QE by just giving money directly to the people (and speed up deleveraging at the same time)?

    http://blogs.reuters.com/anatole-kaletsky/2012/08/09/suddenly-quantitative-easing-for-the-people-seems-possible/

  18. Gravatar of Major_Freedom Major_Freedom
    11. November 2012 at 22:21

    Mark, the Cantillon Effect trumps all 4 in your list of alleged inequality reducing channels. It is an empirical fact that newly created base money tends to become the property of bank owners first. Thus, inflation ” under normal circumstances” increases inequality.

    Regarding your “intuitive sense” argument: even with “economic slack”, newly created money still typically enters the economy in the banking system first. Economic slack reduces everyone’s standard of living. Any (alleged) increase in investment and production that is caused by inflation thereafter is derivative.

    As long as poor people are not the first receivers of new money, then inflation does not reduce inequality, regardless of how many resources are idle and regardless of how many people are unemployed.

  19. Gravatar of Major_Freedom Major_Freedom
    11. November 2012 at 22:26

    Any reserch papers that show inflation being followed by a temporal reduction in inequality does not “prove” your theory correct, for one could argue that the opposite theory is fully consistent as well, on the basis that the reduction of inequality would have been even greater absent the inflation, but because there was inflation, the reduction in inequality was smaller.

  20. Gravatar of Bonnie Bonnie
    11. November 2012 at 22:43

    “Recent academic work suggests the policies now being pursued by the Fed “may currently be easier than the recommendations” suggested by traditional rules of thumb like the Taylor rule, [said] Federal Reserve Bank of St. Louis President James Bullard…”

    MM correct in 2008/9, wrong in 2012. This is a frustrating development, right along with Kocherlakota’s unwillingness to go the next step. If they get the 2009 part right, why can’t they get the 2012 part right? The identification of the problems of both time periods are based on the same logic. I am very happy to see that at least Bullard isn’t being branded a hero. No, the heroic part is actually in solving the problem instead of trying to blow everyone away with unhelpfully vague bluster about next steps.

  21. Gravatar of Saturos Saturos
    12. November 2012 at 02:29

    MF, money is not the same as wealth.

    The rest of your comments make even less sense than usual.

  22. Gravatar of Saturos Saturos
    12. November 2012 at 02:38

    StatsGuy, yes new forms like virtual games are the art of the future. But Halo is not a great example. Neither is WoW, as David Friedman points out: http://daviddfriedman.blogspot.com.au/2012/10/is-world-of-warcraft-game-or-story.html

    OTOH, the games and visual novels Eliezer Yudkowsky points to in his now-notorious OKCupid profile (http://www.okcupid.com/profile/Eyudkowsky) are all great stories. (In fact I would draw attention to Manga/Anime in general). To that list just off the top of my head I would of course add Myst.

  23. Gravatar of Saturos Saturos
    12. November 2012 at 02:39

    More David Friedman on computer games and stories:
    http://daviddfriedman.blogspot.com.au/2012/10/mmorg-as-future-of-fiction.html
    http://daviddfriedman.blogspot.com.au/2012/10/is-it-possible-to-do-mmorg-right.html

  24. Gravatar of Saturos Saturos
    12. November 2012 at 03:02

    In fact, if David Friedman has his way, the stories of the future will be f***ing great: http://daviddfriedman.blogspot.com.au/2012/11/global-warming-as-casus-belli-sf-idea.html

    So long as they remain fictional, that is.

  25. Gravatar of Major_Freedom Major_Freedom
    12. November 2012 at 03:33

    Saturos:

    MF, money is not the same as wealth.

    I know.

    Money enables one to purchase wealth. Those who receive newly created money first can purchase wealth before their prices rise on account of the new money circulating throughout the economy and bidding up prices. That increases inequality if the new money is received by relatively wealthier people.

    That is why I said “newly created base money tends to become the property of bank owners first. Thus, inflation ‘under normal circumstances’ increases inequality.”

    I didn’t actually argue that the money itself is the increase in inequality. But granted what I said was not exactly clear.

    My main position is that inflation does not affect the nominal demands and prices of all goods equally. It affects nominal demands and prices in a sequential manner over time, from person to person and business to business as the new money is spent and then respent.

    For example, inflation affected housing to a relatively larger degree than other goods, prior to 2007, because a relatively large quantity of new credit went to mortgage loans, rather than to all goods equally.

