"you didn't write that"

I want to highlight the two best pieces I've read on the Obama "you didn't build that" - gate.

The first  comes from Josh Barro over at Forbes.

The second comes from Carolina's own Kindred Winecoff.

Both are highly recommended.

People, what do you think about this issue?

Is it an out of context molehill made into a mountain, or a disturbing peek behind the curtain?

You know where to let me know.

The Gorge

Visited the Columbia Gorge with my sister Kathy.  Here is a view of Multnomah Falls....a short movie.

Kathy and I got to see some pretty impressive parts of the gorge.  This slot canyon was completely blocked with a log jam.  Looked like something from Lord of the Rings.

Kathy in front of one of the smaller falls.  Really great hiking.

Cobra Juicy

Black Moth Super Rainbow, one of my favorite weird bands is running a Kickstarter to finance the release of their new album and it's going really well.

I have to confess that I don't understand Kickstarter very well, but hey, it's getting me new BMSR!

Here's a link to a song from the new album.

Here's the video for one of my favorite BMSR songs, "Sun Lips"  from "Dandelion Gum":

She swallowed the spider to catch the fly

and by "she" I mean Hugo Chavez.

People, gasoline in the oil-rich Bolivarian Republic of Venezuela sells for $0.11 cents per gallon. In neighboring Colombia, it costs over $4.00.

So it's no wonder that those Bolivarian citizens often undertake a fair amount of illegal cross-border arbitrage.

But, nowadays, Venezuela actually has to import a fair amount of gasoline (they can't refine enough for the local market) at market prices.

In other words, they are at the margin, taking a big loss on imported gas that their citizens then "export" to Colombia! The Chavez government is leaking a lot of money to subsidize (a) domestic criminals and (b) Colombian motorists.

Anyway, Chavez has gotten tired of this mess and imposed quantity rationing on people in two states that border Colombia and lean toward the opposition.

Not surprisingly, the locals are extremely upset about this violation of their inalienable right to rip off their government, even though the allowed quantity of gas is 11 gallons, PER DAY (40 for busses).

Wouldn't it just be simpler, fairer, and more environmentally sound to just end or drastically reduce the massive subsidy for gasoline?

How does giving away gasoline make any real sense ( I know people like free gas, but you could just give them cash and drastically reduce the negative environmental externality)?

The war on Al-gebra*

What an amazing piece of horse hockey on the front page of the NY Times opinion section (and no I'm not talking about Tom Friedman's piece).

*huge hat tip to RKG for this title.

Bad Mojo

Yikes!! Anybody want to buy a pair of Thunder season tickets? I'll never be able to un-see this:

Two part question: (A) which country US or Spain has the worst unis? (B) which of the three Thunder players looks the silliest?

He hit himself with his rhythm stick!

You just can't go wrong with this story.

A 36-year-old Jacksonville man is accused of performing a sex on himself while driving south on Interstate 95 near Ormond Beach.  Ronald Ayers was charged with indecent exposure on Wednesday.

He denied performing the sex act, saying another driver who reported him to authorities misunderstood what he was doing while driving – using drum sticks to hit his steering wheel.

Some salient facts:  (1) It was apparently consensual.  (2)  The guy's defense, his DEFENSE, mind you, was that he had both hands off the steering wheel and was pounding the steering wheel with his drumsticks.  (3) The woman who claims she had a "clear view" was clearly not looking at the road, herself.

Reminds me of the old joke.  Woman calls police, says man is exposing himself in window of other apartment.  Police come in, she points, "See!  SEE!  It's disGUSTING."

Policeman looks.  "Ma'am, I don't see anything."

Woman.  "Well, of course not.  You have to stand on the chair, and use these binoculars."

Nod to Angry Alex, and with thanks to Mr. Drury for the title, which of course I adapted.

Escape velocity

We didn't reach it.

Revised numbers show GDP growth in the fourth quarter of 2011 was 4.1%, which fell to 2% in the first quarter of this year. Meanwhile the initial estimate of second quarter 2012 growth is 1.5%.

At least the rate of decline is slowing!

