Lost in America
Due to the positive reaction to my previous post, I’ll do something even more self indulgent–keep a running tab of my trip. I write this from a secure undisclosed Red Roof Inn in Utica.
July 20: After packing I got gas, and was told my sticker had expired months ago Got to get out of Massachusetts before they catch me. Two blocks from home I enter the Mass Pike (I-90) in the evening “rush” hour. Not a good start. Over my entire life I’ve lived in a string of locations along I-90–which means I should have moved to the beautiful Pacific Northwest.
Just as I entered the Hudson River valley, a corny Thomas Cole sunset appeared in front of me, with musical accompaniment from a Joy Division CD. Surreal. Stopped at a NY wayside at 9:30 and got a stale cheeseburger for dinner. The AC was so cold it was painful. Picked up one of those coupon magazine and tried to book a motel an hour down the road. The call lasted forever–why does modern life have to be so complicated–do you have a room or not?
And that’s it. Hopefully something more exciting will happen later on the trip. Perhaps my wife will gamble away our 401k plan in Vegas. (She’s not with me now, but we’ll meet up in the midwest.) Maybe I’ll find a picture or two to post.
July 21. Before describing today’s trip I have one request. I am working on a principles textbook and need some cartoons with economic themes. I am trying to find one that I recall with a king who is relieved to hear the kingdom is merely run out of gold, not paper and green ink. If you know any good econ-oriented cartoons (any field within econ), please leave a link in the comment section.
Right next to my hotel in Utica I found an actual original McDonald’s:
After my Egg McMuffin I took off in my new (used) Maxima. First stop Buffalo, which has one of Frank Llyod Wright’s greatest houses, the Martin house designed in 1903:
So far they’ve spent over $40 million on the restoration, and it shows. The interior is amazing. The neighborhood is full of nice old homes.
Then on to the Knox-Albright art museum, which I found disappointing–not at all my taste in art.
Downtown is pretty quiet–much easier to park than in Boston. But it’s full of nice buildings like this art deco gem:
With a lovely art nouveau mural in the lobby:
Then late at night I arrive at my surprisingly expensive “Super 8” motel, and had endless trouble getting my room key to work. Remember when hotels had actual keys, which generally worked? Then a quick KFC dinner, which is pretty horrible stuff, but surprisingly tasty. I believe it’s the number one fast food in China. The checkout guy described all the deer he had hit with his car, in gory detail. I was tired and just wanted to get back to my hotel, but I’m too polite, and just waited him out.
I forgot to mention an interesting incident when the packers loaded our furniture on Thursday. They spoke a romance language I could not place (which I usually assume means Portuguese), but had an eastern European accent. It turns out they were Moldovan–I suppose they were speaking Romanian. In any case I talked to a big burly guy named Vitalia afterwards and he asked what I did. I said economic research and he asked what area. I said monetary policy, and then explained that that related to the Federal Reserve (many Americans have no idea what monetary policy is.) He smiled and said he knew what it was, and then asked me if I was the guy with a blog on the subject. It turns out he reads my blog, and even described some of the amusing items in the in the comment section. Lessons? It’s a small world, prob. values of 0.05 are meaningless, and never assume a big muscular worker is not highly educated.
July 22: I was blown away by the quality of Detroit’s highway system. It’s far better than what Chicago has, and serves a much smaller population. You want infrastructure, Detroit has plenty. And very few cars on either the downtown streets or the expressways. I also saw lots of new apartment construction along Woodward Ave., which I drove from downtown out to Wayne State, where Detroit’s fine art museum is located. Speaking of art museums, Toledo has probably the most underrated collection in all of America. It’s a comprehensive collection, but I only had time to look at the paintings (I’m told they have an impressive glass collection, in another wing. Toledo is glass city.)
