tag:blogger.com,1999:blog-5908830827135060852.post1397277950359742903..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: Book Review: Secular Stagnation: Facts, Causes and CuresBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-5908830827135060852.post-86668605584216067732014-11-03T06:58:19.661-05:002014-11-03T06:58:19.661-05:00Although some central bankers may think they are s...Although some central bankers may think they are setting rates where the "markets" want them (based on rate expectations), the reality is that people in the markets set rate expectations on what they assume the committee will do. To what extent the short rate is "market determined", it is based on markets beyond the rates markets - consumer prices, etc. If you take such a wider view, then yes, it is out of the central bank's hands.<br /><br />I wrote about this here:<br /><br />http://www.bondeconomics.com/2014/08/understanding-central-bank-control-of.html<br /><br />How important the central bank is a point of debate. As you note, by backing themselves into a zero interest rate policy, the Fed may have wiped out a lot of its effectiveness. But as time passes, conditions will change. If the U.S. housing market returns to a reasonable equilibrium, it will provide a strong "transmission mechanism" for interest rates to the broader economy. Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-88220220708890421202014-11-02T21:15:55.155-05:002014-11-02T21:15:55.155-05:00Is it possible that the US Federal Reserve as an i...Is it possible that the US Federal Reserve as an institution is slowly being made irrelevant - in today's global economy? The ultimate outcome of free market economics. Why do we need an institution that has little policy value? The ZIRP is a natural trend for the US economy - as it is only economy capable of equilibrating global inefficiencies imbalances. Remember, the US Fed was not responsible for historical declining interest rates - they are part of the free market evolution. Greenspan said he had no control, he was only reacting to global forces!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-71739272359497036432014-11-02T21:10:36.634-05:002014-11-02T21:10:36.634-05:00I will admit to thinking a lot in terms of closed ...I will admit to thinking a lot in terms of closed economy models, but I tend to view the external sector acting as yet another source of drag on the economy - a form of automatic stabiliser. But for the mainstream, it's hard to work in the external sector, as you then have to incorporate two sets of optimising households. So they have little choice in the matter.<br /><br /><br />The tend towards digitisation is interesting, as it messes up the logic of "production models" which are based on analogies to manufacturing. Also, it does allow for economic growth to decouple from resource use (although the servers acting as the backbone of the internet consume a lot of electricity).Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-12871932542683300132014-11-02T20:57:24.187-05:002014-11-02T20:57:24.187-05:00I think there are two aspects that are largely ign...I think there are two aspects that are largely ignored in most of these economists arguments -- the globalization trend means that most of these closed economy models are useless! and the digitization of the economy - the exchange economy will contract as measured by recorded transactions. In a digitized world - human needs are satisfied using a computer vs a car. Imagine the substitution that is taking place. During the 80's one had to go out of the house to see entertainment - so use a car, use gas etc etc. Today, I can sit at home and use the computer for all my entertainment! What a diffierenceAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-91507074169095217062014-10-29T20:00:25.228-04:002014-10-29T20:00:25.228-04:00I forgot about that Kalecki quote, but it was pret...I forgot about that Kalecki quote, but it was pretty prophetic. I am planning in writing a longer piece on slow growth, and I will have to work that in. Thanks.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-25426310615702337782014-10-29T08:28:19.764-04:002014-10-29T08:28:19.764-04:00'Secular Stagnation' is just a fancy descr...'Secular Stagnation' is just a fancy description of what Kalecki describes in his famous essay. Best summary <a href="http://www.interfluidity.com/v2/3451.html" rel="nofollow">is here</a><br /><br />Monetary policy is all about misdirection and indirection. It seems that it's sole purpose is to prove how really, real clever all these people doing fancy mathematics are, rather than actually solve the problem. <br /><br /> NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.com