Trump Is (Sort Of) Right About Yellen

Donald Trump this week said that Federal Reserve Board Chairman Janet Yellen won't raise rates because President Obama told her not to. Why he's (sort of) right. [Credit: CNBC]

Donald Trump this week said that Federal Reserve Board Chairman Janet Yellen won’t raise rates because President Obama told her not to. Why he’s (sort of) right. [Credit: CNBC]

The media just can’t keep up with The Donald.

Corporate news-gathering outlets do their best to repeat and amplify his every offbeat utterance.  His accusation that Marco Rubio is a “disaster with his credit cards” has rippled through the press and forced Rubio to respond.  Ditto for Trump’s mockery of Jeb’s energy, Carson’s religion, Carly’s face, Kasich’s poll numbers, Hillary’s marital relations  (“If Hillary Clinton can’t satisfy her husband what makes her think she can satisfy America?”), Bernie’s mental health and the menstrual cycles of debate moderators.

But as they were buzzing about his scheduled appearance on Saturday Night Live, the media largely overlooked what was perhaps Trump’s most heretical accusation of all. Continue reading

On Wind And Eagles

Citing potential damage to protected species, a federal judge recently put a crimp in the Administration's forced march toward wind energy. [Credit: Daily Mail]

Citing potential damage to protected species, a federal judge recently put a crimp in the Administration’s forced march toward wind energy. [Credit: Daily Mail]

Two strains of environmentalism collided in a federal courtroom this month, pitting protectors of bald and golden eagles against advocates of the Obama Administration’s forced march toward wind power.

The eagles won.

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Can Greece Slip The Austerity Trap?

Greek Prime Minister paid tribute to Greek patriots executed by Nazis during WWII. His message to the Germans was clear: we bailed you out, now it's our turn. [Credit: The Guardian]

Greek Prime Minister paid tribute to Greek patriots executed by Nazis during WWII. His message to the Germans was clear: we bailed you out, now it’s our turn. [Credit: The Guardian]

Shortly after his election last Sunday as Greece’s Prime Minister, Alexis Tsipras chose not lay a wreath on the Tomb of the Unknown Soldier in Athens’ Syntagma Square.  Instead, he went to a war memorial in the Athens suburb of Kessariani where Nazi soldiers executed hundreds of Greek Resistance fighters during the brutal German occupation.

Tsipras’s message was not lost on Angela Merkel and other European leaders: the world forgave most of Germany’s debt; now it’s Greece’s turn. Continue reading

Good News Coming On The Deficit. Well, Sort Of.

Syriza party leader Alexis  Tsipras hopes to prevail in today's Greek elections, which could mark a turning point in his nation's struggle against a crushing load of debt. Meanwhile, U.S. government deficits are improving. Sort of.

Syriza party leader Alexis Tsipras hopes to prevail in today’s Greek elections, which could provoke a showdown between European leaders and Greece, which struggles under a crushing load of debt. Meanwhile, U.S. government deficits are improving. Sort of. [Credit: BBC]

On Tuesday morning, the Congressional Budget Office will announce that the federal deficit continued to decline last year.

The announcement will trigger an orgy of self-congratulation in Washington.  The Administration will claim that its policies have been vindicated.  Republicans also will take a bow, touting spending constraints they’ve imposed since winning the House majority.

But you’ll hear nothing from the Washingtonians who most deserve credit for reduced deficits: the Federal Reserve Board of Governors.  By holding interest rates near zero and lending trillions in free money to the Treasury, the Fed has allowed the government to reduce deficits even as it gorged on debt. Continue reading

Debt And The New American Exceptionalism

Federal Reserve Chairman Janet Yellen plans to increase interest rates.  Can government and households survive the shock? [Credit: Huffington Post]

Federal Reserve Chairman Janet Yellen plans to increase interest rates. Can government and households survive the shock? [Credit: Huffington Post]

The American economy is back.  After years of tepid growth and a first quarter contraction, GDP grew by a robust 4.6 percent in the third quarter of last year.  The unemployment rate remained at 5.8 percent in November, and analysts expect the Labor Department to announce tomorrow that the economy added substantially more than 200,000 jobs in December.  Inflation is low, the dollar is strong, oil prices have tumbled, and federal deficits are lower.  Nearly six years after the recession ended, the long-awaited recovery appears at last to have arrived.