I’m normally pleased when a small city museum has a couple of gems, but Toledo has dozens, with strength in both old masters and impressionism/post-impressionism. To my eye Rubens can seem a bit overdone, but when he’s on his game no one produces more beautiful paintings:
And here is a dazzling Bonnard (much more impressive in real life):
Also some cute modern art:
July 23: Left Ann Arbor and drove to a house on Lake Michigan, owned by a commenter to this blog. Once I reached Battle Creek it became an exercise in nostalgia. As a child we drove once or twice a year from Madison to Lansing, to see family. That was our one vacation of the year. The trip was originally 12 hours, but fell to 6 after the interstates were built. I used to be glued to the window, and now I started seeing a few familiar milestones—Kalamazoo, Paw Paw, and other oddly named towns. (My grandmother was born in Hell, Michigan.) But there were a few new additions, signs for “Sun Spa” and “Oriental Health Massage–open until 1am”. After lunch my 3 hour trip from Benton Harbor to Rockford became 5.5 hours, as traffic in northern Indiana came to a standstill. Out of frustration I decided to take local roads, the old highway 20. It passed though downtown Gary as a thunderstorm was approaching. To say Gary has seen better days would be an understatement–it seemed like a third world country. I should have taken some pics, but didn’t know if the local residents would appreciate a visit by an aficionado of “ruin porn”. I’m a long way from Mission Viejo.
July 24: I returned to my hometown yesterday. In an earlier post, I explained why Madison, Wisconsin has convinced me that progressives are wrong about race in America.
In another post, I discussed my brother Mark’s amazing collection of old stuff. He was featured on “American Pickers” (the second part of the episode entitled “Catch 32”.) My best friend is an equally serious collector, except that he collects much larger objects. Whenever I return to Madison I can count on seeing something new, and this time I was not disappointed. Roger has purchased the original train station in Madison, as well as a big long train:
I’ve known Roger since I was 5. When we were 14 we’d go to the rail yards in downtown Madison in the middle of the night, to collect unused flares. The material was then packed into long aluminum tubes to make fireworks. (Today we’d be investigated for suspicion of terrorism.) We were roommates in college, and he started buying and selling bikes out of our apartment. He gradually built that up into a bike retailing business with many stores, by working harder than anyone I’ve ever met. The old Madison train station is now one of those stores.
My brother, Roger, and I share a strong interest in the past, and a fascination with old objects, buildings, photos, posters, etc. Roger’s much more interested in the project of restoring an old building than in any money he’ll make from the venture.
I’m drawn to people who have a strong sense of nostalgia.
BTW, Roger chartered a boat trip for us yesterday, which provided a nice view of the Frank Lloyd Wright convention center and the capital. Otis Redding died in December 1967, when the plane he was on crashed into this lake:
July 25: Still in Madison. Here are some pics from my brother’s “house”, which is more like a museum. It’s a 5000 sq. foot Ford dealership from 1918, and the inside feels like you are back in time, with old store fronts hiding bedrooms:
Here is a giant clock face from an old bank in Illinois:
And here is “naked Santa”:
This is just the tip of the iceberg.
July 26: Last day in Madison, not much to report. Visited my favorite modern housing development (Middleton Hills), which consists of nothing but prairie-style or craftsman style homes:
I was very happy to see that the Wisconsin state capitol building in Madison still has no security at the entrance. You can just walk right in. Perhaps there is still a sliver of hope for America.
July 27: Long drive from Rockford to Bartlesville, OK. Drove through some of the best farmland in the world in north central Illinois. My two favorite America hotels are in Oklahoma. Tomorrow we have lunch at the 21 Museum Hotel in OKC, while last night we stayed at the wonderful Price Tower Inn in Bartlesville. It’s well off the beaten track, but worth it:
July 28: Driving through Oklahoma reminded me of a trip I took in 1976 (with three others), driving from Madison to Yucatan over Christmas break. The first “day” was Madison to San Antonio almost non-stop. By the time we got to Oklahoma is was the middle of the night and there was a freezing rain outside. The next day the driver of the Oklahoma segment told us he kept trying to keep his eyes open as he zoomed 80 mph over frozen bridges at 4am. Of course we all laughed it off. Now I’d be angry about something like that. What makes 20 year olds so much braver than 60 year olds, despite having far more to lose (in terms of foregone years of life.)
