Obama takes a page from Herbert Hoover’s campaign playbook

From the NYT:

While Mr. Obama seeks to make Republicans the villains when it comes to the economy, he is also, more diplomatically, blaming Europe. In Minneapolis and Chicago on Friday, he cited the impact of the continent’s travails on the American economy.

Citing the jobs report, Mr. Obama said, “A lot of that is attributable to Europe and the cloud that’s coming over from the Atlantic, and the whole world economy has been weakened by it.”

Hoover also blamed Europe in the 1932 campaign.  Today almost all macroeconomists believe the problem wasn’t Europe, but rather the failure of the Fed to boost NGDP with a sufficiently expansionary monetary policy.  And what do these economists do when faced by another epic demand shortfall in their own lifetime?

As lackluster as the American jobs data was, with unemployment inching up one-tenth of a percentage point to 8.2 percent, the news from Europe was far worse: the jobless rate in the euro zone hit 11 percent, the highest since tracking began in 1995. “There’s really nothing the U.S. can do,” said Charles Calomiris, professor of finance and economics at Columbia Business School.

Alan J. Auerbach, an economist at the University of California, Berkeley, said, “Frankly, I don’t see what President Obama can do right now other than to forcefully present a detailed plan for action and challenge Congress to take it up.”

It’s easy to see the failure of others.  Not so easy to see what went wrong when monetary policymakers following the consensus view of leading macroeconomists led us to the slowest growth in NGDP since Herbert Hoover was President.  Our policies didn’t work?  There can’t be anything wrong with our policy; the problem must be unsolvable.


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81 Responses to “Obama takes a page from Herbert Hoover’s campaign playbook”

  1. Gravatar of Morgan Warstler Morgan Warstler
    3. June 2012 at 06:10

    “We’d like to thank you Herbert Hoover…”

    Except this time, Mitt Romney can ride to the rescue to deliver the anti-FDR solution.

    I wonder what is different? Why o’ why could a financial crisis lead to SMALLER GOVT. instead of BIG GOVT?

    Scott, I think we should agree your dedication should be at least 14 pt font. And I prefer a non-italicized sans serif. If you can choose any, then please make it ROBOTO.

  2. Gravatar of Saturos Saturos
    3. June 2012 at 06:15

    Why is Scott dedicating the book to you again?

  3. Gravatar of Neal Neal
    3. June 2012 at 06:52

    Macro 202 assignment:
    An investment bubble in the European periphery has led to overpriced labor relative to the strong economies in the interior. Strong structural forces prevent wage decreases. The European Central Bank is enforcing a sub-2% inflation target. Europe is sliding into a long recession. What can the US do?

    Solution:
    What can the US do? Well, a recession in Europe represents a negative real supply shock (insofar as it hits imports) and a negative real demand shock (insofar as it hits exports and finance). [The US BOP with Europe is here.]

    If the Fed keeps AD growing steadily, it entirely mitigates the demand shock and solves the supply shock with a burst of inflation, rebalancing wages in export- and import-oriented industries and moving workers from import-oriented industries to export-oriented industries.

  4. Gravatar of Morgan Warstler Morgan Warstler
    3. June 2012 at 06:58

    Scott and I have a bet int he biggest question facing his NGDPLT.

    My primary political economy theory is a LONG ITERATIVE GAME PLAY argument that once the GOP started spending all the money, a sea change occurred where it is IMPOSSIBLE for FDR to happen again.

    I argue it is so impossible for FDR to happen again, that progressives will be left to return to their Blue States, calling for states rights, where they keep all their tax dollars at home and try to turn them into Liberal Utopias.

    They will be forced to say, “since we can’t run the country, we’re keeping our money, to hell with DC.”

    —–

    Fundamental to Scott’s analysis is that Fiscal Crisis leads to bigger government – if that is NOT THE CASE, then the benefits of NGDPLT are not in doubt, BUT the primacy of his strategy over mine is in doubt.

    Meaning if the right knows that leaving massive deficits to democrats works.

    And Scott (and some on the right) knows NGDPLT works.

    Then it isn’t logical for Scott to pitch NGDPLT to liberals, he should forget them… he should focus like a laser on selling his policy to the right.

    He should adopt the public personae of Friedman, and earn his cred as an anti-government libertarian, because the right ALREADY HAS A WINNING STRATEGY.

    Scott then isn’t in a position to sell NGDPLT to conservatives as protection from another FDR.

    If I’m right, conservatives already got that.

    Scott’s plan will need to run along side the right’s sure fire winner.

    That’s the bet.

  5. Gravatar of Alexander Hudson Alexander Hudson
    3. June 2012 at 06:59

    It seems to me that economists whose area of expertise is monetary policy believe (correctly) that monetary policy is very effective at stabilizing/boosting demand, while those whose area of expertise is not monetary policy are (with a few exceptions) hopelessly confused. Maybe the Romers should invite Auerbach over for dinner and set him straight. Along with every other economist in the US, Bernanke included.

  6. Gravatar of Saturos Saturos
    3. June 2012 at 07:03

    Morgan, I think Scott cares more about ameliorating mass unemployment than going on Friedmanite crusades to reduce the size of government.

  7. Gravatar of Saturos Saturos
    3. June 2012 at 07:03

    And so did he, probably.

  8. Gravatar of ssumner ssumner
    3. June 2012 at 08:11

    Saturos, Morgan must have dreamed he bet with me.

    Neal, Good example.

    Alexander, Good observation.

  9. Gravatar of Morgan Warstler Morgan Warstler
    3. June 2012 at 08:28

    Saturoros,

    Uncle Milty knew in his bones govt. was the problem.

    For that reason he sought to stabilize money supply growth, and preferred to remove the Fed from the procedure entirely.

    He didn’t wake up hating unemployment, he blamed unemployment on government, and woke up hating them for it.

    ——

    How would Milton talk to Dekrugman? And why?

    Watch this:

    http://www.youtube.com/watch?v=5wMMJYj3IsY

    ——

    My “bet” with Sumner is real.

    When pushed so many moons ago, he used Obama’s election to shame me for trusting debt as a weapon to ruin Democrats day.

    I held fast, we can’t keep Dems from being elected, the question is can we stop the payoff to their voters. This requires not just debt, but also a Democrat politician to play along.

    It means that we need Dem pols to see that you can be Clinton and win, and be Obama and lose.

    So far the 2010 Tea Party has kept my analysis spot on, and it is real deep and abiding question – does it carry us into 2012.

    Because if I’m right, it means that Scott’s study of the Great Depression isn’t really enough to properly play Macroeconomics.

    We shouldn’t assume negative “big government” consequences to debt fueled financial crises.

