economics

A central reason for policy intervention in this boom-bust process, Minsky emphasized, is the ever-present danger that the contraction will get out of control and spread into a system-wide debt-deflation. In this way, a normal business recession can become instead a deep and long-lasting depression, such as happened in 1929-1933 when debt deflation

Here's what’s happening in some European countries as I’m writing these lines (I’ve mentioned it briefly in last week’s posting Pushing on a String). Oil companies were assigned specific targets how much they have to reduce their carbon emissions annually. If they exceed their targets (i.e. reduce emissions by more than targeted), they receive a

Like most industrial and trade policies, tariffs operate by transferring income from one part of the economy to another, in this case from net importers to net exporters. They do this by raising the price of imported goods, which benefits the domestic producers of those goods. Because household consumers are net importers, tariffs are effectively a

While half of the Fed’s dual-mandate is for “price stability”, I’ve often argued that the Fed doesn’t target price stability, but rather “inflation stability”.

These tariffs would still come with domestic risks. But for economists to suggest that the effect of tariffs in 1930 must be the same as today only shows how muddled most economists are about trade. The real lesson of Smoot-Hawley is not that the United States cannot benefit from tariffs, but rather that persistent surplus economies should not

This may have also been due to consistently weak credit demand from the industry. After years of sluggish performance, private sector investment still has not picked up in a substantial manner. It is true that within industry, bank credit to medium industry grew at almost 20% and that to small industry at around 13%, but this was primarily driven

• Cracks. The old system is showing cracks. The grid is struggling. Planes are falling apart. Carbon emissions have to go. Healthcare costs are through the roof. Metals discoveries are declining. Supply chains are breaking down. America’s industrial base has atrophied. The biggest systems in the world need to be rebuilt.

• Enormous Markets. Most of

While the strong dollar gives U.S. consumers more buying/importing power, it makes U.S. products and services more expensive, and thus less competitive in the export market. Basically, it helps some groups live above their means (and U.S. asset prices have been doing great), but it hollows out the U.S. manufacturing sector and negatively affects