We saw some nice art deco buildings in Tulsa:
Had lunch with Steve Winkler at the Museum Hotel in OKC. The lobby is full of art—perhaps this one is a comment on the modern GOP:
North Texas is full of windmills—there seems to be thousands of them. I enjoy driving the old Rte 66:
July 29: I expected Arizona and New Mexico to be wide open highways and sunny skies. Instead it was rainy with lots of traffic jams on I-40. Truckers like to drive side by side at 60 mph on a 75 speed limit highway. What’s up with that? Albuquerque is a mess—no wonder New Mexico is the only state in that part of the country that does not have fast population growth. However I saw some wonderful old 50s signs and motels along the way.
July 30: Just arrived in Orange County. Exhausted. California traffic was bad, as expected, except the last 20 miles which were like my own private highway. Wait, it was a toll road, which is sort of like a private highway. Had dinner at a nice Japanese place on a lake, within walking distance of our house. It’s 78 degrees and dry, with a cool breeze off the lake. Paradise:
And had some yummy shrimp wrapped in pork:
No internet connection for the next few days, so blogging will be slow.
Tags:
21. July 2017 at 05:21
Scott,
Coming across I-90 through Albany, you passed just north of where I live. We’ve got the houses of both great Hudson River School painters, Thomas Cole and Frederic Church (Olana), nearby. Although I grew up with Classic Rock, my teenage children introduced me to the New Wave music of the ’80s. Joy Division is great, as are New Order, Cure, Smiths, and Echo and the Bunnymen. Enjoy lots of wonderful music as you cross the USA.
21. July 2017 at 06:20
Great story, Albert Brooks, er, Scott Sumner.
21. July 2017 at 07:09
Booking hotels with a regular phone is so 90s: Nowadays we book accommodations with the power of the internet.
21. July 2017 at 07:30
You should really try AirBnb if you haven’t yet. Especially in the Midwest where people are actually nice to strangers.
21. July 2017 at 07:50
Don’t say nest. Don’t say egg.
21. July 2017 at 09:02
On the way, why not take a slow tour of the Driftless Area? What’s the hurry? In fact, why not solicit trip route suggestions? As long as you’re moving generally southwest …
In fact, given free rein, I’d recommend heading north right away. Drive along the north shore of the Great Lakes, then at Thunder Bay, go south to Duluth and head to the Mississippi. Stay as close to the river as you can, and turn left when you feel like it. OK, I’ll stop the fantasy now, before I start waxing silly about plains, deserts, and mountains.
21. July 2017 at 11:09
https://www.youtube.com/watch?v=cjCa8i5JDF4
21. July 2017 at 14:06
Please for the love of god install Hotel Tonight on your phone.
Start checking it about noon same day. You’ll find cheap stuff
21. July 2017 at 15:56
‘I’d recommend heading north right away. Drive along the north shore of the Great Lakes, then at Thunder Bay, go south to Duluth and head to the Mississippi.’
If Scott did that he’d end up paying twice as much for the gas he’s burning.
‘Stay as close to the river as you can, and turn left when you feel like it.’
Which would return him to Boston.
21. July 2017 at 16:03
‘Picked up one of those coupon magazine and tried to book a motel an hour down the road. The call lasted forever–why does modern life have to be so complicated–do you have a room or not?’
Ann Coulter, and Jerry Seinfeld, could both explain that;
http://www.anncoulter.com/columns/2017-07-19.html
————quote———-
Jerry: I don’t understand. I made a reservation. Do you have my reservation?
Rental car agent: Yes, we do. Unfortunately, we ran out of cars.
Jerry: But the reservation keeps the car here. That’s why you have the reservation.
Rental car agent: I know why we have reservations.
Jerry: I don’t think you do. If you did, I’d have a car. See, you know how to take the reservation, you just don’t know how to hold the reservation. And that’s really the most important part of the reservation: the holding. Anybody can just take them.
———-endquote——-
Ann makes a very telling point about how that relates to ‘health insurance’. I.e., words have no precise meanings to politicized people.
21. July 2017 at 16:08
http://ngdp-advisers.com/2017/07/21/interest-rates-not-matter-pondering-international-capital-flows-property-zoning/
To maintain property values….
