Jim wrote:
is the G-S article on-line? where is your web-site?
===
Alex reaction:
The "Un-Godley private Sector Deficit" was the central article of the "US
Economics Analyst" , 27 July, which is produced by the 'GS Financial
Workbench' and is distributed to *subscribers*. I guess that on
that a recovery would follow suit, and that monetary policy is
>effective... We actually included a rejoinder in our web site on this
>occasion, and subsequently we were contacted directly by G&S...
is the G-S article on-line? where is your web-site?
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
At 22/08/01 15:37 -0400, Alex Izurieta wrote:
>1) There seems to be (for me and other observers) convincing evidence
>that
>we are leading to a recession.
>
>
>2) How deep and how long I do not "know", but (WITHOUT EFFECTIVE POLICY
>CHANGES) we could think of something between the UK c
Private Sector Deficit", US Economics Analyst, 27 July) where they
> were trying to argue precisely the opposite: that of course things are not
> rosy, but that a recovery would follow suit, and that monetary policy is
> effective... We actually included a rejoinder in our web site on th
us debate about policies to prevent
it.
BTW, I do not think the above is contradiction with what I said at URPE or
what is written in the paper.
Alex
Original Message-
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED]]On Behalf Of Doug Henwood
Sent: Wednesday, August 22, 2001 2:41 PM
To:
Alex Izurieta wrote:
>In conclusion, it all points, day by day, into a direction that confirms the
>analysis deployed in the "Implosion ..." paper and elsewhere (e.g. Dean
>Baker had an insightful presentation during the URPE Summer school). On the
>other hand, it looks to me that there is a lot
New
York. "We think monetary policy
in this environment is not very
effective."
I think that the smashing of Greenspan's myth, along with the possible
failure of monetarism and tax cuts, may open up the possibility that
people might be receptive to a substantive dialogue about the econom
I am seeing more and more stories doubting that a recovery is on the
near horizon. Notice the quote below
"We think the economy has got
real problems that won't be
rectified quickly," said William
Dudley, an economist with
Goldman Sachs & Co. in New
York. "We think
does anyone know the specific rule for setting the Fed Funds rate that the
Fed was trying to follow until the end of 2000? was it a variant of the
Taylor Rule?
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
might prevent deflation.
Keynes' "euthanasia of the rentiers" scenario seems ruled out by the way in which the
central banks are controlled -- mostly by bankers.
>How exactly is it done?<
you need to know how monetary policy works? The Fed buys bonds, which raises their
price
At 22:04 18/03/01 +, Jim wrote:
>If the rich countries coordinate monetary policies to prevent this
>scenario, then interest
>rate cuts won't affect the demand for U.S. goods via exchange rates. It
>would have to be
>by a generalized reflation, by most of the rich countries.
This is likel
quot; of overindebtedness.
But I can't predict the future.
[I changed the word "monetarism" to "monetary policy" in the subject line, because the
former is just one kind of ideology concerning the latter (that of the followers of
Milton
Friedman). Greenspan is no monetarist, tho
Michael Perelman wrote:
>I suspect that Greenspan, like Clinton, were very fortunate in presiding at a
>time of prosperity and riding old wave of good luck -- sort of like the TV
>weather personality grinning because it going to be a beautiful day.
>Well, who
>knows, maybe the weather is going t
Ellen Frank wrote:
Doug writes:
>Dunno, but there's a piece in the current Fortune claiming that Alan
>G. really really wants the stock mania to stop, so rates may rise
>more and more quickly than anyone ever knew. Hard to tell whether
>this is well-leaked or just the reporter's speculation thoug
Ellen Frank wrote:
... rentiers hoarding funds and businesses looking
to expand.
I don't remember this bit. Why would rentiers
want to hoard?
--
Barnet Wagman
email: [EMAIL PROTECTED]
that his posited "speed limits" for GDP became irrelevant.
However, Greenspan differs from a weather-clown in that he has some impact
on the "weather." We have to consider Marx's opinion (in ch. 34 of vol. III
of CAPITAL) that even though monetary policy can't abolish
I suspect that Greenspan, like Clinton, were very fortunate in presiding at a
time of prosperity and riding old wave of good luck -- sort of like the TV
weather personality grinning because it going to be a beautiful day. Well, who
knows, maybe the weather is going to be a little bit rough.
Jim
Tom wrote:
> This kind of disconnect between Fed signals and market movements is
> unsustainable. Either a new consensus forecast for interest rates will
> form or the Fed will begin to lose its sacred "credibility."
In a way, the Fed has already lost its credibility. After applauding John
M
Ellen Frank wrote:
>Hey Doug - You know, I just don't beleive this stuff about
>the stock market. I mean, if the Fed wanted to burst the
>stock bubble, why not raise margin requirements? Why
>pussy-foot around with 1/4 point rate increases that
>the market keeps discounting in advance? There's
Doug writes:
>Dunno, but there's a piece in the current Fortune claiming that Alan
>G. really really wants the stock mania to stop, so rates may rise
>more and more quickly than anyone ever knew. Hard to tell whether
>this is well-leaked or just the reporter's speculation though.
