Comments on: In the mountains http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/ Thu, 14 Oct 2010 13:09:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Brad Setser: Follow the Money » Blog Archive » How Worried Should We Be About Dubai? http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125564 Brad Setser: Follow the Money » Blog Archive » How Worried Should We Be About Dubai? Tue, 17 Feb 2009 17:14:56 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125564 [...] Previous [...] [...] Previous [...]

]]> By: Cedric Regula http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125563 Cedric Regula Tue, 17 Feb 2009 16:28:49 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125563 Here's a 100 year history of our chief practitioners of economics, the Federal Reserve. Their stated objective to use interest rate policy to balance inflation and unemployment, thereby growing the economy at "maximum potential". http://www.econlib.org/library/Enc/FederalReserveSystem.html For reference, here is Maslow's Pyramid. ZIRP and QE should mean we have already reached Peak Maslow's Pyramid. Nothing to worry about, they know what they are doing. http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs Here’s a 100 year history of our chief practitioners of economics, the Federal Reserve. Their stated objective to use interest rate policy to balance inflation and unemployment, thereby growing the economy at “maximum potential”.

http://www.econlib.org/library/Enc/FederalReserveSystem.html

For reference, here is Maslow’s Pyramid. ZIRP and QE should mean we have already reached Peak Maslow’s Pyramid. Nothing to worry about, they know what they are doing.

http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

]]> By: Robert Bell http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125559 Robert Bell Tue, 17 Feb 2009 11:53:53 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125559 CalculatedRisk often sends action photos of scenic places when he is on vacation. I'm just sayin' CalculatedRisk often sends action photos of scenic places when he is on vacation.

I’m just sayin’

]]> By: Indian Investor http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125554 Indian Investor Tue, 17 Feb 2009 07:58:53 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125554 @Cedric: Please have a look at this link to get a common sense guess at the current unemployment level. http://www.newsweek.com/id/160698 @Cedric: Please have a look at this link to get a common sense guess at the current unemployment level.

http://www.newsweek.com/id/160698

]]> By: Cedric Regula http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125553 Cedric Regula Tue, 17 Feb 2009 03:11:52 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125553 Then here is some actual economic data for 20 years to look at. It tabulates real and nominal interest rates vs inflation vs unemployment rate. It may give you some idea of who to believe of the 3 economists above. But this data is from functional economic times, so we get Fisher's debt deflation spiral taking us all the way down to zero, we don't there of course. I don't know if this chart will post readable. Giving it a shot anyway. Table 1 Selected Statistics, 1960–1999, percentages (average or changes) Year or Average Over CPI Inflation Dec.–Dec. Fed Funds Rate “Real” Funds Rate M1 Growth Rate Adjusted M1B Growth Unemployment Rate 1960–64 1.2 2.9 1.7 2.8 — 5.7 1965–69 3.9 5.4 1.5 5.0 — 3.8 1970–74 6.7 7.1 0.4 6.1 — 5.4 1975 6.9 5.8 -1.1 4.7 — 8.5 1976 4.9 5.0 0.1 6.7 5.8 7.7 1977 6.7 5.5 -1.2 8.0 7.9 7.1 1978 9.0 7.9 -1.1 8.0 7.2 6.1 1979 13.3 11.2 -2.1 6.9 6.8 5.8 1980 12.5 13.4 0.9 7.0 6.9 7.1 1981 8.9 16.4 7.5 6.9 2.4 7.6 1982 3.8 12.3 8.5 8.7 9.0 9.7 1983 3.8 9.1 5.3 9.8 10.3 9.6 1984 3.9 10.2 6.3 5.8 5.2 7.5 1985–89 3.7 7.8 4.1 7.7 — 6.2 1990–94 3.5 4.9 1.4 7.8 — 6.6 1995–99 2.4 5.4 3.0 -0.4 — 4.9 Then here is some actual economic data for 20 years to look at. It tabulates real and nominal interest rates vs inflation vs unemployment rate. It may give you some idea of who to believe of the 3 economists above. But this data is from functional economic times, so we get Fisher’s debt deflation spiral taking us all the way down to zero, we don’t there of course.

I don’t know if this chart will post readable. Giving it a shot anyway.