21. July 2017 at 20:24
Patrick Sullivan:
Good advice for a truck driver. Bad advice for a good trip. Sorry about typing “left” instead of “right.” You’re a really sharp guy. I know I enjoyed the correction.
22. July 2017 at 03:43
Hi Jack, trust you are typing this on a scroll of paper.
Neal C.
22. July 2017 at 05:45
David Levey, Thanks for the music tips. I mostly stopped keeping up with pop music after 1980. Olana is great.
Morgan, I have no idea how to install apps on my phone. Too bad you weren’t with me for the trip.
Everyone, Thanks for the travel tips, but I have limited time if I am going to meet my mover in OC.
22. July 2017 at 06:17
“I was tired and just wanted to get back to my hotel, but I’m too polite, and just waited him out.” polite as in put the guy on blast over the internet behind his back.
I’m awaiting the inevitable “get off of my lawn” line within this (entertaining) series of posts.
Safe travels.
22. July 2017 at 07:02
Scott,
One more music recommendation: the first three albums from The Strokes, released between 2001 and 2006. IMO, the best rock music of the last 20 years.
Don’t know if you’ve made it to Chicago yet. At that point you have two choices for heading west, both of which I’ve driven. You can cut SW and see the wonders of NM and AZ, especially the Grand Canyon, or continue west on I-90 through the glories of SD (Badlands, Deadwood, Mt. Rushmore) and on to Yellowstone. Both ways will take you to Vegas, hub of the modern universe. We’ll all be watching your progress.
22. July 2017 at 10:32
Sounds like you’ll be passing by my hometown (Cleveland) soon. I look forward to reading about your experience!
22. July 2017 at 16:38
This in-depth analysis kills the entire Russian hacking narrative & links to legit evidence showing DNC/CrowdStrike planted fake Russian fingerprints.
http://g-2.space/
22. July 2017 at 16:40
More on the refutation of the conspiracy theory of Russian hacking
https://pbs.twimg.com/media/DFV4xd1XgAAnxbp.jpg
https://pbs.twimg.com/media/DFV41G9XsAAlmhZ.jpg
22. July 2017 at 16:42
More analysis
https://theforensicator.wordpress.com/2017/07/09/guccifer2-metadata-analysis/
22. July 2017 at 16:47
Unlike Vitalia, I am neither burly nor highly educated.
Great architecture shots!
But here is odd chuckle: Is Trump Bigger Than Mother Theresa?
Well…
The Trump Administration just pried open the mainland China to….rice.
Yes, rice.
“CHICAGO (Reuters) – China officials have agreed to allow imports of U.S. rice for the first time ever, U.S. Department of Agriculture Secretary Sonny Perdue said on Thursday.”
—30—
Beijing had barred American (Californian) rice through the Clinton, Bush, Obama administrations. California rice is regarded by many as the best and cheapest in the world.
As Sumner has pointed out, rural Chinese still starve to death.
Now, why Beijing officials barred American rice from China when rural Chinese are starving is another question. I guess building huge reserves was more important.
Why no humanitarians seem to regard this as an issue is astonishing.
Any sane and civilized person certainly hopes American rice can help stop starvation in rural China.
So, will Trump have, by having opened China to rice, prevented more suffering than Mother Theresa?
The world works in mysterious ways…..
23. July 2017 at 06:10
Cameron, Unfortunately I passed though at night, but in the past I’ve enjoyed their art museum. The downtown area looks more impressive at night than I recall from 30 years ago.
Ben, You said:
“As Sumner has pointed out, rural Chinese still starve to death.”
No they don’t.
23. July 2017 at 06:11
Thanks David.
23. July 2017 at 13:48
If you happen to stop in Kansas City during your trek, shoot me and email!
23. July 2017 at 15:44
nice buy > Nissan New Maxima
It adopts HTSS (High Tensile Strength Steel
23. July 2017 at 16:30
“Due in part to its economic growth, China became the first country to accomplish the United Nation’s Millennium Development Goal of reducing the number of people living in extreme poverty and hunger in half. Unfortunately, there are still 150 million people in China that are considered undernourished. Most of those that suffer hunger are women, children and elderly people from rural regions.”