    And without that assumption, Scott’s got a nice Friedman like policy stance, but NO real history of wooing the VERY PEOPLE who are most likely to be able to and want to adopt his plan.

    If I’m wrong, I’ll be publicly wrong, but if I’m right, Scott’s N’s NGDPLT is just the second biggest weapon conservatives have, it isn’t the first.

    And Scott shouldn’t set himself up to be pissy about a stronger weapon, it makes it look like he’s not really anti-government.

    And that makes his policy goal further away.

  10. Gravatar of StatsGuy StatsGuy
    3. June 2012 at 08:56

    Morgan, go ahead and plot US GDP pre-Bretton Woods – back when govt was a much smaller portion of the economy. Your facts are so screwed up.

    Yet you seem to think that sufficient repetition of falsified statements will convince people… Well, maybe you will.

  11. Gravatar of Saturos Saturos
    3. June 2012 at 09:15

    I think Scott’s being a bit hard on Obama. He’s just repeating conventional wisdom about Europe and its effects. Indeed the Fed’s recent statements have been along the same lines as well, Obama thinks he’s just reiterating what all sensible economists understand to be the state of matters. Not everyone has read Scott’s NYT piece, you know.

  12. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 10:25

    “I don’t see what President Obama can do right now”

    That statement is correct, though not for the reasons he thinks.

    Since Obama is stuck with a chair of the Fed and an FOMC that are determined to blatently, and illegaly, ignore the Fed’s mandate to achieve maximum employment, and are operating on the principle that once the an immediate financial crisis is passed all a central bank should do is to stabilize the price level, the President’s ability to do anything to bring the unemployment rate down is severely limited.

    Reappointing Bernanke was Obama’s most serious economic policy mistake. It was the equivalent of Roosevelt reappointing Herbert Hoover’s Federal Reserve Board chair would have been. If Obama loses, this mistake is by far the most important reason.

    This mistake has been compounded by not promptly filling the FOMC with people who would take the Fed’s mandate to achieve maximum employment seriously. And a number of the people he has appointed apparently also do not appear to give the maximum employment mandate significant priority. The two new appointments do not appear likely to change this.

  13. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 10:39

    Last April Bernanke stated that the FOMC considered it very reckless to reduce unemployment a little faster by taking steps to push the inflation rate up. Such a step could threaten to undermine the credibility of the central bank as a bulk wark against inflation. This clearly shows that Bernanke believes that the Fed COULD do more to make the economy grow faster (and that the economy is therefore not in a liquidity trap) and is deliberately holding back on monetary stimulus in order to make the economy grow slowly enough to not allow an increase in inflation. Therefore we are currently under a regime of monetary austerity. As a result we should not be surprised that the economy is not growing fast enough to bring the unemployment rate down at a solid rate. Once one understands this, the fact that the unemployment rate is not coming down faster is not a mystery. It is a deliberate policy choice of the Fed.

  14. Gravatar of Negation of Ideology Negation of Ideology
    3. June 2012 at 10:49

    FEH –

    “Reappointing Bernanke was Obama’s most serious economic policy mistake.”

    I don’t agree, I think this was his most serious mistake:

    “This mistake has been compounded by not promptly filling the FOMC with people who would take the Fed’s mandate to achieve maximum employment seriously.”

    In other words, I don’t think Bernanke is the problem. There are only a few people who would be better than Bernanke – Christina Romer and a blogger from Bentley come to mind. But if he had appointed those two to the Board I think Bernanke would have had the votes to get a good recovery.

    Also, Obama had such a large majority he could have pushed Congress to change the Fed’s mandate. Or he could have pushed for a stimulus that actually addressed the mortgage problem, like making the first time homebuyer credit retroactive contingent on using it to make an extra payment on mortgage principle. Instead he did nothing to get incomes up relative to debts, or debt down relative to incomes.

  15. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 10:50

    “Except this time, Mitt Romney can ride to the rescue to deliver the anti-FDR solution. … I wonder what is different? Why o’ why could a financial crisis lead to SMALLER GOVT. instead of BIG GOVT?”

    Two reasons:

    1. When Roosevelt took power the economy had been in a depression for several years. So a solid majority of the electorate was convinced that the Republican policies were failures. When Obama took power, the deep part of the recession (as opposed to the previous mild one) had been going on for about 1/2 year. So there was less time for the electorate to be convinced of this.

    2. During the first 4 years the Roosevelt administration was succeeding solidly at bringing the unemployment rate down. The electorate therefore became convinced that Roosevelt’s policies were the right ones. During Obama’s years the unemployment rate has been coming down at an abysmally low rate. Therefore the public has not been convinced that the Democrats’ policies are the correct ones. If the unemployment rate had come down at a solid rate, the modest improvements in regulation that the Democrats passed would have stuck.

    IT WAS THE JOBS, STU er MR. PRESIDENT!

  16. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 11:27

    I don’t really buy this Hoover analogy. What exactly can Obama do at this point? If he goes out and says it’s Bernanke’s fault the GOP House will be calling for his impeachment on Monday for daring to so attack the Fed’s sacrosanct independence.

    This is why I was telling the Nick Rowe and his people at Mostly Canadian yesterday that they have much the better system-there the government really can tell the CB to do something. Obama really doesn’t have much he can do other than do a Harry Truman and run against the do nothing Congress.

    He isn’t wrong about Europe either. The current slowdown is being generated from the EU. Now maybe the Fed could do something to reverse it but that’s the Fed’s failure not Obama’s. At this point even if he agreed with you-I have no idea whether he or Romney for that matter can spell NGDP-what could he really do publicly?

  17. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 11:36

    In principle, Obama should be running against the do-nothing Federal Reserve System this Fall, but for reasons that are obvious this is simply not doable.

    But progressive economists (along with market monetarists) should be criticising the Fed for imposing a regime of monetary austerity on the economy that is killing the recovery. Unfortunately the fact that most progressives believe that we are in a liquidity trap prevents them from seeing the problem.

  18. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 11:38

    FEH I’d love for him to attack the Fed but again he’d be impeached. In the US there’s this ideology of Fed indepedence. In Britain and Canada they don’t have this illusion.

  19. Gravatar of Negation of Ideology Negation of Ideology
    3. June 2012 at 11:46

    Mike Sax – What evidence do you have that Obama would be impeached for criticizing the Fed? He criticized the Supreme Court and wasn’t impeached.

    I beleive the only people mentioning impeachment are Dennis Kuchinich and Ron Paul, and that’s because they don’t like him defending the country.

  20. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 11:51

    Negation I didn’t say he’d be impeached but Darrell Issa and company would make it sound that way.

