Friday, December 6, 2013

"Hold a Dollar Bill Up to a Mirror": Slow Growth, No Growth, Inequality and Social Mobility and What Still Needs to Be Done

"Hold a dollar bill up to a mirror/
 And I'll show you something funny/
 It's only a fast buck, but..../
 It's so hard to make that kind of money.."
--Fast Buck Freddy, Jefferson Starship

Following the 2007-2008 financial meltdown, we appear to have reached a new stasis, where the market is booming, unemployment is somewhat stagnant, having not rebounded substantially BEYOND 2008 levels, and household income is shrinking. Wonkblog provides the basis and Larry Summers provides the analysis of why things may not get better without more forceful involvement in monetary and fiscal policy.

As Ezra Klein and Evan Soltas's morning policy news primer Wonkbook/Wonkblog report, in recent speeches, both President Obama and Congressman Paul Ryan have adressed the issues of inequality and social mobility. Both men are quick to say that growth is necessary to reduce both inequality and poverty. But weak growth is no longer the central economic problem obsessing American politics. It's no longer treated as a crisis. No one on either side of the aisle believes new policy is politically possible. Washington has become used to these kinds of numbers and resigned to its inability to do anything about them. 

"Meanwhile, the economic profession is beginning to wonder whether slow growth is, for the United States, the new normal. That was the subject of Larry Summers's searing speech before the International Monetary Fund, and it's the subject of Tyler Cowen's work on "The Great Stagnation," and it's the subject of Brad DeLong's 9,000-word piece on whether "growth is getting harder".

Krugman: Secular Stagnation here

Larry Summers Explains It All – and it ain’t so good
Here’s what Summers said: The Fed’s job, most of the time, is pretty simple. Its main job is to set the federal funds interest rate, which ripples out and raises or lowers other rates on everything from mortgages to credit cards to business loans; economists and journalists tend to refer to the Fed as raising or lowering “the interest rate” rather than just the funds rate to reflect its wider influence on the whole economy. If the Fed wants to know what interest rate we should have at a given time, it can just plug the unemployment rate and the inflation rate* into an equation, which will spit out what the fed funds rate should be. Couldn’t be easier. The problem is that when inflation is low and unemployment is high, the interest rate that equation spits out is sometimes negative.

And the Fed can’t have negative interest rates; that’d mean peoples’ bank accounts would start losing dollars over time. If that were to happen, everyone would just start doing transactions in cash, which doesn’t decay like that over time. So what the Fed can do — and does do — is promise to keep interest rates at 0 for a very long time.

The hope is that doing that has similar effects to having negative rates, and will get the economy back to normal, where we can have positive rates again. But that approach only works if, when times are good, the interest rate we want is positive. For most of history to date, that’s been true. But Summers argues that it could be that the rate we want is negative. If that’s true, then keeping rates at zero indefinitely won’t get us where we need to be. We need to take much more drastic action.