—30—
I thought it was your blog that had a mention of a family in rural China that faced starvation, and that rural poverty is real in China. I remember the post, as I live in rural SE Asia, and I could not imagine a family starving here, despite development in this region mostly likely lagging behind China’s at this point. Also, the charity and custom of neighbors and temples would prevent a person from starving. Climate may play role (SE Asia can grow anything all the time, while vast parts of China face harsh winters).
Have you forgotten your post on a starving rural family in China?
23. July 2017 at 17:01
I think you’re thinking of one of Baloo’s cartoons.
http://baloocartoons.com/
Search around
https://www.cartoonstock.com/sitesearch.asp?ANDkeyword=king&NOTkeyword=&TITLEkeyword=&categories=All+Categories&categoriesNews=All+News+Categories&artists=100&colorOption2=blackWhite&colorOption1=colour&mainArchive=mainArchive&newsCartoon=newsCartoon&vintage=vintage&orientationOption1=portrait&orientationOption2=landscape&submit1=Search&sort=&limit=12
23. July 2017 at 18:46
“never assume a big muscular worker is not highly educated.”
Well, we cannot assume readers of this blog are highly educated either.
23. July 2017 at 19:11
https://www.economist.com/news/china/21604220-growth-has-helped-millions-avoid-malnutrition-it-still-threatens-hold-back-generation
24. July 2017 at 02:28
The IMF today upped its forecast of mainland China economic growth to 6.7% from 6.6% for 2017.
If China is goosing its figures, they have fooled the IMF too.
Actually, I could almost believe China could pull wool over the eyes of the IMF, but private-sector Western corporations are investing heavily in China also.
24. July 2017 at 10:46
I’ve been told that the Toledo art museum has an excellent collection of medieval manuscripts.
If you are heading to Madison from Michigan you might try going north to Ludington, seeing the dunes, and taking the car ferry to Wisconsin. I’ve been told it is worth seeing. That and the house on the rock in Wisconsin which I think is in Dane county.
Funny that you talk of Detroits infrastructure. They have plenty of highways but seemingly little else.
If you are going to Milwaukee please take pics and notes.
Happy travels.
24. July 2017 at 11:43
https://www.nytimes.com/2015/03/01/magazine/karl-ove-knausgaard-travels-through-america.html
24. July 2017 at 13:31
You’re going to Rockford?? That’s where I live… I’m currently in Bosnia though.
25. July 2017 at 05:01
Ben, Doesn’t that prove my point?
25. July 2017 at 11:37
Here’s a newspaper article about Scott’s friend:
http://host.madison.com/ct/news/local/writers/mike_ivey/bike-boss-how-budget-bikes-roger-charly-conquered-madison-s/article_e6fab86a-dad1-11e3-a4ea-0019bb2963f4.html
25. July 2017 at 21:52
Sumner, once you get to the land of Mordor, drop this ring into the abyss that is the California legislature:
Some of the Awan bros were caught trying to flea the country last night. The scandal is they are pakistani ISI/Muslim brotherhood operatives. House dems funnelled dozens of pakistani and MB operatives into the country under the guise that they were all related in the Awan family. These individuals had the ability to hack and surveil dems political opponents. Dems made the IT admins for all subvommittees they sat on pertaining to military, dhs, tech and other top secret info. So essebtially these guys got whatever data they wanted about US military and gov while dems got a free surveillance team like their own little intelligence community. Now here’s where it gets good, the Awans had access to all info about future military raids through the house dems servers. Remember the navy seal, Ryan Owens who died on the first SOF raid Trump authorized in Yemen? The muslim brothehood/al-qaeda militants were tipped off a few hours before the raid, and as such Owens was killed in the firefight. Now do you get it? These statists gave terrorists and hostile governments information to kill civilians all so they could win elections.
Put that into your pipe and smoke it
25. July 2017 at 22:02
Evidence has been pouring in recently…evidence is showing that Hillary Clinton colluded with Ukraine to subvert the election and as has always been the case Trump did not collude with Russia to influence the election.