>
Hey Doug - Y
e that the powers of financial
>policy are limited.
>
>Edwin (Tom) Dickens
>
This is such a good point! I have always found the debates
about "is monetary policy effective" on the left to be very
sterile. Whether or not fed funds increases lead to investment
declines, one thi
Tom - I think I have miscontrued what you meant by
"loanable funds" theory (I've forgotten so much
economic theory, mostly deliberately). By loanable
funds theory you mean the old savings and
investment story, where there's a pool of savings
provided by consumers and borrowed by firms
and gover
Jim Devine wrote:
>
> it's clear that monetary policy has its limits, since Greenspan has >been failing to
>slow the economy down for months now.
The major econometric models predict that a 25 basis point increase in the
Federal funds rate will decrease the rate of growth of GD
Jim Devine wrote:
>
> Paul A
> >Have a feeling the "limits of financial policy" issue is likely to be a key
> >policy debate in an upcoming crunch?
>
> it's clear that monetary policy has its limits, since Greenspan has been
> failing to slow the econo
Jim Devine wrote:
>
> is this a lot or a little? Tom, I must admit I find your comments on this
> issue to be a bit obscure.
>
Sorry. I prefer to think that it's the issues that are obscure, but maybe
it's just me. $220 billion is a lot. For example, as an alternative to
loanable funds theory
Ellen Frank wrote:
>
>
> ...aren't these
> market connected via the responses of financial
> players?
I should hope so. Isn't everything connected to everything else in an
advanced capitalist economy? But the point of theory is to abstract from
some connections in order to emphasize others as
Hi Ellen,
It's me that's dense for not being clear that I'm not defending Operation
Twist. I'm just saying that it provides the best historical precedent for
current monetary policy.
That there is no market for loanable funds does not fly in the face of the
evidence, jus
Paul A
>Have a feeling the "limits of financial policy" issue is likely to be a key
>policy debate in an upcoming crunch?
it's clear that monetary policy has its limits, since Greenspan has been
failing to slow the economy down for months now.
If the US has anything close
Tom (or anyone else):
Any suggested readings on either the theoretical side (how the capital
controversies affect the monetary arguement) or the segmented financial
capital market issue?
Have a feeling the "limits of financial policy" issue is likely to be a key
policy debate in an upcoming c
At 11:34 PM 3/21/00 -0800, you wrote:
>Jim Devine wrote:
> >
> > The Fed is driving up (and tomorrow probably will drive up) short rates
> > while the Treasury is driving down long rates. However, as Ellen notes,
> > there are real limits to this.
>
>The Treasury probably has $220 billion to spend
Thanks to all for the valuable lessons on monetary policy. Keep it
coming.
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
Yes, I understand that central banks prefer to operate in
bills and that this means the short market is subject to
different forces. But what I'm asking is, aren't these
market connected via the responses of financial
players? Right now, for example, a 6-month commercial
bill is paying nearly
irrelevance of a transmission mechanism of
monetary policy via an argument in a mainstream aggregate demand function.
Heterodox economists tend towards specifying a direct effect of interest
rates on income distribution.
Key players at the Fed currently argue just the opposite: That excess
aggregate
Michael Perelman wrote:
>
> The magical yield curve supposedly indicates the type of pressures that are
> building up in the economy. Operation Twist was supposed to manipulate the
> environment.
>
Like fiscal surpluses to spend?
Jim Devine wrote:
>
> The Fed is driving up (and tomorrow probably will drive up) short rates
> while the Treasury is driving down long rates. However, as Ellen notes,
> there are real limits to this.
The Treasury probably has $220 billion to spend on long bonds between now
and November.
as less to do with short-term consumption than with the
management of foreign-exchange reserves. The interest-rate insensitivity
of investments suggests the irrelevance of a transmission mechanism of
monetary policy via an argument in a mainstream aggregate demand function.
Heterodox economists tend
Ellen Frank wrote:
>
> I've never understood the reasoning behind operation twist.
> Although a drop in long-rates would make it cheaper to
> borrow and stimulate real spending, a rise in short rates,
> it seems, would make lenders less willing lend long and finance
> real investment. The reason
I wrote:
> > That means that the long rate can only fall relative to the current
> short rate if expected short-term rates are falling. That is, the long
> rate can fall relative to the federal funds rate only if people expect
> the Fed to loosen up in the future (increasing the supply of funds
d
>investment,
>reinforcing Michael's point. (I'm thinking that a lot of the new debt
>that
>a business investor would take on would have variable rates, so that a
>temporary dip in the long rate wouldn't have a big effect.)
>
>Alternatively, monetary pol
The magical yield curve supposedly indicates the type of pressures that are
building up in the economy. Operation Twist was supposed to manipulate the
environment.