    The rest of your comments make even less sense than usual.

    How so?

    And wouldn’t you have had to show how my comments made little sense in the past before you can say “even less sense than usual” now? I don’t know what you are referring to.

  26. Gravatar of Major_Freedom Major_Freedom
    12. November 2012 at 03:37

    So long as they remain fictional, that is.

    It’s already a reality. States are already fighting wars against “polluters”. It’s a rather indiscriminate war, but a war nonetheless.

  27. Gravatar of Major_Freedom Major_Freedom
    12. November 2012 at 03:41

    More David Friedman on computer games and stories

    Spontaneous, decentralized, anarchistic stories being created through online games, where anyone can add anything they want to it but is constrained to the reaction functions of other story teller gamers.

    Would the stories follow predictable arcs? Or would they become as unpredictable as real world human society?

    When does the game become more “real” than reality? Suppose gamers are connected 18 hours a day.

  28. Gravatar of J.V. Dubois J.V. Dubois
    12. November 2012 at 04:02

    Scott: interesting question at the end. This topic is covered in this very good book: http://www.amazon.com/Retromania-Pop-Cultures-Addiction-Past/dp/0865479941

    It seems that we this generation is generation of retro. I still do not know the reason, but I think that it actually can be caused by the fact that these fantastic pieces have already been made. And this is not only valid for our times.

    For instance try to think of top 10 (or top 3 or whatever) classical music piece. I think that you will have hard time recalling anything not from 18th or 19th century. Vivaldi, Beethoven, Strauss, Mozart, Bach … There will be rare individuals who actually lived in 20th century who could get onto that list. Maybe Puccini? Does it mean that humanity lost ability to compose classical music? I don’t know. In a way we are all very retro when it comes to classical music. The same may go for anything else – list the top 10 Rock Bands – I think this would be dominated byt 60ies – 80ies bands.

  29. Gravatar of Becky Hargrove Becky Hargrove
    12. November 2012 at 04:49

    Lucas,
    Part of what intrigues me is the additional wealth impetus progressivism seems to imply, and the degree to which non progressivism can sometimes devolve into basic or individual sustainability.

  30. Gravatar of StatsGuy StatsGuy
    12. November 2012 at 05:21

    @ Saturos, Major…

    Regarding whether decentralized stories will be possible, I would argue yes, as Vile Rat showed:

    http://www.huffingtonpost.com/2012/09/12/libya-attack-victim-remem_n_1879047.html

    I disagree that the storyline for Halo 4 is not a good example of modern narrative, based purely on the fact that the market agrees with me. (I do not play Halo)

  31. Gravatar of StatsGuy StatsGuy
    12. November 2012 at 05:34

    … (continued) …

    Also, I’ve had the QE / wealth concentration argument with Scott for a long time. He’s hard to convince, but I think one thing he will agree to is that sudden/unpredicted/irrational deviations from an NGDP path cause wealth concentration.

    Major is correct, that correlation does not equal causation here. Inflation may occur in periods of particularly high growth due to exogenous reasons, which might also simultaneously flatten income and wealth distribution.

  32. Gravatar of Benny Lava Benny Lava
    12. November 2012 at 05:53

    Regarding literature, remember that Joyce never got a Nobel. My friends think David Foster Wallace was the greatest voice in literature for the late 20th early 21st century but I don’t see the appeal. Maybe Harry Potter is the new Charles Dickens?

  33. Gravatar of woupiestek woupiestek
    12. November 2012 at 05:58

    Aren’t the geniuses simply moving on to the next great art? Symphonies and operas were main stream culture, before film came along. Now cinema is being replaced by video games in turn.

  34. Gravatar of ssumner ssumner
    12. November 2012 at 06:16

    saturos, No I don’t agree with the Economist. Central banks should target NGDP, not financial markets.

    I’m afraid I know nothing about video games, so I can’t comment.

    John S, The UK has had tight money, if you look at NGDP..

    JV. I’m not surprised that nobody is writing Beethoven-type symphonies anymore. After all, nobody in the 20th century invented the electric light, phonograph, movie projector, etc, because they were already invented by Edison. It’s much harder today to invent multiple transformative technologies. Perhaps Apple comes closest. The same is true for art.