25. July 2017 at 22:04
‘WHY OH WHY DO YOU DEFEND TRUMP MF?’
I’m defending truth based on evidence, which requires a mental faculty greater than the information from one’s nose.
26. July 2017 at 03:30
Of interest, since Scott is driving cross-country–
Great Britain says it will ban sales of new gasoline and diesel cars starting in 2040…
And then Trump told the WSJ maybe it is Gary Cohn for Fed Chair in February, and that he (Trump) likes low interest rates…
26. July 2017 at 05:42
Scott,
Don’t know yet which way you’re heading out of Madison, but if you’re staying on I-90 you still can have some fun stopping at Deadwood, SD. for a taste (however contrived) of the Old West. On the other hand — in light of this report — maybe I should take back my suggestion that you include Yellowstone in your trip.
http://nautil.us/blog/-the-supervolcano-under-yellowstone-is-alive-and-kicking
26. July 2017 at 07:27
The pictures of your brother’s place, with the old storefront and clock face, are outstanding.
26. July 2017 at 08:55
Re Roger: “He gradually built that up into a bike retailing business with many stores, by working harder than anyone I’ve ever met.”
Somewhat off-topic, but at some stage, I would be interested in hearing your views on work, Scott. You seem to work pretty hard on your research and blog. But you also enjoy films and sports, etc, not to mention having an intact family life(!). And in your previous post, you kept referring to how you failed to make the expected progress on your dissertation and publications earlier in your career. Is that because you were doing other things, or often got ‘bogged down’? And did you ever consider dropping out of academia, and if so, to do what? More generally, do you think working hard or being focused is essential to success and/or happiness, or would you rather not make such generalisations?
26. July 2017 at 15:38
I second what Becky said. Wow!
26. July 2017 at 19:34
Off-topic: “Thirdly, in order to have a gold standard, is it *sufficient* [emphasis in the original] that all other kinds of money be ultimately convertible into gold money? The answer is No, not unless they are unconditionally convertible [written in the UK in 1922, when it was illegal or difficult to export UK gold without a license]. England, therefore, …has not at present got a gold standard” – from Money, by D.H. Robertson MA, Cambridge Economic Handbooks, with an introduction by J.M. Keynes (1922).
I once, when I first started reading this blog (I’ve since stopped) got into an argument with our host who insisted that England’s post-WWI gold standard was indeed a gold standard (I argued it was not). That’s when I realized I was talking not to a scholar but to an ideologue. BTW I personally feel money is largely neutral. Expanding the money supply changes real output very little if at all. But it’s not good when an economist doesn’t know basic history.
PS–Ben Cole, if you’re reading this, I’ve read that Nixon during the wage and price controls of the early 1970s jarred the Japanese into protectionism when Nixon temporarily banned American rice from being exported to Japan. The Japanese seized upon this to demand ‘food independence’ and hence closed the door to agricultural free trade. Cannot find this on the internet (too old for that) but there it is, if true.
27. July 2017 at 19:13
Ray “Electrum” Lopez:
I hang on your every word. I know Japanese tourists buy American rice to take home.
BTW, speaking of Japan, here is an interesting note from OECD:
“Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Japan, the average household net-adjusted disposable income per capita is USD 27 323 a year, less than the OECD average of USD 29 016 a year.”
International comparisons are vexing, but when you consider how expensive housing and medical care are in the US vs. Japan, it becomes a good bet Japanese real-world living standards are higher than that of Americans.
Toss in safe streets in Tokyo vs. any typical American big city….I would say life is better in Japan than the U.S. This is what I saw, anecdotally, on my visit there.
Here is another oddity:
“Tokyo leads in global patent filings
High concentration of big corporations underpins dominance
TOKYO — Inventors and companies based in the Tokyo-Yokohama metropolitan area filed the most international patent applications in the five years through 2015, surpassing technology hubs in the U.S. and China.”
—30—
Not sure what patent-filing means, but perhaps Japan is the untold story of our time.
Their economy is growing again (thanks to Haruhiko Kuroda), they are inventive, and they arguably have higher living standards than Americans.