    This is because of the doctrine of Fed independence-Congress and certainly the President must not in any way lean on the Fed or try to push it to ignore it’s righteous passion for inlfation fighting in favor of money printing.

    I can assure you that if Obama were to in anyway criticize or really even suggest an opinion on what the Fed does the GOP would go hogwild. I’m sure at least you’d hear rhetoric that Obama should be impeached.

    The doctirne of Fed Independence means that Obama is not supposed to in any way criticize or even remark on the actions of the Fed.

  21. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 11:54

    Just to be clear Negation. there is no similar doctirne of Supreme court independence. And if Obama critizies a SJC decision it doesnt matter anyway as he has no power to take their job as he does for the Fed.

    While many felt Obama was in poor taste for crtiicizing Citizens Unite-not me but I digress- he didn’t quite commit the blasphemouy involbed in trying to “influence” the Fed.

  22. Gravatar of J.V. Dubois J.V. Dubois
    3. June 2012 at 11:56

    Saturos: “I think Scott’s being a bit hard on Obama. He’s just repeating conventional wisdom about Europe and its effects.”

    No, on the contrary I think that he is too soft on him. I am tired of the “bad advisors” argument. It is always that the figurehead is the best we can get only if he had better skill at picking his advisors.

    To hell with that. After all the disasters the advises of his economic advisers brought he should fire them and get new ones. Or maybe he has good advisers but he refuses to listen to them – then he should fire himself. Either way this is his responsibility. He had power to replace several seats on FED board with economists that would help the economy. And at any moment he can start calling things as they are and at least make the work of some people in key positions easier. But he won’t. Either he does not know how, does not want to or he is just plainly weak. Anyways he definitely is a person the history will justly blame for failure to do something – unless he radically changes the tune. And as you know such thing almost never happens in politics.

  23. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 12:00

    So J.V. Dubious you think a President Romney will give us more aggressive monetary policy? He comes from a party that has passed a Sound Dollar bill in Congress and many state GOPs have passed billls to bring back gold.

    Unless the GOP has been all about “hard money” because Obama was President-which is quite plausible-I don’t see the basis for it.

  24. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 12:02

    Sorry for mispelling your name-oops. LOL Certainly don’t mean to suggest your dubious! LOL

  25. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 12:15

    “In the US there’s this ideology of Fed indepedence.”

    But it is only ideology. There is no substance behind it. The U.S. constitution does not call for an independent central bank. On the contrary, since the power to coin money and regulate the value thereof is given to Congress, the Fed is, by law, required to comply with congressional mandates. And it is in blatent violation of the mandate to achieve maximum employment. IN PRINCIPLE, Bernanke could be impeached for dereliction of duty.

    But one thing Obama might have done was to have a public swearing in of the two new FRB members and to remind them of the Fed’s congressional mandate to achieve maximum employment and urge them to comply with their duty to comply with this mandate. This should have been followed by surrogates criticising the Fed for not complying with the mandate. Obviously the Republicans would have severely criticised this.
    BUT there would have been two ways to counter this:
    1. Democratic spokesmen should have pointed out the attempts by Republicans in congress to tell the Fed what to do.
    2. Democratic spokesmen and maybe even Obama should have argued that this shows that Republicans really do not care about achieving full employment.

  26. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 12:21

    Again, FEH, I like all of this. I’d love if Obmaa and the Dems were this aggressive. You are right about Congress having that right but in the conventions of today’s Washington this is just not done.

    The Obama Administration is too timid for anything that bold. It would really be out of left field. I don’t know much about the Administration’s ideas about monetary policy are. I have no idea that they believe or don;t believe in the liquidity trap or anything like that.

    In a way there is a symmetry between fiscal and monetary policy in today’s US. Neither appear on the table.

  27. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 12:28

    “I am tired of the “bad advisors” argument.”

    This is a valid point. Obama has chosen these advisors and the buck stops at the President’s desk. What Obama needs to desoeratekt do is to replace his economic advisors. If he does not do this PDQ, he is doomed politically.

    If I were in Obama’s place and was faced with the dismal unemployment figures I would at this point, and actually quite some time before this, stongly suspect that I am getting very bad advice from my economic advisors. I would respond to talking extensively with outside people of all political stripes who were criticising my policies to get alternative views. Since the current policies are not succeeding, hopefully at least one set of critics would have it right.

    I would obviously talk to Krugman and DeLong, but also Monetarists, Austrians, and even Real Business Cycle theorists to try to determine which, if any, were talking sense and saying things consistent with what is actually happening. Hopefully this process would have also brought me in touch with some Market Monetarists.

  28. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 12:39

    “Neither appear on the table.”

    Fiscal policy (as measured by the entire government sector, federal, state, and local,) after a brief weak stimulus has turned very contractionary. So we currently have contractionary fiscal policy. Instead of this being offset with an expansionary monetary policy, we are under a regime of monetary austerity.

    With the economy facing both fiscal and monetary austerity, we should not be surprised that the weak recovery is faltering.

    The problems with the Euro have added to this and temporarily made things worse, but are not the cause of the problem.

  29. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 12:48

    “The problems with the Euro have added to this and temporarily made things worse, but are not the cause of the problem.”

    That I disagree with. The recovery had been picking up speed until it became clear that Greece may be leaving the euro.

    We haven’t had the level of fiscal austerity in the US they had in Britain and the EU.

    I agree it wasn’t enough but we were kind of muddling through during the first 3 months when the EU seemed to have its act together a little.

  30. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 12:52

    “Obama has chosen these advisors and the buck stops at the President’s desk.”

    As a progressive who very much wanted and wants Obama to succeed, these years have been incredibly frustrating. Watching Obama shoot himself in the foot again and again with respect to economic policy has made me want to tear my hair out in frustration again and again.

  31. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 13:01

    “We haven’t had the level of fiscal austerity in the US”

    One has to look at the fiscal policy of the ENTIRE GOVERNMENT SECTOR, for example, the G component of aggregate demand, because that is what is the relevant factor that affects AD.

    The rate of growth of the G component of AD, measured in terms of real government spending per capita started to decline from its peak in 2010 and turned negative 2011. I have not looked at the data for taxes, but if state and local taxes are included, I would conjecture that real taxes per capita have increased.

    So we are under regime of serious fiscal austerity. Unless such a regime is fully offset by expansionary monetary policy, which has obviously not been happening, this has a strong contractionary effect on the economy. And we are seeing this effect.