  35. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. November 2012 at 07:14

    @John S,
    The simplest answer is that QEP is currently illegal. The Federal Reserve Act does not permit the Fed to simply give away money.

    @Major Freedom,
    The Cantillion Effect isn’t supported by the empirical evidence.

    @Bonnie,
    Bullard (via Krippner) is also claiming that money was loose in 2008. Hmmm.

    @StatsGuy,
    MF is also wrong about the correlation/causation. (I think there’s a rule of thumb here somewhere.) In my opinion, with the exception the research on financial income, all of the research on the channels on the distributive effects of monetary policy is well microfounded.

  36. Gravatar of Saturos Saturos
    12. November 2012 at 07:54

    MF, prices don’t wait for demand to bid them up after a money injection, they jump to the new expected equilibrium in anticipation of increased money flows. There’s no “bills on the sidewalk” for first receivers of money.

    “I’m afraid I know nothing about video games, so I can’t comment.”

    Your daughter doesn’t play any? I recommend to parents with intelligent kids that they (almost) push videogames on their kids, anything that gets them creatively visualizing possible worlds, and figuring out how systems work, how to “game the game”. These days so many schools are incorporating chess as part of the curriculum – but video games can do far more for the developing mind, in my view.

  37. Gravatar of Saturos Saturos
    12. November 2012 at 07:58

    Benny Lava, neither did Kafka!!! a disgrace.

  38. Gravatar of Saturos Saturos
    12. November 2012 at 08:00

    Or Chekhov, Nabokov, Proust, Tolstoy, Twain, Strindberg or *gasp* Borges…

  39. Gravatar of Major_Freedom Major_Freedom
    12. November 2012 at 09:30

    Saturos:

    MF, prices don’t wait for demand to bid them up after a money injection, they jump to the new expected equilibrium in anticipation of increased money flows.

    The law of supply and demand refutes that conjecture.

    Sellers cannot raise the prices of the goods they sell unless their BUYERS are in receivership of additional money to pay those higher prices. Thus, sellers must indeed wait until their buyers actually have more money, before they can start charging them more. That means inflation really does have to flow from the initial locations outwards before prices can rise.

    You can’t set a price for your house at a billion dollars if your potential buyers don’t even have a billion dollars, and this is the case even if you and your buyers expected inflation to be 1,000,000% next year.

    There’s no “bills on the sidewalk” for first receivers of money.

    Not sure what you mean by that.

  40. Gravatar of J.V. Dubois J.V. Dubois
    12. November 2012 at 10:01

    Scott: And yet it seems that there is quite a lot going on with classical music. There are “modern” as well as “contemporary” classical music schools with “famous” opera composers. Of course they are famous within the niche group of people interested in it and not many people outside of this group know about them.

    I think the same goes for movies, it is quite an old art form, isn’t it? If you are movie enthusiast you will probably attend some film festivals where you will be presented with a lot of new things produced around the world. There probably won’t be anything really “new” considering the sheer volume of material produced till today, but I would not say that the movie scene is stagnant.

  41. Gravatar of Saturos Saturos
    12. November 2012 at 10:03

    MF, spending is a flow. Prices rise to clear the market for assets against higher aggregate flow of MoE.

    If the initial receivers have the money first, why would this mean they buy assets more cheaply than others? I don’t get your model.

  42. Gravatar of Saturos Saturos
    12. November 2012 at 10:05

    Statsguy, Harry Potter is good, not that good…

  43. Gravatar of Saturos Saturos
    12. November 2012 at 10:07

    Sorry, I meant Benny Lava…

  44. Gravatar of Major_Freedom Major_Freedom
    12. November 2012 at 10:20

    Saturos:

    MF, spending is a flow. Prices rise to clear the market for assets against higher aggregate flow of MoE.

    That was my point. MoE has to increase FOR THE INDIVIDUAL if the individual is to present a higher nominal demand for the goods of others.

    If the initial receivers have the money first, why would this mean they buy assets more cheaply than others? I don’t get your model.

    Suppose someone printed for me $1 million. Before I spend that money, not everyone who sells goods can, at that time, successfully raise their prices. Maybe some may suspect I am going to buy their goods, and anticipate my additional spending, but I will always be able to buy goods at pre-inflated prices. Once I do spend that money, then that money gets spent and respent, from person to person, and tends towards bidding up the prices of more and more goods as more and more sellers catch on, including the goods I purchased earlier at lower prices.