That recovery has in part been driven by a force that could be its undoing: debt.  Nearly $46 trillion of it, or more than 2-1/2 times our annual economic output. Continue reading

Inequality: Has The Income Gap Narrowed?

Two icons of the Left -- economist Thomas Piketty and Senator Elizabeth Warren (D-MA) -- talking about rising inequality last June.  But by some measures, inequality is shrinking.  [Credit: National Review]

Two icons of the Left — economist Thomas Piketty and Senator Elizabeth Warren (D-MA) — discussing rising inequality during an event last June. But by some measures, inequality is shrinking, not rising. [Credit: National Review]

“The game right now in America is rigged. It is rigged so that those at the top keep doing better and better, and everyone else is under increasing pressure, is under increasing economic strain…And that is the profound danger that we see from great inequality.” Elizabeth Warren (D-MA)

Democrats are still stinging from last month’s epic defeat at the polls.  Some of them attribute that unhappy outcome to ideological temperance.  The party would do better, some argue, if their candidates took a more strident tone, denouncing the rich, preaching that Washington governs in the service of Wall Street, and calling for more aggressive redistribution of income and wealth to dampen rising inequality.

But a new study published in the Southern Economic Journal pulls at a critical thread of that narrative.  It found that, at least according to one measure of income, the gap between rich and poor actually narrowed between 1989 and 2007. Continue reading

The Fed On The Road To Nowhere

Economic policymakers may have us, as the Talking Heads put it in their 1985 hit, on the road to nowhere. [Credit: qednet.biz]

Economic policymakers may have us, as the Talking Heads put it in their 1985 hit, on the road to nowhere. [Credit: qednet.biz]

Former Federal Reserve Chairman Ben Bernanke has been called the man who saved the world.  His extraordinary interventions in the fall of 2008 have almost universally been recognized as having prevented a second Great Depression.

But a new study by the Swiss-based Bank for International Settlements (BIS) suggests that Bernanke saved the world from a crisis that was at least partly of his own making.  Worse, it argues that the course he set and that his successor Janet Yellen and other central banks are following will produce another and perhaps graver crisis.

Government monetary and fiscal policymakers have lost their way, the BIS argues.  So badly that they don’t just need a new direction.  They need a new compass.

Continue reading

Student Loans: Punishing People Who Play By The Rules

President Obama believes that requiring student loans to be repaid is punishing good behavior.  [Credit: NPR]

President Obama believes that requiring student loans to be repaid is punishing good behavior. [Credit: NPR]

“If somebody plays by the rules, they shouldn’t be punished for it.” — President Obama

The President made this inarguable statement in the course of proclaiming a change in the law governing student loans.  Henceforth, millions of people who borrowed for college will have their monthly payments restructured and, in some cases, be entirely relieved of the obligation to repay their debt.

In the President’s mind, borrowing money is playing by the rules; paying it back is punishment. Continue reading

Unemployment Benefits and Harry Reid’s Pain

Harry Reid has embraced the pain of sequestration in his proposal to extend jobless benefits. But does it address the problem? [Credit: Roll Call]

Harry Reid has embraced the pain of sequestration in his proposal to extend jobless benefits. But does it address the problem? [Credit: Roll Call]

“I think it’s really unfair that it would be so easy to turn the sequester around and allow us to do something for the long term to take care of this issue. But no, the Republicans like the pain. They like the pain.”  — Senate Majority Leader Harry Reid, April 24, 2013

Harry Reid (D-NV) has lately embraced the pain of sequester. On Thursday, Reid advanced a proposal to offset the cost of extending “emergency” unemployment benefits with automatic cuts in medical spending for the elderly and disabled. Continue reading