Even though I have eyes to see and ears to hear exactly how crappy a candidate Mittens is, it's hard for me to think Obama can win with an economy this bad.

Off to the Great West....

Heading to Bloomington, IN for an LF conference on the Ostroms.  Sad, because they were both going to attend, but that didn't work out. 

Lin was actually planning grant proposals that would have started in Fall 2013.  She was pretty brave.

Then, to Portland, OR to visit my sister Kathy.  She is a veterinarian, and a big sailer.  May get out o the water a bit.

Then to Seattle, WA to give this talk, and to hang out with Tony Gill, Raoul, and of course the YYM. 

Then back on the redeye a week from Friday.  If you are in Seattle, it would be great to see you at the talk!

A match made in heaven

Bill Callahan's voice and Leonard Cohen's words.

You can hear Bill do a tremendous cover of "So long Marianne" right here.

Highly recommended.

How to be your own worst enemy

Ben Bernanke is his own worst enemy these days. He keeps insisting that the Fed is not out of ammunition and can do more to strengthen the economy, but to date, has not actually done anything "new" or "more".

Which leads to his ritual excoriation in the blogo/twitter-sphere.

And rightly so.

4 years on, we still have not reached pre-crisis employment levels.  High inflation is not on the immediate horizon, and growth and growth forecasts keep falling. If you can "do more", it's beyond time to walk the walk, not just talk the talk.

Ben Bernanke is an excellent economist and a smart man. So what is going on?

Continue reading below the fold

Police Brutality, or Angry Mom?

Boy meets girl.  Girl invites boy home to her house, because parents are out.  The kids get busy.

Mom comes home early.  Nekkid Boy hides in closet. 

Mom is a cop, mom pulls gun, handcuffs Nekkid Boy.  (This sounds like a great premise for a porn movie, by the way! Cop Mom plus daughter on handcuffed Nekkid Boy action.)

But, no.  Instead, extremely angry Cop Mom tries to get handcuffed Nekkid Boy charged with forcible entry (of the house, of the house).

Not surprisingly, supervisors say that since the boy was invited by the daughter, this is not (in any sense) forcible entry.

Boy, no longer Nekkid, sues Cop Mom.

Judge, using repeated references to Jim Croce, says that the Cop Mom was reacting as a Mom, not a Cop.  Seriously, you can read about it here.  They even have a link to the decision itself.  Excerpt:

"Collier was an angry parent who happened to be in uniform, have handcuffs and a firearm, which she used for the private ends of scaring a young man she caught in bed with her daughter," Judge Carnes found.

"Although Collier did use the pistol that she wore as an officer, any adult without a felony record can lawfully possess a firearm (and tens of millions do)," the judge added.

"If the allegations are true, Collier's treatment of Butler was badder than old King Kong and meaner than a junkyard dog," Carnes wrote, returning to Croce's lyrics. "She might even have acted like the meanest hunk of woman anybody had ever seen. Still, the fact that the mistreatment was mean does not mean that the mistreatment was under color of law."

Only in Florida, folks!

(With thanks to Angry Alex.  And, to be fair, I think this could have happened in Missouri, also)

Goat Man of Northern Utah

Some people may just think this guy is crazy.


...a man hiking Sunday along Ben Lomond peak in the mountains above Ogden, about 40 miles north of Salt Lake City, spotted the person dressed like a goat among a herd of real goats. The person provided some blurry photographs to Douglass, who said they did not appear to have been altered.


Wildlife officials now just want to talk to the man so that he is aware of the dangers. There's no telling what his intentions are, Douglass said, but it is believed he could just be an extreme wildlife enthusiast.


"People do some pretty out there things in the name of enjoying wildlife. But I've never had a report like this," Douglass said. "There's a saying we have among biologists — You don't go far enough, you don't get the data. You go too far, you don't go home. The same is true with some wildlife enthusiasts."


But M. Kaan notes that this may just be a biologist who doesn't use no stinkin' equations.  That will result in the work being cited more, apparently, as noted before on this blog.

In any case, the real problem is the goat hunting season is coming up.  And the Bishop will have that bolt action .30-06 out of the gun safe.  Be careful, Goat Man!

