Another shoe has dropped with the exposure of the Bernard Madoff fraud, in which an investment manager is said to have bilked investors out of $50 billion in a massive Ponzi scheme. This criminal fiasco poses fundamental questions about how…
Category: Other
Balanced budgets can be counterproductive
It may be good that many states are required to balance their budgets, but such provisions pose an economically perverse incentive when the economy is at either extreme of the business cycle. Balanced budget requirements are ubiquitous, with Vermont the…
Erratic Fed funds rate has either been abandoned by policymakers or is an impotent tool
Something funny is going on with the Fed funds rate, but everyone is so engrossed with the auto industry and other dramas that few have noticed. This long-obscure interest rate historically has been an important financial-market barometer, but its readings…
Big, bold change unlikely for Detroit’s Big 3
It is an attractive idea that the dull brown moth of the U.S. auto industry can somehow initiate a metamorphosis to become an iridescent butterfly of green technology and electric vehicles. But don’t count on it. History is replete with…
When in doubt, dump
Shopping malls may seem far removed from hog farms. But hog producers and retail managers often face the same brutal reality: When push comes to shove, they must sell products for whatever price they can get. An Associated Press story…
Stronger dollar is welcome news…for some
The dollar has been gaining strength against other currencies this year. But is that a good thing? Any change in an economic indicator can be good news or bad news, depending on the context. We are in highly unusual times…
In hard times, less is more
As we give thanks this week, it may seem to some that we don’t have as much to be thankful for as in prior years. Our nation — indeed, the whole world — faces difficult economic times. More households have…
This one unlikely to be an “average” recession
An economist got lost in the woods during a blizzard. He found a tiny hut with firewood and started a blaze to warm up. The hut was so small his head stuck out the window while the fire was charring…
Media miss interest rate-money supply link
Few things are more humbling for an economics professor than reading media stories about the economy. Somehow, a lot of people must get through our classes while missing the basics. Nowhere is this more true than in reporting on monetary…
Revisit those rosy memories of presidential finances
History often consists of what people want to believe happened rather than what actually happened. Nowhere is this truer than in the rosy views political partisans entertain about their favorite president. Consider two examples I came across this week. In…