    Those who receive the new money last will experience that $1 million inflation as primarily rising prices and costs of living, rather than a rising income like me.

    Do you not know of the Cantillon Effect? I say it almost once a week here.

  45. Gravatar of woupiestek woupiestek
    12. November 2012 at 11:53

    Let’s try another. It used to be the case that many people who were smart and hard working didn’t get much of an education because they could not afford it. So they channeled their productivity into art instead. Because the government has made education more affordable, many artists miss their calling nowadays.

  46. Gravatar of Major_Freedom Major_Freedom
    12. November 2012 at 12:05

    woupiestek:

    I hope you are being sarcastic, because the truth is exactly the opposite. People didn’t abstain from getting a college education because it cost too much. They refrained from getting a college education because they could leave high school and get a decent job.

    For those who did go, students could typically “work their way through college” and graduate debt free.

    The government has made education more expensive through the central banking system’s massive credit expansion going to student loans, and guaranteeing the bank’s principle, as well as making it illegal for student’s to wipe away their student debts via bankruptcy.

    http://i.imgur.com/fJ14A.gif

    http://humblestudentofthemarkets.blogspot.ca/2010/07/erosion-of-american-competitive.html

  47. Gravatar of wufwugy wufwugy
    12. November 2012 at 12:30

    Scott, it was a list of great, timeless films made in the last twenty years. There are arguably even more eventual classics being produced today than there were decades ago, but they’re hard to recognize because they’re contemporary and there is an overabundance of popular films that come and go like the wind

  48. Gravatar of cornflour cornflour
    12. November 2012 at 13:45

    For what it’s worth, I agree that the best films have come and gone. Of course, it’s natural to ask why.

    On this topic, I’ve always liked what the late Stephen Jay Gould had to say. Gould was a famous paleontologist, but also loved to write popularizations of issues related to evolution. In an interview from 1996, Gould talks about baseball, music, randomness, variation, and evolution. His argument is just as relevant to the pattern of film’s decline.

    Now who can help but wonder about the pattern of the discussion about NGDP targeting? What film director is most like Scott Sumner? Must keep up the monomaniacal reputation of this blog.

    The URL for Gould’s interview is
    http://www.pbs.org/newshour/gergen/november96/gould.htm

  49. Gravatar of Doug M Doug M
    12. November 2012 at 15:01

    Saturos,

    “prices don’t wait for demand to bid them up after a money injection”

    Yes, they do.

    Information is imperfect. There is a substantial lag between Fed action, the affects of those changes filter through the economy. Most Wall Street economists put that lag at 12-18 months.

  50. Gravatar of ssumner ssumner
    13. November 2012 at 06:26

    wufwugy, I wish I was going to be around a 100 years from now, so that I could show you that my films will be watched 100 years from now and yours won’t. But alas I have no way to prove that. I don’t think you’d find many film critics who disagree with the claim that Match Point and American Beauty will be completely forgotten in 100 years. I have an open mind on “Silence of the Lambs.”

    JV, There are still good films being made, but in the Western world we are clearly past the golden age. I don’t doubt that 18th century Holland produced some good paintings, but there were no Vermeers, Rembrandts, Ruisdaels, Hals, Fabritieses, De Hooches, ter Borches, etc. Tehre actually are “Golden Ages”

    Saturos, I agree that the Nobel Prize in literature has had a “spotty” record. But consider the Oscars for best picture . . .

  51. Gravatar of woupiestek woupiestek
    13. November 2012 at 12:15

    @MF: There are too many factors involved to be sure that education hurts the arts. But I think it is an interesting idea.

    My grandfather did not go to college because his parents could not afford it. He resented the fact that he was uneducated all of his life, even though he did get a decent job. The price of education has little to do with how affordable it is. The increase in student debt is a price change, so don’t reason from it.

  52. Gravatar of Major_Freedom Major_Freedom
    13. November 2012 at 12:36

    woupiestek:

    My grandfather did not go to college because his parents could not afford it. He resented the fact that he was uneducated all of his life, even though he did get a decent job.

    He didn’t have to depend on his parents.

