Most people are pleased when the value of some asset they own soars, even if it’s because of an un- sustainable bubble. Look at how most people reacted to the widespread run-up in housing prices between 2000 and 2006. The…
Category: Other
Are high prices for farmland creating next economic bubble?
Farmland prices are rising rapidly across Minnesota and the rest of the United States. In our urbanized society, this affects few people directly, but the forces that drive such price increases affect other areas of the economy. Data tabulations lag…
Change makes tracking inflation tricky
I just found a 28-year-old invoice for a refrigerator that illustrates a problem for economists: Measuring price changes is complicated. Some prices have gone up a lot over the past year. Gasoline is one example, although it is about where…
Congressional leaders tread dangerous ground in backing specific Fed policy
As American satirist Peter Finley Dunne’s character Mr. Dooley observed in the 1930s, “The Supreme Court follows the election returns.” The question today is whether the Federal Open Market Committee similarly follows political pressures. The letter that House Speaker John…
Barro’s proposal for tax overhaul is worth considering
If you are a Republican who wants thoughtful analysis rather than slogans, read Robert Barro’s Op-Ed, “How to Really Save the Economy” in last Sunday’s New York Times. His fiscal plan hews to conservative principles but is based on respected…
Is Social Security a Ponzi scheme? Then so is our whole economy
Presidential candidate and Texas Gov. Rick Perry grabbed headlines recently when he compared Social Security to a Ponzi scheme. That sounds correct to many people. But the question is more complex than Perry may realize. Some might deem human existence…
Two good reasons for Bernanke’s reticence
Ben Bernanke is the soul of discretion. That was evident in his Thursday speech to the Economic Club of Minnesota in which he disclosed no new information and gave no hint about the Fed’s future course. However, such tactful reticence…
Obama’s speech may be rare instance of economists agreeing
Ask any economist about how the economy may change because of President Barack Obama’s speech tonight, and you are likely to get the same answer: Not much. But you will not find much agreement as to why. Some think what…
A high salary, or just a ‘marginal revenue product’?
There are few areas in which real-world economics diverges more from introductory econ theory than in how salaries are determined. That is evident in recent local gossip involving compensation for university presidents, TV anchors and disabled pilots. Go beyond the…
Fed policy can affect elections, but is it intentional?
Congress wrote the Federal Reserve Act to insulate our nation’s monetary policy from political pressure. But it is impossible to do that perfectly. Inevitably, political forces occasionally influence how Fed leaders make policy. And there are at least a few…