Friday, April 29, 2011

Attacking the multiplier

Veronique de Rugy summarizes  research that finds very low spending multipliers.

Thursday, April 28, 2011

Keynes vs Hayek 2

The sequel to the best economics video ever.

Tuesday, April 19, 2011


This means something, but I am not sure what:
Last June, for the first time in history, Americans owed more on their student loans, a record $833 billion, than on their credit cards, $826.5 billion. The amount owed on student loans increases at a rate of about $2,853.88 per second, meaning we're on track for total student debt to cross the $1 trillion mark sometime this year.
 Some people have argued that that the next bubble to pop will be a higher-education bubble. The cost of education has risen so that it is no longer a good investment for most students--they will never recover the costs of going to college with higher wages. Maybe. I know that I saw a lot of students who did not belong in college when I was teaching. And I recall top administrators who saw nothing wrong with raising tuition and fees by 5%-10% each year.

When something is not sustainable, it will eventually stop.

Monday, April 18, 2011

Teenage unemployment

Teenage unemployment is about 25%. A comment relayed by Instapundit suggests that lack of final demand may not be the main reason:
Since getting hired almost a year ago, they have worked him as much as possible. He averages close to, but not quite at, 40 hours a week. The reason being, most kids they hire don’t show up when they scheduled, don’t work when they are there, and they mouth off to the management. And at 10 months or so, he has seen dozens of new people come and go.
A lot of young people are not worth $7.00+ per hour, and if they are not, they will not be hired, or if hired, they will not be retained.  The minimum wage is a very cruel law.

(Black teenage unemployment is 42%.)

The little old man who invented hunger

From a look at Cuba today:
While they applaud revolutionary mottos, young people call Marx “the little old man who invented hunger.”
Nothing is more devastating to a bad idea than to put it into practice.

Friday, April 8, 2011

Greece Portugal and the USA

From CNBC:
The US is going down a similar road as that taken by Greece and Portugal with regard to its budget decisions, John E. Silvia, chief economist at Wells Fargo, said on Wednesday.
"To me—being in Europe for a few days—the plot in Greece and Portugal sounds an awful lot like the same plot that's going on in the United States. But the characters have different names," he said.
I coauthored a paper many years ago with a John Silvia. The paper was about economic education. I wonder if he is the the John Silvia who is now with Wells Fargo.

Wednesday, April 6, 2011

Kotlikoff on debt

Lawrence Kotlikoff worries about when the debt-to-GDP ratio hits the critical level:
CBO’s baseline budget updates suggest the date for reaching what Carmen Reinhart, Kenneth Rogoff and other prominent economists believe is a critical insolvency threshold -- a 90 percent ratio of federal debt held by the public to gross domestic product -- has moved four years closer, in just nine months!


Actually, 2017 is optimistic. Uncle Sam’s creditors will soon start charging exorbitant interest rates -- like those Greece, Ireland and Portugal now face. The market’s concern with those countries’ bonds is outright default, which is unlikely in the U.S. What is likely is rising inflation as the Federal Reserve continues to print vast quantities of money to help pay the Treasury’s bills.
I generally don’t give investment advice, but Bill Gross, co-founder of PIMCO and manager of the world’s largest bond mutual fund, has it right. It’s time to dump all but your very short-term U.S. Treasuries and other dollar-denominated bonds. A safer alternative is Treasury inflation protected securities, or TIPS.

Kotlikoff makes Greg Mankiw look like a giddy optimist.

Saturday, April 2, 2011

Is anyone really this stupid?

I get a lot of Nigerian scam letters, some of them well done and some not very well done. This one is in the not well-done category. Are there really people who would send money after getting this?

United Nations Assisted Program
Directorate of International Payment
United Nations Liaison Office - Africa

To The Attention Of Beneficiary,

This email is to notify you about the release of your outstanding payment which is truly $2.500,000.00 Million Dollars The Federal Government scheduled a time frame to settle all foreign debts which includes Contract/Inheritance/Lottery (Sponsored by Microsoft and Shell Petrolum Lottery) and other international loans. News had it that over the past, numerous individual(s) who happen to be impostors (claiming to beindividuals, banks and organizations) are claiming to release numerous sums of fund via numerous ways.

You have two options to receive your payment which is either a Pin Based ATM card or Certified Cashier’s Check. You are advised to select one out of the two options on how you wish to receive your $2.500, 000.00 Million Dollars through ATM card or Check which will be shipped via Ups Express Shipping Courier Company and would get to you within 2 to 3 working days at most.


The actual fees for shipping your ATM Card/ Check is $125.99 Dollars but because Ups Express Shipping Courier have temporarily discontinued the C.O.D which gives you the chance to pay when package is delivered for international shipping as stated on their

We had to sign a contract with them for bulk shipping which makes the fees reduce from the actual $125.99 Dollars to $98.99 Dollars nothing more and no hidden fees of any sort! You are advised to contact the dispatching officer responsible for the shipping of your Check or ATM Card with the following information for shipping of your payment through Check or ATM Card.

Contact: Mathew Benson

United Nation Dispatching Officer

E-Mail: ( deleted )

Phone Number : deleted

Make Sure you provide him with the following information:

1,Your full Name.
2,Your Address where your payment will be dispatch to you:.
3,Home/Cell Phone:.
4,Preferred Payment Method (Check or ATM):

The dispatching officer will provide you with instructions on how you are to make the payment of $98.99 Dollars only for the shipping of your ATM Card or Cashier’s Check. Remember that you are not paying any fees extra no matter what. Once again note that the actual Ups Express Shipping Courier Retail Price is: $125.99 Dollars Your Price (Because of our contract signed): $98.99 Dollars ($27.00 Dollars Savings!)


Dr. Gee Pascal
UN Envoy (African Region)