Category Archives: Uncategorized

Placebos are powerful.  Until they aren’t.  Faith in the Fed’s trillions has sustained markets so far.  But the hard-dollar prop holding up the economy is the merely-billion-dollar flow of fiscal stimulus – especially expanded unemployment benefits.  With Congress likely to … Continue reading →

Mitch McConnell is leaving negotiations over a new stimulus package until mid-July.  With the critical $600 unemployment benefit expiring July 31.  Those unemployment benefits are our most important economic prop.  Leaving the discussion to a last minute scramble up to … Continue reading →

We are one or two policy errors from something pretty awful.  The massive policy response so far tells us we face a massive threat and a massive risk of a policy error. Maybe it all works out.  But never lose … Continue reading →

Next month, Congress risks making an epic policy error.  Will they let the $600 a week unemployment benefit lapse in July? It only require a failure to act.  And politicians are pretty good at failing to act… That extra $600 … Continue reading →

I’ve been musing about monetary velocity because it points to a possible diagnosis on a that nasty feeling in a lot of guts today.  How much of our current prosperity is built on false hopes?  I’m not the first and … Continue reading →

Monetary velocity has been steadily declining, with increasing deceleration after every Fed intervention (see chart going back to 1959 here).  That gnaws at me (see prior post here).  Why does it worry me so much? “How did you go bankrupt?” … Continue reading →

The Fed’s recent interventions may have had more moral effect than practical effect. The Fed has huge impact on Keynes’s “Animal Spirits.” But it might be more placebo effect than anything else.  Fed Chair Ben Bernanke made a joke out … Continue reading →

Summary:  Facing a grinding, random virus threat, people will self-regulate to keep crowd density at “comfortable” levels.  Meaning sparse retail traffic.  Meaning anemic economic activity.  Continuing until an effective vaccine has been widely administered (not just invented). The Virus Will … Continue reading →

We saw a burst of hope on Monday around Modena’s vaccine being ready in volume by early 2021.  That news will change people’s individual economic calculus.  The collective impact of those individual choices probably keeps the economy limping along in … Continue reading →

I keep seeing line graphs trumpeting “no coronavirus case re-acceleration yet!!!”  This is often connected to some sort of positive economic outlook or commentary. That makes no sense. The absence of a case rise tells us one thing.  People are … Continue reading →