Table 1 Selected Statistics, 1960–1999, percentages (average or changes)
Year or Average Over CPI Inflation Dec.–Dec. Fed Funds Rate “Real” Funds Rate M1 Growth Rate Adjusted M1B Growth Unemployment Rate
1960–64 1.2 2.9 1.7 2.8 — 5.7
1965–69 3.9 5.4 1.5 5.0 — 3.8
1970–74 6.7 7.1 0.4 6.1 — 5.4
1975 6.9 5.8 -1.1 4.7 — 8.5
1976 4.9 5.0 0.1 6.7 5.8 7.7
1977 6.7 5.5 -1.2 8.0 7.9 7.1
1978 9.0 7.9 -1.1 8.0 7.2 6.1
1979 13.3 11.2 -2.1 6.9 6.8 5.8
1980 12.5 13.4 0.9 7.0 6.9 7.1
1981 8.9 16.4 7.5 6.9 2.4 7.6
1982 3.8 12.3 8.5 8.7 9.0 9.7
1983 3.8 9.1 5.3 9.8 10.3 9.6
1984 3.9 10.2 6.3 5.8 5.2 7.5
1985–89 3.7 7.8 4.1 7.7 — 6.2
1990–94 3.5 4.9 1.4 7.8 — 6.6
1995–99 2.4 5.4 3.0 -0.4 — 4.9

]]> By: Cedric Regula http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125552 Cedric Regula Tue, 17 Feb 2009 02:58:56 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125552 Whoops, forgot the Friedman link. http://en.wikipedia.org/wiki/Milton_Friedman Whoops, forgot the Friedman link.

http://en.wikipedia.org/wiki/Milton_Friedman

]]> By: Cedric Regula http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125551 Cedric Regula Tue, 17 Feb 2009 02:56:51 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125551 Whilst Brad is goofing off I'll post some new economics stuff to satisfy everyone's thirst for the subject. This is a great time to read up on theories of the founders of modern economics. Two out of the three got rich in the '20s, then lost it all in the '30s. So buyer beware. It's clear there is no General Theory of Economics. The unknown granddaddy , Irving Fisher. Everyone basically agreed with him. http://www.economist.com/finance/displaystory.cfm?story_id=13104022 http://en.wikipedia.org/wiki/Irving_Fisher Then Milton Friedman. The best known monetarist. But his hopes of controlling M2 and regulating fractional reserve banking so M2 meant something were dashed by de-regulation. Paradoxically his preferred means of controlling the money supply fell prey to the "velocity" term in Fisher's MV=PT equation, along with "high powered money" and "the money multiplier". Then traders switch stocks and bonds into money and back again in an eye blink. So Milt's theories have gone down the tubes. Then of course Keynes. Surprisingly, he was an advocate of The International Currency. http://en.wikipedia.org/wiki/John_Maynard_Keynes These are all the Reader's Digest versions, so they don't take that long to read. Whilst Brad is goofing off I’ll post some new economics stuff to satisfy everyone’s thirst for the subject. This is a great time to read up on theories of the founders of modern economics. Two out of the three got rich in the ’20s, then lost it all in the ’30s. So buyer beware. It’s clear there is no General Theory of Economics.

The unknown granddaddy , Irving Fisher. Everyone basically agreed with him.

http://www.economist.com/finance/displaystory.cfm?story_id=13104022

http://en.wikipedia.org/wiki/Irving_Fisher

Then Milton Friedman. The best known monetarist. But his hopes of controlling M2 and regulating fractional reserve banking so M2 meant something were dashed by de-regulation. Paradoxically his preferred means of controlling the money supply fell prey to the “velocity” term in Fisher’s MV=PT equation, along with “high powered money” and “the money multiplier”. Then traders switch stocks and bonds into money and back again in an eye blink. So Milt’s theories have gone down the tubes.

Then of course Keynes. Surprisingly, he was an advocate of The International Currency.
http://en.wikipedia.org/wiki/John_Maynard_Keynes

These are all the Reader’s Digest versions, so they don’t take that long to read.

]]> By: Rocked http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125550 Rocked Tue, 17 Feb 2009 02:46:17 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125550 global imbalances in disorder, this has to end badly. which commodity will be the best performer in 5 year time frame? gold, oil, or agriculture? I'd like to move some money out of cash... global imbalances in disorder, this has to end badly. which commodity will be the best performer in 5 year time frame?

gold, oil, or agriculture? I’d like to move some money out of cash…

]]> By: ndk http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125549 ndk Tue, 17 Feb 2009 00:48:35 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125549 If Brad's going <a href="http://en.wikipedia.org/wiki/Mount_Sunflower" rel="nofollow">where I suspect he's going</a>, there won't be much cliff diving -- or going at all, for that matter. Won't take long to bag that summit. In all seriousness, enjoy your time off, and I'm very sorry to hear of the budget issues in Kansas. If ever there were a state deserving of a better lot... If Brad’s going where I suspect he’s going, there won’t be much cliff diving — or going at all, for that matter. Won’t take long to bag that summit.

In all seriousness, enjoy your time off, and I’m very sorry to hear of the budget issues in Kansas. If ever there were a state deserving of a better lot…

]]> By: RebelEconomist http://blogs.cfr.org/setser/2009/02/16/in-the-mountains/#comment-125544 RebelEconomist Mon, 16 Feb 2009 21:52:18 +0000 http://blogs.cfr.org/setser/?p=4712#comment-125544 <a href="http://macro-man.blogspot.com/2009/02/hubris.html" rel="nofollow">Be careful!</a> Be careful!

]]>