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Tag Archives: finance

The Gender Gap, Paid Leave Programs, and the Soviet Union

The Biden administration intends to nominate for Comptroller of the Currency a candidate who makes Senator Bernie Sanders looks like former Senator Barry Goldwater. The nominee’s name is Saule Omarova, a professor at the Cornell University Law School. Apart from wanting to regulate banks out of existence, Ms. Omarova tweets stuff like this: Until I came to the US, I couldn’t imagine that things like gender pay gap still existed in today’s world. Say what you will...

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Surge in Imported Services Sends Trade Deficit to New Record

The US trade deficit surged to yet another new record in August as Americans are importing more and more services to go along with all of their imported goods.The August trade deficit came in at $73.25 billion, 4.2% higher than the July trade deficit of $70.3 billion. The August deficit set a new record edging out the previous high of $73.23 billion set in June.The new record was driven primarily by Services. The Services Surplus took another big fall, down -7.7% to $16.2B. It was the...

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The Long Road Backwards: Prelude to Another Housing Meltdown?

Those Who’s are at it again. Pursuant to the Supreme Court’s decision in Collins v. Yellen, which ruled that the requirement that the head of the Executive agency the Federal Housing Finance Agency (FHFA) can only be removed by the President for cause represents a violation of separation of powers, the Biden Administration has moved to terminate Director Mark Calabria. FHFA was the agency created by Congress to oversee Government Sponsored Enterprises (GSEs) Fannie...

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That 1970s inflation

Patrick Horan directed me to these tweets: Luther is right.  There are actually three issues that need to be disentangled here: 1.  The cost of high trend inflation 2.  The cost of high inflation volatility 3.  Supply vs. demand-side inflation High trend inflation increases the real tax rate on saving and investment, which hurts capital formation.  This reduces economic growth, lowering living standards. The negative effects are not offset by gains to borrowers, as...

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I’m still waiting

Steve X May 25 2021 at 5:42pm Zoning reform should be given great importance by Libertarians and Classical Liberals. Ed Glaeser’s work calculating the cost of zoning is great. It’s been replicted in many places as well. In the 1970s the government regulated the price of flights, transport costs and so much more. One of the last areas where the government has...

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Is There a New Housing Bubble, and What Should Be Done About It?

with Peter van Doren U.S. house prices surged in 2020, rising 11.2 percent for major metropolitan areas according to the Case–Shiller Home Price Index and 12 percent according to the Federal Housing Finance Agency. This has raised concern that a new housing bubble has formed and is threatening a repeat of the “Great Recession” of early this century. If “housing bubble” means that home prices rise in a relatively short time and then fall back to long-term trend, then...

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Great Cowen Interview of John Cochrane

Yesterday, Tyler Cowen published his interview with Hoover Institution economist John Cochrane. It’s a lot of fun and full of insights. I recommend the whole thing. Some fun highlights follow. If You’re So Smart, Why Aren’t You Rich(er)? COWEN: Brazil has very high real interest rates for decades, right? Arbitrage doesn’t seem to work. COCHRANE: Well, that’s not an arbitrage. An arbitrage is the opportunity to make a sure profit, no risk. You got to invest in Brazil,...

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Can economists be trusted?

For the most part, economists don’t give people advice on how to run their lives. Rather we tend to focus on explaining the behavior of consumers and businesses, usually assuming they are at least somewhat rational. One exception is when there is a “principal-agent problem”, the case where the people you hire (the agents) have interests that differ from you own interest. Thus economists might advise someone to be a bit skeptical if one’s dentist recommends that you...

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Interest rates and housing affordability

David Beckworth directed me to this Nick Rowe post: Let’s start with land, and assume we are not living in the Netherlands. The supply of land is fixed and hence the price is 100% demand determined. If consumer preferences do not shift, then the affordability does not change at all. But the concept of “price” is tricky, as it may be a composite variable that involves both the size of a required down payment (a function of the price of land) and the annual cost of a...

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Monetary Policy: AIT seems on target

Last year, the Federal Reserve announced a policy termed “flexible average inflation targeting.” The basic idea is that the Fed commits to insuring that PCE inflation will average roughly 2% over an extended period of time, and that any short run discrepancies will be offset by future overshoots in the opposite direction. Although they did not specify a starting point, it’s generally assumed to be roughly the beginning of the decade (say January 2020.) Thus inflation...

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