  32. Gravatar of J.V. Dubois J.V. Dubois
    3. June 2012 at 13:29

    Mike Sax: No I do not think that Romney is good candidate. But neither is Obama – at least not if you need someone to get us out of this mess. This is standard “lesser evil” political thinking. I am not naive and I know that there can be no ideal candidate. But you still have to have some reasonable expectations even from candidate you prefer otherwise you will set up a stage for a new political game called “How much more can I make myself less appealing for my voters and still end up being at least slightly a lesser evil so they *have* to vote for me (They have to, my economic advisers told me that people form rational expectations, right?)”.
    .
    By the way this is reason why Krugman constantly bashes journalists for not pointing out really bad arguments and policy decisions due to some political balance issues (both parties are bad – or I will not bash my candidate as he can still do something good for us”). Because this way of thinking is a sure way to end up living in a very badly governed country.
    .
    PS: That typo was actually quite funny, no bad feelings 🙂

  33. Gravatar of Neal Neal
    3. June 2012 at 13:33

    Mike Sax:

    “In the US there’s this ideology of Fed indepedence.”

    Actually, I think what you’re describing is the Republicans being anti-Obama. If Obama says “jump,” the Republicans (especially the Tea Party freshmen) have to say “stand still!” If Obama praises the Fed, the Republicans make noise about the Creature from Jekyll Island. If Obama criticizes the Fed, the Republicans will scream about the Fed’s sacred independence.

  34. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 13:37

    FEH no question if you factor in the states correct. Krugman always makes this point too. Still I wouls say we have had austerity lite on the fiscal end. Again, look at the US compared with the UK and EU and you see the difference.

    To be sure we haven’t done enough. But both fiscal and moentary policy have been better in the US than in Europe.

  35. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 13:38

    Dubois the funny thing is that I make typos all the time but usually they don’t make any material difference. This time… LOL

  36. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 13:43

    Overall FEH I understand what you’re saying I’m as frustrated as anyone. But the political opportunism of the GOP has been so grotesque that I feel that if I join in the Obama bashing I’m only giving them further aid and comfort. No doubt many progressives feel quite differntly.

    I used to argue with them at Firedoglake every day until Jane Hamsher banned me. LOL

  37. Gravatar of ssumner ssumner
    3. June 2012 at 13:47

    Saturos, Yes, and the conventional wisdom was also that Hoover was right. I’m expressing the unconventional wisdom in this blog. And just pointing out that the mainstream of American economists circa 2012 would have felt very comfortable working for Hoover–he was in the mainstream too. He did fiscal stimulus.

    I have nothing against Obama, and no plans to vote for Romney.

    FEH, Why doesn’t Obama go on TV and point out that monetary policy is currently way too contractionary to fulfill the Fed’s legal mandate. Indeed it’s way too contractionary to fulfill a single 2% inflation mandate!!

    Mike Sax, You said;

    “I don’t really buy this Hoover analogy. What exactly can Obama do at this point? If he goes out and says it’s Bernanke’s fault the GOP House will be calling for his impeachment on Monday for daring to so attack the Fed’s sacrosanct independence.”

    God you must have contemp for Obama! You make him seem like a weakling. Imagine FDR or LBJ being afraid of the big bad Republicans. It’s laughable.

    I do agree that the Canadian system is much better. But proportional representation would be still better.

    FEH, You said;

    “In principle, Obama should be running against the do-nothing Federal Reserve System this Fall, but for reasons that are obvious this is simply not doable.”

    I presume the obvious reason is that he appointed 6 of the 7 members of the Board.

  38. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 15:23

    “But the political opportunism of the GOP has been so grotesque that I feel that if I join in the Obama bashing I’m only giving them further aid and comfort.”

    The reason I am so frustrated with Obama is that I very much want him to succeed and he keeps shooting himself in the feet and probably areas higher up.

    I intend to go all out to support Obama in this election because Romney will be a disaster for ordinary working people. His agenda is based on the proposition that working people and the poor have too much money and people like him have too little.

  39. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 15:28

    “Scott, I think we should agree your dedication should be at least 14 pt font. And I prefer a non-italicized sans serif.”

    “Why is Scott dedicating the book to you again?”

    Actually Scott should dedicate the book to Paul Krugman. As he has stated in a previous post:

    “And since I’ve been needling Paul Krugman about small issues in recent posts, how about a big round of applause for Dr. Gloom; the only major nationally-known pundit who’s been 100% right about the AD shortfall from the beginning.”

  40. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 15:47

    “Imagine FDR or LBJ being afraid of the big bad Republicans.”

    What we needed to deal with the Great Recession followed by the Little Depression was another FDR.

    Alas Obama is no FDR.

    Obama’s single biggest political mistake is that he came to Washington with the mistaken belief that he could work together with the Republicans in a bipartisan manner to solve the nation’s problems. The Republicans, of course, had absolutely no intention of doing this and from day one set out to make him fail by opposing and sabotaging everything he wanted to do, even if it meant opposing things they had previously been in favor off. For example McCain had proffered cap and trade as the policy to deal with air pollution. Since he had worked with Republicans in bipartisanship before, it was a natural mistake to make. But Obama’s problem was how long it took him to catch on to what the Republicans were up to. Their failure to support the stimulus, which was designed to be bipartisan, should have made the reality clear. And many other subsequent actions should have made it clearer. But he continued to fail to get it until the failure of the big deficit reduction plan last Summer.

    He should have caught on to what was going on quickly and from that point on approached the Republicans in Congress as a deadly enemy that had to be neutralized if his administration was going to succeed.

    And, of course, getting the unemployment rate to come down as rapidly as possible should have been the overriding objective of his administration, even when it meant doing things that were initially unpopular, like accepting higher inflation and bigger deficits. If the unemployment rate has been coming down at a solid rate those things would not have been major problems.

  41. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 15:57

    “Still I wouls say we have had austerity lite on the fiscal end. Again, look at the US compared with the UK and EU and you see the difference.”

    Which is why the U.S. economy is still growing, although slowly, while Britain is in a second dip recession and many of the Euro states are in deep depression.

    Note that we are also having less monetary austerity than the Eurozone. My impression is that the Bank of England has actully tried to PARTIALLY offset the contraction imposed on the British economy by Cameron’s fiscal policy, but I could be wrong about that. The 2% inflation mandate clearly limits what the BOE could do with respect to this.

  42. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 16:00

    FEH I’d say I agree with everything you said. What Cameron wants is fiscal austerity and monetary stimulus. However clearly the monetary policy has not been aggressive enough assuming his premise is sound-it wouldn’t be my choice.

  43. Gravatar of Morgan Warstler Morgan Warstler
    3. June 2012 at 16:31

    Scott we’re at the CPI target, slightly over it:

    http://www.bls.gov/news.release/cpi.nr0.htm

    —-

    FEH, stop dancing! Obama had his chance to BE CLINTON. He did not WANT to be Clinton. That was his mistake.

