Do nations follow sounder economic policies if their citizens understand basic economic principles? Minneapolis Federal Reserve Bank President Gary Stern raised that question in a brief radio interview a few days ago. The occasion was the release of a new…
Author: Ed Lotterman
Be skeptical of long-term forecasts
Imagine a time machine has just moved you back 75 years, to the spring of 1928. If you are a little hazy about history, here are a few reminders: The armistice that ended World War I will have its 10th…
Read economic headlines with a dose of skepticism
Be careful when reading headlines of economic or financial news that use superlatives. The news often it isn’t as earthshaking as the headline suggests. Consider the following two headlines “Euro breaks all-time high against dollar” and “Euro/dollar exchange rate same…
Trade deficit lures foreign investment
What came first, the rising U.S. trade deficit or the soaring amount of foreign investment in the United States? It’s a classic chicken-and-egg question. And it’s timely because recent changes in the value of the dollar alter the incentives for…
Zoning can bring economic efficiency–and bigotry
Zoning is always troublesome for hard-core, free-market economists. There are a few true-blue libertarians in the discipline. They argue that government should not regulate who does what where. But most economists accept the argument that some level of zoning can…
Revealing “refund loans”
You can tell that a lending institution is trying to take advantage of borrowers when it refuses to tell them exactly what interest rate it is charging them. That is not any principle of economics but rather a practical observation…
Ups and downs of the dollar can be good and bad news
If you read Superman comics as a kid, you probably remember Bizarro, Superman’s evil double, and Bizarro World, the skewed reality he inhabited. Everything in Bizarro World resembled in a perverse and twisted way some corresponding reality in Superman’s world.…
Age is a factor in valuing life
Is the death of an older person as great a loss to society as that of a young person? The Office of Management and Budget says no. The Environmental Protection Agency says yes. At stake are the cost of pollution…
What factors allow CEOs to earn above-market pay?
Are CEOs paid too much? To most economists, that question does not involve fairness, justice, outrage or any of the other terms that many people use regarding pay in the millions of dollars. Instead, they focus on whether the sums…
Fed facing election pressure
The Federal Open Market Committee met Tuesday and, as expected, announced that it was making no changes in its management of the nation’s money supply, though it did hint at the possibility of reducing an interest rate target when it…