More assorted musings:
- The saving glut smackdwon continues. First Menzie Chinn dealt it a back-breaking blow, then I pounded it with some monetary superpower, and now Asian officials are pushing back as well.
- Apparently the Swedish central bank has been reading Scott Sumner's blog. They are now penalizing banks for holding excess reserves. This move is a part of a package where they are effectively cutting interest rates to minus 0.25 percent.
- Josh Hendrickson has a great post where he reminds us that yes, "inflation is a monetary phenomenon, but this isn't inflation." I hold a similar view.
- Nick Rowe baits me in for more discussion on whether the Fed actually pushed its policy rate below the natural interest rate in the early-to-mid 2000s. I am convinced it did, Nick is not so sure. See our exchange in the comment's section.
- Speaking of the natural interest rate here is a graph from an ECB paper that rigorously shows the actual interest rate (red line) did drop below the natural interest rate (black line). Click on figure to enlarge.
- Here is a great article on Mark Thoma and how he influences the national debate through his blog the Economist's View. The economic blogosphere really has become a force in shaping economic policy. I had a conversation about this with Tyler Cowen and he pointed to, among other things, how the original plans for the TARP were scrapped because of negative feedback from the blogosphere.