Real-World Economics Review

from Ken Zimmerman (originally a comment) In the early 20th century the emergence of the United States as a global force unparalleled and nearly unrivaled in material might catapulted obscure economic indicators into central, abiding elements of national life. No “man on the street” would have given a thought to gross national product or national income in the 1920s or at any point before then, and not simply because that number didn’t exist. People wouldn’t have thought of their nation...

from Peter Radford I read this morning that the Federal Reserve had bought, at the peak of the recent crisis, about 40% of all US government bonds being issued. This may, to some of you, be something of no concern. Think again The illusion that there are separate spaces for monetary and fiscal policy is belied by this fact.  Which one was it?  Was it the Fed flooding the economy with money?  Or was it the government issuing debt to finance economic support? I suppose it was both.  But it...

from Lars Syll The COVID-19 pandemic impelled governments to fall back on “fiscal Keynesianism,” because there was no way that just increasing the quantity of money could lead to the reopening of businesses that were prevented by law from doing so. Fiscal Keynesianism in the big lockdown meant issuing Treasury payments to people prevented from working. But now that the economy has reopened, the practical rationale for monetary and fiscal expansion has disappeared. Mainstream financial...

from Jonathan Nitzan and Shimshon Bichler This long-term consumer price series shows that, after 1900, inflation changed in two important ways: 1. Magnitude: Until 1900, UK’s annual inflation rate averaged 0.4%. From 1900 onward, it averaged 4.0%. 2. Direction: Until 1900, consumer prices went up and down. From 1900 — with the exception of the great depression — they went only up. *** The reason for this change has had a lot to do with the new capitalist mode of power — specifically: 1....

from Ken Zimmerman (originally a comment) I shall be telling this with a sigh Somewhere ages and ages hence: Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference. Robert Frost. Frost’s poem is usually interpreted with a positive spin. I give it just the opposite interpretation here. Commenting today on the world around us is difficult because for nearly the last 45 years the US has taken the wrong road. On the economic side the US has...

from Peter Radford Sabotage. Not the sort of sabotage we associate with plucky heroes undertaking dramatic action like blowing up railway lines and so on. No, the sort of sabotage that is a great deal more subtle.  The kind that is summed up by the metaphorical boiled frog.  The slow devious and underhanded chipping away at something termite-like until the edifice is more fiction than fact. That sort of sabotage. The sort of sabotage that Thorstein Veblen wrote about a hundred years ago...

from Gerald Holtham (originally a comment) People have come to expect and hope that life will be better for their children than it was for them. That can be true of some people in upwardly mobile families in societies with social mobility. If material welfare is stable in such a society, however, upward mobility must be matched by downward mobility. Therein lies a difficulty; the rich and powerful will not readily accept such an outcome for their offspring. Economic growth is the solvent...

from Lars Syll Veblen, Keynes, and Hirschman were more than economists because they practiced their economics from a standpoint outside the profession, using it to criticize not only the assumption of rational self-interest, but also the consequences of economists’ indifference to “preferences.” Veblen’s standpoint was explicitly religious; he was still of a believing generation. Keynes, too, was an ethicist. G.E. Moore’s Principia Ethica remained what he called his “religion under the...

from Ken Zimmerman (originally a comment) When I was 12 and my sister 5 she was convinced that pixies lived in our backyard and protected our house from the coyotes, raccoons, and bobcats that were a problem for city neighborhoods all over Texas due to the drought.  I tried to convince her otherwise but couldn’t.  I agreed to go with her every night before her bedtime to search for the pixies. Never found them and by the time my sister began the new school year she had forgotten about...

from Dean Baker We are still getting through a worldwide pandemic that has taken tens of millions of lives. While we did develop effective vaccines, they were not produced and distributed quickly enough to prevent enormous loss of life. This is a tragedy that should force us to ask how we could have done better. On the other side, some people did manage to get enormously rich from the pandemic. Specifically, those who had patent monopolies on the mRNA vaccines did very well, as the stock...