    WE KNOW if you cut, cut, cut the ublic secotr, so much so that we get real deflationary PRODUCTIVITY effects…

    This does not mean “less services” – this means the same of better services, spending less on labor to get them.

    At least be noble enough to answer what I’m really saying.

    IF Obama came in and turned on his base, sold them down the river, demanded that they all get 401K’s and deliver 2-3% PRODUCTIVITY GAINS every single year.

    that would be REAL GROWTH, we’d get REAL DEFLATIONARY EFFECTS!

    And what do we KNOW Ben would do?

    He’d print money to keep inflation at 2%.

    ——

    Look guys, you are banging your head against a wall here.

    What is on the table is that you DO NOT GET govt. spending you want. You DO GET to sacrifice the public employee unions.

    Look, along the way, there will be Ohio’s, there will Wisconsin, etc. but the clear trend is a public sector that operates with the mindset of the private sector.

    GOV2.0 doesn’t mean death of government. It means cheaper govt. that delivers more.

    Obama HAD his chance.

    ——

    You don’t get to skip over the the REAL CHOICE Obama made, and act like it would have been easy fr him to get the hegemonic Fed to behave differently.

    To get the Fed to behave different, Obama had to be different.

    Blame him for not being Clinton.

    Because he wasn’t.

  44. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 18:21

    “To get the Fed to behave different, Obama had to be different.”

    True, but not in the sense you mean. To get the Fed to behave differntly what Obama had to do is appoint people to the BOG who took the Fed’s mandate to achieve maximum employment seriously. Therefore Bernanke was a serious blunder and some of his other choices are also mistakes. Also not filling the vacancies promptly before the Republicans were able to obstruct was a mistake.

    Accepting conservative Republican economic policies to get a right-wing Fed to give him the stimulus needed is clearly not the path he should have taken.

    “This does not mean “less services” – this means the same of better services, spending less on labor to get them.”
    You are ignoring adverse selection. If you pay government workers less with fewer benefits, you get less qualified workers and therefore less services. In many of the more responsible positions government workers are already paid far less than people in the private sector holding jobs with comperable responsibilities are.

  45. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 18:22

    “He’d print money to keep inflation at 2%.”

    That seems to be what Bernanke is doing at this time.

  46. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 18:28

    “To get the Fed to behave differntly what Obama had to do is appoint people to the BOG who took the Fed’s mandate to achieve maximum employment seriously.”

    Actually that is only Phase 1 of what Obama needed to do. The second thing was to only let Class C directors select the presidents of the individual Federal Reserve banks to eliminate the role of bankers in making monetary policy.

    That might have been something left to the second term, after a rapidly declining unemployment rate had not only gotten Obama reelected but had given the Democrats control of both houses, and the filibuster in the Senate was eliminated.

  47. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 18:33

    “Blame him for not being Clinton.”

    I blame Obama for not being another FDR.

  48. Gravatar of Morgan Warstler Morgan Warstler
    3. June 2012 at 18:41

    FEH,

    This shit won’t fly:

    “You are ignoring adverse selection. If you pay government workers less with fewer benefits, you get less qualified workers and therefore less services.”

    That is NOISE.

    REAL workers deliver 2-5% YOY Productivity gains and have a quit rate far higher.

    Please SHUT UP.

    End USPS. End it outright.
    Adopt my Guaranteed Income plan.
    Outsource the entire SSA.
    End Davis Bacon.
    End Seniority rules.
    End Guaranteed Benefit Pensions

    Just shut up.

    If you want to be taken seriously you ahve to start with we could run the entire government with half as many public employees and no discernible loss in services.

    And the remaining 50% would be paid more, and would be the competent who come in from the private sector and steal the new high paying jobs from the bureaucrats lazy asses.

    We play real ball here, FEH, to save your precious government, you’re gonna have to thinking about it the way BAIN would.

  49. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 18:58

    “If you want to be taken seriously”

    I have no desire to be taken seriously by right wing ideologues. I do want to be taken seriously by moderate centrists, moderate conservatives and, of course, progressives, and my arguments are directed to them.

  50. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 19:09

    C’mon Morgan. You’re actually doing the Bain Capital argument? Elect me because I was President of Bain?

    Tell me something if his record at Bain was so sterling why won’t he release the numbers as he’s alwyas talking about all the jobs he supposedly created.

    It goes up every day. In 1994 when he ran against Ted Kennedy for Senate-and he was promisng to be better on gay rights than Teddy himself-he claimed that he had created 10,000 jobs. He was already two thirds os a way through his Bain tenure at that point.

    Now it’s miraculously 100,000 jobs. Yeah sure, including the downsizes? Truth be told he proabaly doesn’t know how mnay he created when he was there and of course that wasn’t a priority.

    He got that 100,000 number by counting everyone who’s every worked for a Bain company in any capacity ever.

  51. Gravatar of Morgan Warstler Morgan Warstler
    3. June 2012 at 20:49

    Sax, you too.

    I’m making a very simple and unbeatable argument. Neither of you can keep your dignity intact and not answer it.

    The KIND OF PRESSURE applied in the private sector to drive costs lower, innovate and deliver more for less…

    The public sector WILL operate that way OR you are doomed.

    No one will like govt. until it pulls a Skype or Napster or Apple or Google or Amazon out of its ass.

    The problem is YOU TWO and Obama don’t know how to think like this.. Clinton did, he just looked at welfare, said this is bad policy, shrugged and threw it on the fire to burn.

    It doesn’t take genius, it just takes a complete willingness to upset the apple cart, you just have to be willing to say simple stuff like:

    no public employee is worth $100K unless he makes other public employees redundant.

    or, lets shut down the Postal Service, you get the idea.

    Guys, it is going to HURT your side, you are going to BARELY feel normal upside with some small tax raises in the process.

    But it is 100% up to you to save your side – you are going to have to realize govt. is a product and right now all the market research says everyone thinks your product is too expensive and generally not worth it.

    You dont have a messaging problem.

    EVERYONE knows the truth, so stop fighting it, admit it to yourselves, and focus on leading your side out of the friggin wilderness. Deliver more for less, every year, no matter what and crush anyone on your side who fights it.

  52. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 21:08

    Yeah it makes sense Morgan. To win Democrats should submit body and soul to Republicans. That’s an unbeatable argument in your mind but yet your surpisred no one buys in.

    As for Clinton that was his worst policy what he did to TANF. You got a messaging problem if you imgagine this is a winning arugment.

    Despite all you talk about government that’s got nothing to do with our problems today. We’ve been cutting government for 30 years and what do we have now? Our entire economy is a caracass.