Current Reading

  • Midnight Rising: John Brown and the Raid that Sparked the Civil War- Tony Horwitz
  • A Sultan in Palermo - Tariq Ali
  • Hitch-22: A Memoir - Christopher Hitchens
  • Negropedia- Patrice Evans
  • Dead Funny: Humor in Nazi Germany - Rudolph Herzog
  • Exile on Main Street - Robert Greenfield
  • Among the Truthers - A Journey Among America's Growing Conspiracist Underworld - Jonathan Kay
  • Paradise Lost - John Milton
  • What Is Your Dangerous Idea? Thinking the Unthinkable - John Brockman
  • Notes from the Edge Times - Daniel Pinchbeck
  • Fringe-ology: How I Can't Explain Away the Unexplainable- Steve Volk
  • Un Juif pour l'exemple (translated as A Jew Must Die )- Jacques Cheesex
  • The God Delusion - Richard Dawkins
  • Pale King - David Foster Wallce
  • David Bowie: Starman bio - Paul Trynka
  • Tobacco Stained Mountain Goat - Andrez Bergen
  • The Future of Nostalgia -Svetlana Boym
  • Living in the End Times - Slavoj ZIzek
  • FIrst as Tragedy Next as Farce - Slavoj Zizek
  • How to Survive a Robot Uprising - Daniel Wilson
  • Where is My Jet Pack? -Daniel Wilson
  • Day of the Oprichniks - Vladimir Sorokin
  • Ice Trilogy - Vladimir Sorokin
  • First Civilizations
  • Oscar Wilde -Andre Maurois
  • The Beats - Harvey Pekar, et al
  • SDS - Harvey Pekar, et al
  • The Unfinished Animal - Theodore Roszak
  • Friends of Eddy Coyle
  • Brooklands -Emily Barton
  • Abraham Lincoln - Vampire Hunter - Seth Grahme-Smith - Entertaining and historical
  • Dictionary of the Khazars - Pavic
  • Sloth-Gilbert Hernandez
  • War and Peace- Leo Tolstoy
  • Charles Addams: An Evilution
  • Life in Ancient Greece
  • Time - Eva Hoffmann
  • Violence - S. Zizek
  • Luba - a graphic novel by Gilbert Hernandez
  • Life in Ancient Egypt
  • Great Apes - Will Self - riveting and disturbing
  • Lost Honor of Katherina Blum - Heinrich Boll - could not put it down
  • Yellow Back Radio Brokedown - Ishmael Reed (author deserving of new wide readership)
  • Living in Ancient Mesopotomia
  • Landscape in Concrete - Jakov Lind - surreal
  • 'There Once Lived A Woman Who Tried To Kill Her Neighbor's Baby'-Ludmilla Petrushevskaya - creepy stories - translation feels literarily "thin"
  • Mythologies - William Butler Yeats (re-read again & again)
  • How German Is It ? - Walter Abish
  • The Book of Genesis - illustrated by R. Crumb - visionary
  • "Flags" - an illustrated encyclopedia - wish I could remember all of these. Flag culture
  • Sirens of Titan - Kurt Vonnegut
  • Ubik - Philip K. Dick
  • Nobody's Fool - Richard Russo
  • Hitler's Empire - Mark Mazower
  • Nazi Culture - various authors
  • Master Plan: Himmler 's Scholars and the Holocaust - Heather Pringle
  • Eichmann in Jerusalem - Hannah Arendt
  • Living in Ancient Rome
  • Traveling with Herodotus -R. Kapuszynsky
  • Oblivion - David Foster Wallace - Some of his greatest work
  • Infinite Jest - David Foster Wallace - still wrestling with this great book
  • Netherland - Joseph O'Neill - staggeringly great read
  • Renegade - The Obama Campaign - Richard Wolffe
  • Mount Analogue - Rene Daumal
  • John Brown
  • Anathem - Neal Stephenson - love Stephenson but tough slogging first few chapters
  • 7 Deadly Sins
  • ALEX COX - Alex Cox
  • FIASCO by Thomas Ricks
  • I, Fellini - Charlotte Chandler & Federico Fellini
  • Best of 20th century alternative history fiction
  • Judah P. Benjamin - Eli Evans - Confederacy's Secretary of State & source of the W.C. Field's exclamation
  • Moscow 2042 - Vladimir Voinovich - Pre-1989 curiosity & entertaining sci fi read; love his portrayal of Solzhenitsyn-like character
  • Gomorrah - Roberto Saviano - Mafia without the It-Am sugar coating. Brutal & disturbing
  • The Sack of Rome - Celebrity+Media+Money=Silvio Berlusconi - Alexander Stille
  • Reporting - David Remnick - terrific journalism
  • Fassbinder
  • Indignation - Philip Roth
  • Rome
  • Let's Go Italy! 2008
  • Italian Phrases for Dummies
  • How to Pack
  • Violence - Slavoj Zizek
  • Dali: Painting & Film
  • The Gang That Couldn't Shoot Straight - Jimmy Breslin
  • The Good Rat - Jimmy Breslin
  • Spook Country - William Gibson
  • A Blue Hand - The Beats in India - Deborah Baker
  • The Metaphysical Club - Louis Menard
  • Coast of Utopia - Tom Stoppard
  • Physics of the Impossible - Dr. Michio Kaku
  • Managing the Unexpected - Weick & Sutcliffe
  • Wait Til The Midnight Hour - Writings on Black Power
  • Yellow Back Radio Brokedown - Ishmael Reed
  • Burning Down the Masters' House - Jayson Blair
  • Howl - Allen Ginsberg
  • Cat's Cradle - Kurt Vonnegut
  • The Palace Thief - Ethan Canin
  • John Adams - David McCullough
  • The Wooden Sea - Jonathan Carroll
  • American Gangster - Mark Jacobson
  • Return of the King - J.R.R. Tolkien
  • Gawker Guide to Becoming King of All Media
  • Jews and Power - Ruth Wisse
  • Youth Without Youth - Mircea Eliade
  • A Team of Rivals - Doris Goodwin
  • Ghost Hunters -William James and the Search for Scientific Proof of Life After Death - Deborah Blum
  • Dream -Re-Imagining Progressive Politics in an Age of Fantasy - Stephen Duncombe
  • Love & Theft - Eric Lott
  • Exit Ghost - Philip Roth
  • Studio A - The Bob Dylan Reader

Current Listening

  • Alexi Murdoch Wait
  • Wilco Summer Teeth
  • Wilco The Album
  • Carmina Burana - Ray Manzarek (& Michael Riesmann)
  • Polyrock - Polyrock
  • 96 Tears - Garland Jeffries
  • Ghost of a Chance Garland Jeffries
  • Yellow Magic Orchestra
  • Mustang Sally Buddy Guy
  • John Lee Hooker
  • Black and White Years
  • Together Through Life - B. Dylan
  • 100 Days 100 Nites - Sharon Jones & The Dap Kings
  • DYLAN: 3 disc Greatest...
  • Glassworks - Philip Glass
  • Wild Palms - Soundtrack -Ryuichi Sakamoto
  • Dinah Washington - Best of..
  • Commander Cody& His Lost Planet Airmen Live at Armadillo