Doug Henwood wrote:
> Michael Perelman wrote:
>
> >As I recall the explanation, long-term capital investment depends upon
> >long-t
Michael Perelman wrote:
>As I recall the explanation, long-term capital investment depends upon
>long-term rates, while short-term consumption is affected by short-term
>rates. In fact, of course, investment is pretty insensitive to interest
>rates.
Was this before the yield curve was seen as a
iness investor would take on would have variable rates, so that a
temporary dip in the long rate wouldn't have a big effect.)
Alternatively, monetary policy (tomorrow's hike) and fiscal policy (buying
back long-term government debt) are working at cross-purposes. That would
help expla
As I recall the explanation, long-term capital investment depends upon
long-term rates, while short-term consumption is affected by short-term
rates. In fact, of course, investment is pretty insensitive to interest
rates.
Ellen Frank wrote:
> >
> >I don't know Jim, what do you think? Was it th
>
>I don't know Jim, what do you think? Was it the purchase of long-term
>bonds that failed to put downward pressure on their yields, the sale of
>short-term bonds that failed to put upward pressure on their yields, or
>both?
>
I've never understood the reasoning behind operation twist.
Although
Jim Devine wrote:
>
> didn't "Operation Twist" (the early 1960s effort to raise short rates while
> lowering long ones) fail? or did it only fail after awhile, e.g., after the
> election?
>
> Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
I don't know Jim, what do you think?
At 09:14 PM 3/19/00 -0800, you wrote:
>The Treasury has purchased $2 billion in long term government bonds in the
>last month. It appears prepared to buy long bonds at an accelerating rate
>through November. And the Fed seems prepared to go along by trying to
>protect the dollar from the Treasur
Barnet Wagman wrote:
>
> Operation Twist? What does that refer to?
During the Kennedy Administration, the Treasury and the Fed tried to
"twist" the yield curve, or "invert" it as we say today, by purchasing long
bonds and selling short ones. The idea was to stimulate domestic aggregate
demand
Operation Twist? What does that refer to?
Edwin Dickens wrote:
The Treasury has purchased $2 billion in long term
government bonds in the
last month. It appears prepared to buy long bonds at an accelerating
rate
through November. And the Fed seems prepared to go along by trying
to
protect the
The Treasury has purchased $2 billion in long term government bonds in the
last month. It appears prepared to buy long bonds at an accelerating rate
through November. And the Fed seems prepared to go along by trying to
protect the dollar from the Treasury's purchases with a higher Federal
funds
At 12:24 PM 9/25/96, Jeffrey Fellows wrote:
>And would add that insofar as the ideological
>interests and intellectual predilictions of IMF and US federal policymakers
>are largely the same, the fact that the IMF is making suggestions on Fed
>policy may be the result of unseen pressure by the US
I agree with Mr. Perelman. And would add that insofar as the ideological
interests and intellectual predilictions of IMF and US federal policymakers
are largely the same, the fact that the IMF is making suggestions on Fed
policy may be the result of unseen pressure by the US government. While
In response to my comment about the IMF advising that the Fed raise US
interest rates, Michael P. says >>Why not? We applaud when they make the
same advise elsewhere in the world.<< where I presume that "We" refers to
the US establishment and not to a "We" that includes Michael himself.
Also, Do
I don't see why the IMF's position on raising U.S. interest rates should
come as much of a surprise. They reflect the consensus of First World
central bankers and creditors, and that consensus is lined up on the side
of higher U.S. rates (both kinds of rates - interest & unemployment). I
doubt the
Why not? We applaud when they make the same advise elsewhere in the
world.
[EMAIL PROTECTED] wrote:
>
> in the now-recurrent debate about whether or not the undemocratic
> and unrepresentative Federal Reserve Open Market Committee should
> boost interest rates, this morning on National Public R
in the now-recurrent debate about whether or not the undemocratic
and unrepresentative Federal Reserve Open Market Committee should
boost interest rates, this morning on National Public Radio I
heard that the International Monetary Fund, of all organizations,
was recommending interest rate hik
-4020
On Mon, 10 Jan 1994, R. Anders Schneiderman wrote:
> Or how about trying to explain to the rest of the Left what monetary
> policy is--why anyone worried about the plight of the homeless, the
> environment, etc., should worry about the bond market or any of the rest
> of it? Sp
-4020
On Mon, 10 Jan 1994, R. Anders Schneiderman wrote:
> Or how about trying to explain to the rest of the Left what monetary
> policy is--why anyone worried about the plight of the homeless, the
> environment, etc., should worry about the bond market or any of the rest
> of it? Sp
about how outrageous this situation is. Democratic control of
> monetary policy and a little "reflation" should cure the bond market of their
> arrogance (but such a government policy would need to be forthright and
> very politically up front about what was going on and why ... fat
about how outrageous this situation is. Democratic control of
> monetary policy and a little "reflation" should cure the bond market of their
> arrogance (but such a government policy would need to be forthright and
> very politically up front about what was going on and why ... fat
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