  53. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 21:11

    Your trouble is the bad job numbers made you real cocky. NOt suprising Republicans love the misery of others-it’s an almost sexual high.

    And they think it’s going to benefit them in November. We;ll see

  54. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 21:34

    “Your trouble is the bad job numbers made you real cocky.”

    For the right wing, depressions are heaven sent. They provide a golden opportunity to beat working people into submission. To make them give up hard won gains.

    As the son of a blue collar worker who grew up in a blue collar home, my loyalties are with the working people and am determined to do all I can to resist this right-wing class warfare against working people and the poor.

    “And they think it’s going to benefit them in November. We;ll see”

    This is why Obama’s dropping the ball on the economy is such a tragedy. He had a golden opportunity to create a fairer, juster economic environment with greater equality of opportunity that would improve the standard of living of working people, and he blew it. Instead Romney and the Republicans may well win and further enrich people like himself at the expense of working people and the poor.

  55. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 21:41

    “Clinton did, he just looked at welfare, said this is bad policy, shrugged and threw it on the fire to burn.”

    He only did this after the Republicans gained control of congress and were able to force such a policy on him. If he had not lost control of congress he would not have agreed to that. And he made the changes considerably less bad than the Republicans had wanted. Before, when he had control of congress, he raised the taxes on the rich and he tried to provide universal health insurance.

  56. Gravatar of Mike Sax Mike Sax
    3. June 2012 at 21:46

    I hear you FEH but for me that’s why I don’t do Obama bashing in public all it does is give aid and comfort to your Morgan Warsters. See how Morgan wants you to think that your salvation is not figthing Republicans but other Democrats.

    Morgan do you forget where Truman said givven a chance between a Republican and a Republicna people will choose the Republican every time? There’s a two party system for a reason.

    Your family was blue collar and you got guys like Herman Cain who want to raise the taxes of blue collar people while lowering them on people like Mitt Romney. Notice how you always get all these guys running around like Steve Mooore lecuting us about how “45$ of Americans pay no tax” which is a lie anyway. They are only talking about fed income taxes, ignroing payroll taxes which are killer as well as of course the state taxes-sales, income, property, etc.

    So yeah I feel you but the answer isn’t bailing on Obama but getting him a Congress.

  57. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 21:47

    “The KIND OF PRESSURE applied in the private sector to drive costs lower, innovate and deliver more for less… ”

    If there is this kind of pressure why has executive compensation risen so sharply? There is no reason to believe that excecutives are working harder than they worked a generation ago, when compensation was a lot lower. So how can this unneccessary expense occur if there is such pressure?

  58. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 21:51

    “See how Morgan wants you to think that your salvation is not figthing Republicans but other Democrats.”

    It’s called “divide and conquor.”

  59. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 21:55

    “So yeah I feel you but the answer isn’t bailing on Obama but getting him a Congress.”

    I have already contributed to Obama and Democratic candidates and expect to contribute more than I can afford before the election is over. But in the Presidential election it is more a matter of defeating Romney, who is a true class enemy of working people and the poor, rather than reelecting Obama, who has dropped the ball on the economy.

  60. Gravatar of Full Employment Hawk Full Employment Hawk
    3. June 2012 at 22:00

    “rather than reelecting Obama, who has dropped the ball on the economy”

    If I knew everything I know now in 2008, I would have supported Hillary. At least she would not have had any illusions about the Republicans, would have known they were out to do her in, and would have responded accordingly.

  61. Gravatar of Bonnie Bonnie
    4. June 2012 at 00:13

    FEH & Mike Sax:

    I’m not voting for anyone who isn’t going to fix this mess. Regardless of what anyone says is the problem, if it doesn’t have anything to do with monetary policy, it’s pretty close to being completely wrong. If we just fix this one thing, a lot of those other things become a heck of a lot easier to deal with; just by getting people back to work and lightening the load on safety nets will be a big step in getting the spending down and revenue up. Anything else is just bull crap that is doomed to fail; and I’ve been so angry about the bull crap all around that that is where I am drawing the line.

    As it stands now, Romney has been talking about the need for rising incomes, which I think is code for rising NGDP, and so that is the way I am leaning because this has to get fixed or nothing else is going to work. Maybe if Obama challenged the Fed on the inflation propaganda, I might think twice about it, but I don’t really know. I’m pretty ticked off about this problem being strung out so long because this recession has hit my family pretty hard and life-long friend of mine. 2010 was pretty rough for her, and she ended up going two weeks without food. So I think the only way I would vote for Obama might be if he convinced Bernanke to resign because all of the historical signs that I have found show that this inflation targeting regime is pretty much his ugly baby; he sure wrote about enough and told Businessweek about it before taking the chair. Yep, I want figuratively want Bernanke’s head on platter and will settle for nothing less.

  62. Gravatar of Full Employment Hawk Full Employment Hawk
    4. June 2012 at 04:34

    But what makes you think that Romney’s head of the Fed will engage in less monetary austerity than Bernanke? The Republicans have been criticising Bernanke and the Fed for doing too much in the area of monetary stimulus, not too little. Romney will be under great pressure from the “sound money” people in the Republican party to pick a chair who will impose even greater monetary austerity than Bernanke.

    On the basis of some of the things Romney has been saying it looks more like Romney plans a Keynesian tax-based fiscal stimulus, designed by Mankiw, to try to restore the economy. He has promised huge tax cuts right away and has argued that significant spending cuts should be postponed because if they were made right away they would cause recession. That will mean a large increase in the deficit at the beginning of Romney’s term. One needs to remember that Mankiw IS a Keynesian. He is a conservative Keynensian favoring tax cuts instead of spending increases, but he IS a Keynesian. Such a policy will, of course get the right-wing base of the Republican party very upset. This would explain why Romney is doing all he can to pander to the right wing base now, like by appearing with The Donald. He wants to solidify his support with the base before he does something they will be very opposed to.

    Bernanke will still be chair during the first year of this tax-based fiscal stimulus. If he continues the current policy of keeping the inflation rate from going above 2%, he will offset any effect of such a tax-based stimulus on AD by providing less monetary stimulus, so that this stimulus will not work through any effects on AD. Only to the extent that it increases AS will it have a stimulative effect. Of course, with a Republican president Republican Bernanke may be willing to deviate from the exclusive attention to the price stability target and actually allow the economy to grow to achieve lower unemployment.

  63. Gravatar of Full Employment Hawk Full Employment Hawk
    4. June 2012 at 04:51

    “If we just fix this one thing, a lot of those other things become a heck of a lot easier to deal with; just by getting people back to work and lightening the load on safety nets will be a big step in getting the spending down and revenue up.”