Treading Water

So, on May 21, I said that the sky was falling, and I was bailing.  Took everything out of stocks, and invested in bonds.  Mostly in the TIAA-CREF's "inflation-linked" bond product.


On May 21, the DJIA was 12,450.  Today, it is 12702.  That's up about 2% since I ran and squealed.  DJIA has been higher, as high as 12,900, and as low as 12,100, since May 21.  But right now, it's just over 12700.  The inflation linked bond is up about 1.2% since May 21.


So, clearly, you are better off ex post if you stayed in stocks.  But I have been sleeping well.

Strangely Sensible

One of my pet peeves is people who start by saying, "I don't know much about economics."  Actually, I don't mind that; that's sensible.  But what I object to is when they take another twenty minutes and PROVE it.  They had me at "I don't know much..."  I was willing to believe them.

This is about as opposite as it can be.  This young woman starts by saying she doesn't know much about libertarians, except that they are juvenile and shallow.

Then, she concludes by saying:

 To be sure, there are plenty of reasons for a non-moral relativist to favor limited government.
1.  In the first place, government tends to be inefficient at most jobs.
2.  Also, a person living in a pluralist society might pragmatically recognize that a small, relatively neutral government is the most optimal of the realizable options.
3.  Finally, there is the deep truth that some level of freedom is necessary for human beings to achieve full moral maturity, and exercise the virtues.
(more below the fold)

On PSU Punishment....

A friend writes....

Ok, are you bothered by the NCAA action against PSU? I hate PSU and I hate Paterno even more, but this seems to be way over the top. Any punishment before the accused is allowed to put on a defense is wrong, but this punishment is “cruel and unusual.” I do  think Paterno and others made some serious mistakes, mistakes for which they should be held to account, and they are being held to account. BUT to destroy the football program and the school’s reputation is wrong. What Paterno did and is alleged to have done did not involve cheating at his sport. Where Spanier, the VP, the AD, Paterno and the BOT went way wrong was in trying to protect the PSU brand and reputation at all costs. This was their first instinct. Everything else became consciously secondary. All athletic programs with big reputations and “legendary” coaches are subject to this same mistake. As a member of the ******** here, I saw this up close 6 years ago. The first official meetings were focused on protecting the institution and its brand, rather than attempting to find out what if anything happened for which [university] needed to answer. (MORE BELOW THE FOLD)

"It isn’t easy to understand how the world works"*

And it doesn't help that we get bombarded with BS on a minute by minute basis:

"Tax rates were higher under Clinton than under Bush/Obama and things were better, so raising taxes now won't hurt economic performance."


"We tried stimulus and the economy was worse than the governments' "no stimulus" baseline, so fiscal stimulus doesn't work."


"We spend more on health care than some other nation does and get worse results, so if we adopted the system used by the other country we'd get better results with less cost."


These are examples of the common mistake of not taking other relevant factors into account. Using one bilateral comparison to determine causality is rarely going to be correct.

Consider the third example above. For the claim to have any shred of validity, we'd need to find a nation that had roughly the same population, income distribution, ethnic diversity, rates of obesity and exercise, diet, and probably a few other things as well. That ain't Sweden, or Singapore, or France.

But yet we hear it every day repeated as a killer argument for some alternative health care delivery system.

Then there are the claims that conflate average with marginal:

"Wages are higher in manufacturing than services, so we should subsidize increases in manufacturing jobs"


"Higher top tax brackets won't deter economic expansion because they only apply to the last money earned. The overall average tax rate won't go up very much." 

Averages just aren't relevant for economic decisions. To determine what kind of job is better, we need to study what are current hires in manufacturing earning compared to services. When deciding to expand production businesses compare the marginal costs and benefits of doing so.

Take heart, at the least the BS shot at you by econo-pundits is not as grossly ridiculous as that delivered by medico-pundits.

Take this recent gem: "If you sit a lot, you will have a shorter life expectancy" which is being widely interpreted as meaning "sitting will shorten your life!"

Did it never occur to these geniuses that sick people probably sit a lot more than healthy people??