    My grandfather did go to college, by working his way through it. He didn’t depend on his parents. The price of education relative to middle or lower class incomes during his time was far lower than it is today. Today, it is virtually impossible to work one’s way through college debt free, because there has been so much credit expansion going to student loans, that the price of education has risen at a rate far higher than incomes. To get a college education now, one has to have either wealthy parents, or one has to go into debt.

    The price of education has little to do with how affordable it is.

    I didn’t just look at the price of education. I also looked at other factors, which you conveniently overlooked.

    The increase in student debt is a price change, so don’t reason from it.

    Debt isn’t a price. Debt is a contract of borrower and lender.

    The price of education has gone up because the student debt has gone up, not vice versa. Prices are a function of supply and (nominal) demand. The price of education can only go up if the supply goes down, or the demand goes up, or both. Since the supply certainly hasn’t fallen, then the demand must have gone up. Where did the demand come from? The demand comes from money students own, and from student loans. Thus, the increased demand must be coming from either more money in student pockets (I think that has only modestly grown), or student loans, or both. I argue the main source is student loans.

  53. Gravatar of Brian Brian
    13. November 2012 at 14:44

    Wufwugy,

    +1 Fight Club. Truly excellent writing.

  54. Gravatar of Adam Adam
    13. November 2012 at 15:54

    I’d wager that part of our collective feeling that great films are a thing of the past is age. I think one needs youth to truly love a work of art.

    I’d wager that more of it has to do with the way the movie business works now, in which only sequels, super heroes or other hooks that increase the likelihood of a return on a big budget get made. Gone are the days of the small picture made on a reasonable budget that hits big.

    Unless the Weinsteins are involved (see The King’s Speech).

  55. Gravatar of ssumner ssumner
    13. November 2012 at 17:51

    Adam, I don’t agree. I truly love some of the Asian films made in the last few years, and even a few American films. But I suppose the enjoyment can be more intense when you are young.

    I would add that at age 57 I often like rediscovered classics that I have never seen much more than I like highly acclaimed newer films.

  56. Gravatar of wufwugy wufwugy
    13. November 2012 at 19:20

    Well, IMO the best classics are ones that aren’t even recognized, like Rope, Harakiri, and Dersu Uzala

  57. Gravatar of Saturos Saturos
    13. November 2012 at 20:24

    Scott, yes, we really need an economic model of Golden Ages… (*hint* Tyler *hint*)

    “Maybe some may suspect I am going to buy their goods, and anticipate my additional spending, but I will always be able to buy goods at pre-inflated prices.”

    MF, you just refuted your own position, then reasserted it. Is this how you always argue? (Don’t answer that.)

    Doug M, you said: “Information is imperfect.”

    But ratex is still quite strong enough that asset prices rise today as expected future nominal income rises. Goods prices are stickier, but that just means everyone gets to buy more while prices adjust more slowly.

    Yes stickiness might justify a kind of Cantillon effect, as people could time their purchases for when they thought prices would become unstuck. But if everyone did that then… ratex again.

    “Most Wall Street economists put that lag at 12-18 months.”

    And they are wrong, as this blog and all the MM blogs have shown. Don’t make me post the links.

  58. Gravatar of Saturos Saturos
    13. November 2012 at 20:26

    The commentators are wrong, that is, obviously market participants trade today on the basis of where they think NGDP will be tomorrow.

  59. Gravatar of Saturos Saturos
    13. November 2012 at 20:30

    MF, if you were correct then people who received money today could buy at low prices, cause the price to rise, then sell later once prices had risen, and earn the higher price on sales before it fell again. The people at the end of the Cantillon process could well be buying from the people at the start of it. In fact anybody could always make a profit that way regardless of the money supply…

  60. Gravatar of Major_Freedom Major_Freedom
    14. November 2012 at 13:05

    Saturos:

    MF, you just refuted your own position, then reasserted it. Is this how you always argue? (Don’t answer that.)

    Saturos, you haven’t shown how I refuted my own position. I can’t accept an unjustified argument.

    MF, if you were correct then people who received money today could buy at low prices, cause the price to rise, then sell later once prices had risen, and earn the higher price on sales before it fell again.

    Welcome to inflationary stock market bubbles.

    The people at the end of the Cantillon process could well be buying from the people at the start of it. In fact anybody could always make a profit that way regardless of the money supply…

    Not those at the end. They can’t pay higher prices because their incomes are last to rise. Their real incomes are reduced.

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