    RIGHT ON!

    “I’m pretty ticked off about this problem being strung out so long because this recession has hit my family pretty hard and life-long friend of mine. 2010 was pretty rough for her, and she ended up going two weeks without food.”

    I see that you are a full employment hawk too. GREAT! But how do you reconcile this with the fact that Lucas has argued that cyclically unemployed workers are choosing leisure? This is a major component of New Classical models of the business cycle.

    I personally experienced the hardship that cyclical unemployment inflicts on working people when my father was laid of during recessions in the past, none of which were half as bad as the current situation. Fortunately I am economically secure now, but my symptathies are with the workers who are involuntarily unemployed. This explains why I am bitterly disappointed with Obama, and in the coming election see my support of him as actually wanting to defeat Romney. I think Obama really did come to the office lacking sufficent political experience and the fact that he beat Hillary for the nomination will have turned out to have been bad for him. Spending two terms as Hillary’s Vice President might have given him the needed political experience to become a successful president.

  64. Gravatar of Full Employment Hawk Full Employment Hawk
    4. June 2012 at 04:55

    “I see that you are a full employment hawk too. GREAT! But how do you reconcile this with the fact that Lucas has argued that cyclically unemployed workers are choosing leisure? This is a major component of New Classical models of the business cycle.”

    Ignore this paragraph. It was put there by mistake.

  65. Gravatar of Morgan Warstler Morgan Warstler
    4. June 2012 at 05:00

    FEH & SAX,

    You LIE to yourselves.

    Clinton campaigned on the word “invest” – he was going to invest in everything from education to job training to science, etc. ect.

    After the word change, he said invest most.

    Then Jan 1993, he met with Greenspan and that day threw the entire agenda under the bus.

    Carville and Reich FREAKED OUT.

    —–

    That is EXACTLY what happened. Clinton had nothing to give his side, so his first act was don’t ask don’t tell.

    And even liberal commentators who didn’t understand what Clinton had just done with Greenspan (which was most people), were like, “this is his first act????” where is his political genius??”

    It was the only thing he could do that was free.

    They ORIGINALLY tried healthcare because it was meant to be a cost saver on Medicare, and it got deeply wrong. Just like Obamacare did.

    ——

    Guys, you play the ball where it lies.

    And the right has gotten very good at leaving the left in horribly shitty positions.

    Clinton came in and played the ball where he found it.

    Obama pulled out his driver and jumped into the sandtrap and flailed.

    ——-

    Look, if Obama loses, it might not be enough for you. But it should be.

    You should look at Citizens and the Fed and the Constitution itself (I don’t mean healthcare, I mean states rights), and consider the tale of two Presidents…

    And ask yourselves if the new strategy of your opponent is making your past method of winning nearly impossible…

    When do you stop arguing for big centralized national govt?

    1. The blue states can suddenly support 15% Federal flat tax rates with no transfer payments at all to small and poor states.

    2. Blue states can then raise giant progressive income tax rates and provide superior services.

    3. Small poor states have a choice to make. Become progressive or become bastions of public sector efficiency.

    4. If places like Alabama don’t choose, they literally will lose their entire population. They certainly can’t survive as is without Federal largess.

    5. Big blue states will have to become efficient as well, but if you believe int he progressive ideal, you have to believe one of the blue states will show the rest how to be like Singapore / Hongkong.

    The right started to win, when it CHANGED FUNDAMENTALLY its past relationship with deficits.

    The left has only won when it did the same. Clinton balanced the budget and he started on it in 1993.

    If you have to become balance budget fighters to win, don’t you want to do it while your tax dollars stay at home??

    Try not to change the topic, If you have only one choice on deficits, don’t you want to save the blue states first?

  66. Gravatar of Morgan Warstler Morgan Warstler
    4. June 2012 at 05:04

    But what makes you think that Romney’s head of the Fed will engage in less monetary austerity than Bernanke?

    ROFL.

    Bernanke himself will engage in more monetary stimulus after Romeny wins.

  67. Gravatar of dwb dwb
    4. June 2012 at 05:09

    “Romney will be under great pressure from the “sound money” people in the Republican party to pick a chair who will impose even greater monetary austerity than Bernanke.”

    I don’t see why the Fed would be any different under any administration: The Brady (?) bill in the house removes the unemployment side of the mandate and focuses on price stability. Under Romney thats is more likely to get passed. moreover, the Fed’s exclusive focus on price stability and credibility with little tolerance for inflation mildly above 2% is exactly what we have now. Even the “doves” are singing that song. When Romney talks about higher incomes, thats not code for anything. He also said 4% unemployment. Hubbard said on CNN so slow down the rate of fiscal balanced (code for fiscal stimulus??). I think Romney camp says everything imaginable, hope something will stick to someone. Insofar as real economics, i tend to put more weight on what Mankiw, Hubbard, and Taylor have to say since those are the likely heads of policy, and insofar as they go, they are still under the tight money Hayekian zeitgeist.

    PIANALTO: I think this is one of those areas where I am more centered. I have an outlook for inflation that stays very close to our 2% objective and the risks around that I view as balanced.

    WSJ: There’s a view that because inflation is so anchored around 2% the Fed has room and leeway to do more to address the employment problem. Why not do more if inflation is anchored?

    PIANALTO: I just don’t take it for granted that it’s anchored. Inflation expectations are obviously an important component in terms of my inflation outlook and our objective of 2% is helping to anchor them. But you have to deliver on your objective. If we don’t deliver on that objective we lose credibility.

    http://blogs.wsj.com/economics/2012/06/04/qa-pianalto-on-monetary-policy-fed-governance-and-rocknroll/?mod=WSJBlog&mod=marketbeat

  68. Gravatar of Mike Sax Mike Sax
    4. June 2012 at 05:41

    “Bernanke himself will engage in more monetary stimulus after Romeny wins.”

    Morgan I already gave you that one. The only case to make for things getting better under Romney is the Morgan Warstelr Premise. If it’s true-I admit it’s plausible-then you could be right.

    Bonnie

    “As it stands now, Romney has been talking about the need for rising incomes, which I think is code for rising NGDP, and so that is the way I am leaning because this has to get fixed or nothing else is going to work. Maybe if Obama challenged the Fed on the inflation propaganda, I might think twice about it, but I don’t really know.”

    Bonnie obvously you will vote your own judgment. I hear that your frustrated and want thigns to get better-so do I. However a change to Romney doesn’t necesarily mean that-indeed I argue the opposite. I really think you’re reading too much into Romney’s words. And his party basically wrote the book on inflation propaganda.

  69. Gravatar of Mike Sax Mike Sax
    4. June 2012 at 05:45

    The Morgan Warstler Premise by the way Bonnie, is the only reason to think a President Romney could possibly improve thiings.