And no, state of health was NOT a control in the meta-analysis that is cited in the articles. Only age and gender were used as controls. In other words, the statement is meaningless.


*title quote is from Larry Summers as discussed here by one of his former students, Miles Kimball.

Gary Johnson

Went over to Charlotte with the EYM for some campaigning with Gary Johnson, ex-Gov of NM and now LP candidate for President.

Gary is a genuinely great guy.  We started out with the fun run (the (not) exciting start is in the video above, complete with police protection!).  It was supposed to be 5k, and that would have been nice, since it was unbelievably humid.  But for some reason the marked course was about 6.1k, and there were some tongues hanging out.  Really fun, though.  The EYM was way ahead of me, not surprisingly.

Then a luncheon, which was packed.  Lots of people, lots of excitement.

Then an anti-war rally.  Interesting collection of people.  Gary's speech was terrific, short, on-point, well received.

Later, at the cocktail party, I got a photo of Gov. Johnson and the EYM.

Then, the speech.  A very nice crowd.  All the speeches were good; Barbara Howe did a good job, also. 

Gary Johnson is the best Presidential candidate I have seen in my lifetime, in terms of issues and experience.

More Equations, Fewer Citations?

Heavy use of equations impedes communication among biologists

Tim Fawcett & Andrew Higginson
Proceedings of the National Academy of Sciences, 17 July 2012, Pages 11735-11739

Abstract: Most research in biology is empirical, yet empirical studies rely fundamentally on theoretical work for generating testable predictions and interpreting observations. Despite this interdependence, many empirical studies build largely on other empirical studies with little direct reference to relevant theory, suggesting a failure of communication that may hinder scientific progress. To investigate the extent of this problem, we analyzed how the use of mathematical equations affects the scientific impact of studies in ecology and evolution. The density of equations in an article has a significant negative impact on citation rates, with papers receiving 28% fewer citations overall for each additional equation per page in the main text. Long, equation-dense papers tend to be more frequently cited by other theoretical papers, but this increase is outweighed by a sharp drop in citations from nontheoretical papers (35% fewer citations for each additional equation per page in the main text). In contrast, equations presented in an accompanying appendix do not lessen a paper’s impact. Our analysis suggests possible strategies for enhancing the presentation of mathematical models to facilitate progress in disciplines that rely on the tight integration of theoretical and empirical work.

Interesting.  I wonder if the same holds for economics and political science.    My five most cited works vary quite a bit. Two are books, with some equations, but mostly text.  The 1986 APSR is almost pure equations, and no emprical work, but we did try to make it accessible with the accompanying text.  And the 1989 and 1994 APSRs are mostly empirical, with some equations as estimations.

Angus's top five (we share the 1994 APSR, of course) is not terribly equation-heavy.  The largest one, the paper with Tullock in 1989, has nearly 1,000 cites (you think that's easy?  try it at home).  And Grier-Tullock 1989 is almost Hemingway-esque in its pared down simplicity and clarity. 

So, a conjecture:  obfuscating meaning with equations may help you get a paper published in the first place, especially at a lesser journal.  So the "survival test" is biased toward junking the paper up. But clarity and careful presentation help published papers have more impact.

What think you, folk?

Nod to Kevin Lewis

CYA

Interwebs are buzzing over Peter Doyle's IMF resignation letter.

I have to say I'm not too impressed.

I know, I am a huge IMF critic. I know, pretty much everything he says is true.

But people, he took the very remunerative and tax free salary for 20 years!!!.

And then blasts everyone and proclaims himself "ashamed" of the organization.

Did it really take him that long to figure it out?

I'm guessing that, after 20 years of "service", he'll be getting and keeping a nice pension too.

Plus he was not exactly a low level drone. He was high enough up to be considered part of the problem in my opinion.

It's the economics version of a deathbed conversion;  work for the devil for 20 years and then see the light at the very end.

Nice job, Pete. You have a future in politics for sure.

Jackie Blue of NOLA writes:  "Jazz Great Embalmed Standing Up!  Is this the greatest thing you've ever seen, or what? I love this town."

