Sunday, July 5, 2009

Assorted Musings

More assorted musings:
  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

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