    What it basically argues is that the GOP has been sponsiring such bad polices-the Sound Dollar bill, gold bug bills at the state level. threatening to “treat Bernanke ugly” because there’s a Democrat in the White House.

    If so then the Morgan Warster Premise is correct. Then you could argue voting Republican will improve things though talk about talk about moral hazard. It basically says the GOP wins by holding it’s breath until it’s blue.

  70. Gravatar of Becky Hargrove Becky Hargrove
    4. June 2012 at 05:49

    There are some Republicans who think they can keep putting the squeeze on knowledge workers and everything will still be okay. But if that squeeze goes on too long, with no reasonable way to reorganize wealth capture of knowledge, democracy is at stake.

  71. Gravatar of Morgan Warstler Morgan Warstler
    4. June 2012 at 05:55

    What do you mean squeeze on knowledge workers?

    Computers do that, not Republicans.

  72. Gravatar of dwb dwb
    4. June 2012 at 06:02

    The Morgan Warstler Premise by the way Bonnie, is the only reason to think a President Romney could possibly improve thiings.

    i don’t really listen to what politicians say, better to pay attention to what they actually do.

  73. Gravatar of Morgan Warstler Morgan Warstler
    4. June 2012 at 06:05

    Sax, I speak about it like it is nefarious, because I want to speak in the language that you are able to grasp about your opponents.

    Amongst my people, it is different:

    1. force productivity gains from public sector
    2. relax regulations on commodity extraction
    3. end Obamacare

    What is the effect of these good things? This stuff is deflationary, the overall effect is a lower nominal level of spending.

    As such, we’ll hear lots of news about the dollar being too strong, (maybe we’ll talk a bit about China) and oh btw, if inflation falls below 2% – the Fed prints.

    Sax, EVERYTHING you say starts with assuming 1,2,3 are bad… and to the Fed 1,2,3 are good.

    If you don’t understand how the Fed views 1,2,3. Or your argument is that they shouldn’t view 1,2,3 as positive, you are going to be tilting at windmills.

  74. Gravatar of ssumner ssumner
    4. June 2012 at 06:11

    Morgan, Get your facts straight! The headline CPI has averaged 1.22% over the past 45 months, and is expected by the TIPS markets to be below 1% over the next few years. The Fed isn’t even close to hitting its inflation target. Don’t be ridiculous.

    FEH, I mostly agree with your political analysis. I’d add that if the BOE is trying to offset the Cameron cuts, they are doing a very lousy job.

  75. Gravatar of Negation of Ideology Negation of Ideology
    4. June 2012 at 06:13

    Mike Sax –

    “What it basically argues is that the GOP has been sponsiring such bad polices-the Sound Dollar bill, gold bug bills at the state level. threatening to “treat Bernanke ugly” because there’s a Democrat in the White House. ”

    I think that’s a good point. I think for some people it is pure cynicism, for some people it’s their internal partisan bias blinding them to the truth. I agree Perry accusing Bernanke of treason was the low point of this campaign. If it was Obama vs. Perry, or obviously Obama vs. Paul, I’d vote for Obama because he’s far better on monetary policy.

    I think government officials should treat Presidents of the opposing party the same as Presidents of their own party. Unfortunately, they don’t. But I don’t see how any of this is Romney’s fault.

  76. Gravatar of Becky Hargrove Becky Hargrove
    4. June 2012 at 06:15

    Morgan,
    The problem is that the infinite promise of knowledge is held captive to the scarcity requirements of money in the present. That means that at least half the people born in the world who desire to interact with it intellectually have to settle for less. Which means for half the people born, their desires and dreams to succeed become a cruel joke. I wanted to stay out of this space because I don’t want to bring out the crazies, but there are days when I cannot just sit by and watch the world go to hell in a handbasket. And some of the recent threads scare the you-know-what out of me.

    I’m not even sure Republicans recognize what is happening. Every time the knowledge of a worker is utilized in the present, it takes a number of haircuts which diminish the overall capacity of one’s potential. Think of a factory that buys many parts which – as it turns out – cannot be utilized in the creation of the product itself. That’s what happens when we (as the factory) purchase products for the betterment of human capital.

    In money based terms, if a computer does something better that means a human does not need to do it anymore. As a bookstore owner I loved to organize knowledge but the database does it better. Let’s take that to a logical conclusion. Does that mean someone like myself has no business organizing knowledge? See, when everything is attached to the money production efficiency we are painted into a corner where much of our knowledge is no longer needed, and only a few people need to utilize knowledge for the benefit of all…and democracy is threatened.

  77. Gravatar of Mike Sax Mike Sax
    4. June 2012 at 06:46

    Morgan a post just for you that shows you just how inefficient government workers are

    Nice Bus’s Able-Ride system-where’s the market efficiency? http://diaryofarepublicanhater.blogspot.com/2012/06/morgan-warsterl-market-efficiency-and.html

  78. Gravatar of Full Employment Hawk Full Employment Hawk
    4. June 2012 at 21:45

    “Bernanke himself will engage in more monetary stimulus after Romeny wins.”

    He will definitely want to, the question is whether the “sound money” people in congress are sincere and have the power to impose their will, or whether these are simply anti-Obama posturing and/or they do not have the power to impose their will.

    I also strongly suspect that if McCain were running for reelection Bernanke would be engaging in a more expansionary monetary policy.

    Obama’s single biggest mistake was putting a Republican in charge of the Fed.

  79. Gravatar of Full Employment Hawk Full Employment Hawk
    4. June 2012 at 21:53

    “and to the Fed 1,2,3 are good.”

    This is because Obama did not fill the vacancies on the Fed, especially the chair, with progressives.

  80. Gravatar of Full Employment Hawk Full Employment Hawk
    4. June 2012 at 22:02

    “PIANALTO:…But you have to deliver on your objective. If we don’t deliver on that objective we lose credibility.”

    If I were interviewing Pianalto I would ask her why the Fed is blatently ignoring the Fed’s mandate to achieve maximum employment. I had a chance to do that with Lacker at a presentation he was making and raised the issue. Unfortunately they did not allow me any follow up questions.

    Somebody needs to tell her: CREDIBILITY, SCHMEDIBILITY, IT’S THE JOBS, STUPID!

  81. Gravatar of Full Employment Hawk Full Employment Hawk
    4. June 2012 at 22:06

    MORGAN:

    My philosophy is that a progressive President, instead of adjusting his economic policies to suit a right-wing FOMC, the thing to do is to adjust the FOMC to suit my policies. Obama failed to do that and therefore he is in deep trouble.

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