Everybody is jibber-jabbering about China, but Japan is quietly moving ahead.
Another interesting story.
“Toyota Motor aims to introduce autonomous vehicle technology (by 2020) that …the next model of the Mirai fuel-cell vehicle.”
In other words, there will be self-driving cars on Tokyo streets, powered by fuel-cells, in the 2020s. The Mirai is Toyota’s fuel-cell car, already in production. Burns cleanly, only water vapor.
I am sure Japan has problems, like any nation. But China is going backwards in civil and legal rights, and the CCP is becoming increasingly muscular. President XI makes Trump look like Peter Pan. On the plus side, China’s PBoC is pretty good, and they have a huge population and they seem to embrace technology and work.
Interesting times.
28. July 2017 at 05:32
David, We are taking the old Rte 66.
Rajat, I’d rather not generalize about work, it depends on the person.
I didn’t work on my dissertation when I first started teaching–that’s why I fell behind.
Ray, Glad to have our clown back. Where did I say the UK was on the gold standard in 1922? 🙂
28. July 2017 at 14:32
Guess you should be singing along with this as you go —
https://en.wikipedia.org/wiki/Route_66_(song)
28. July 2017 at 19:03
I detect a difference between a Tyler Cowen travelogue, and a Scott Sumner travelogue. I live vicariously through Cowen.
Fun note for Sumner, since he is interested in cash in circulation
Bernanke pointed out the Fed recently projected there will be $2.5 trillion in paper cash in circulation (outside of banks, that is) in just eight years. That’s about $7,353 per resident, assuming a U.S. population of 345 million in 2025.
https://www.brookings.edu/blog/ben-bernanke/2017/01/26/shrinking-the-feds-balance-sheet/ see footnote 7
Imagine that. Your neighbors, family of four, have $29,000 stuffed into the mattresses?
Incredible numbers. Booming!
If this cash in circulation is all drug business (a typical postulation)…no wonder everyone is hooked on opioids or meth or…Afghan heroin. If the cash in circulation is all drug business, and circulates twice a year, that means a $5 trillion annual illicit drug biz by 2025.
That does not strike me as convincing.
Without any proof, I suspect there is a connection between booming cash in circulation and Cayman Island-style bank accounts…anybody have any clues?
Ray Lopez, the all-knowing and all-seeing, what say you?
31. July 2017 at 03:17
Ben, the Fed believes that two-thirds or more of US currency is held abroad. I recently retired from the Fed and wrote the program that updates their internal estimate from cash office data. Nobody, including me, has any real idea of how accurate that estimate is.
1. August 2017 at 18:32
David, I thought of that song at various cities.
Jeff, I did my dissertation of cash hoarding and the underground economy.
I think cash held overseas is part of the story, but cash holdings in other countries is also surprisingly high, suggesting that domestic hoarding is also a big issue.
3. August 2017 at 11:01
Scott,
Even if only a third of US currency is held domestically, that still leaves a lot for hoarding. So I don’t disagree with you there.
However, the Fed has two somewhat indirect sources of data for it’s estimates. One is the cash office data I mentioned. The Fed knows how much currency was paid into circulation and received from circulation by each of it’s 37 (I think) cash offices. The big banks that do the vast majority of currency shipments work with the New York, Miami and Los Angeles cash offices. And those offices account for the vast majority of net currency paid into circulation. Especially for the largest denomination ($100) bills.
There is a second, unofficial source of data as well. Many of the biggest banks involved in currency shipments report those shipments voluntarily to the New York Fed. This is nice data because it is broken down by country, and you can see the effects of regional spikes in demand associated with wars, financial crisis, etc. However, the Fed may not have the legal authority to compel banks to report this data, so they don’t like to publicize it.
There is quite a bit of data of various kinds the Fed collects on a voluntary basis that it doesn’t like to talk about. I think they have an entirely reasonable fear that some grandstanding political type will try to use the numbers in a way that embarrasses the reporters, and that will lead to a cessation of the reporting.
5. August 2017 at 21:09
Jeff, Thanks, That’s interesting.