This is what he was writing about.

Carter Wrenn On NC Dem Money Woes

My good friend Carter Wrenn, longtime political operative, thinker, and trouble-maker, has an interesting view on the current money race in NC.

First, let me show you this.  It may be hard to understand, but Bev Perdue outspent Pat McCrory by a truly huge margin.  None of our local media objected, because that was how it was supposed to be.  Everyone knows that Dems are more popular... 

Now, Carter's observations...

The Democrats’ treasure chest has vanished. Year after year in elections, Democrats like Jim Hunt and Marc Basnight had war chests brimming with cash. Bev Perdue defeated Pat McCrory last election by outspending him by $7 million. But now the Democrats’ larder is empty. Phil Berger’s outraising Martin Nesbit (Basnight’s Senate heir) seventeen to one and Pat McCrory raised a million dollars more than Walter Dalton last quarter.

So, for Democrats, what went wrong?

 

The answer, I think, is that the Dem machine in NC was so corrupt that, once out of power, there was very little actual support for the candidates or the policies.  The Dems lived off theft for more than a century.

 

Now, to be sure, it is not clear that the Repubs will do anything different...  To be fair, the Dems never claimed that they were going to do anything else.  They took money from people who earned it, and gave the money to their friends, whooping and squealing about "the poor! the poor!" in the meantime.  The Repubs say they are going to cut, and then they just end up TAKING their cut.

My Dog Does Not Own My House

A group of homeowners recognize that they spend too much time, which might be better spent sleeping or working, patrolling and defending the boundaries of their fields and pastures. So they commission a pack of dogs, large fierce dogs, to carry out this rather simple function on their behalf.

The dogs are perhaps smelly, and noisy, and not too bright, but they are quite capable of carrying out the limited function envisioned for them by the homeowners: bark loudly at intruders near the border to warn them off, and bite anyone who actually crosses the border.

The landowners selectively breed the dog pack over time, and the dogs develop rudimentary speech abilities, and opposable thumbs. The dogs are now able to carry out their function at a very high level, conducting night surveillance of property and defending that property against anyone without authorization. In fact, this dog pack is the best, the smartest, and the most dangerous dog pack the world has ever known. The citizens feel very secure.

One day, a homeowner returns to his house and finds the dogs sitting on his couch, eating his food, and watching his television. Outraged, he confronts them: “How dare you violate my property, which you are supposed to protect?”

The head dog is utterly unashamed. In fact, he says, "You didn't earn this house."

The dog points out that the only reason that the homeowner is able to leave his house to work and earn money is that the dogs protect the house. Thus, in the dog’s view, the dogs have a better claim to ownership than the putative “owner,” because without the dogs there would be no ownership, no roads, no businesses. The dog says it again: "You didn't create that business, you didn't earn this house."


(More below the fold)

Donorcycles

Donorcycles: Motorcycle Helmet Laws and the Supply of Organ Donors

Stacy Dickert-Conlin, Todd Elder & Brian Moore
Journal of Law and Economics, November 2011, Pages 907-935

Abstract:  Traffic safety mandates are typically designed to reduce the harmful externalities of risky behaviors. We consider whether motorcycle helmet laws also reduce a beneficial externality by decreasing the supply of viable organ donors. Our central estimates show that organ donations resulting from fatal motor vehicle accidents increase by 10 percent when states repeal helmet laws. Two features of this association suggest that it is causal: first, nearly all of it is concentrated among men, who account for over 90 percent of all motorcyclist deaths, and second, helmet laws are unrelated to the supply of donors who die in circumstances other than motor vehicle accidents. The estimates imply that every death of a helmetless motorcyclist prevents or delays as many as .33 death among individuals on organ transplant waiting lists.

I would expect deaths to go up, and total accidents to go down slightly, after a helmet law is repealed.  People would be slightly less willing to take risks, but if there is an accident it is more likely to result in death.

Freaky Friday

1. Is de-worming kids in the developing world all it's cracked up to be? Survey says, "maybe not"!

2. Can this graph be right? After all its 105 in OKC today.

3. Is there really something too my recent wild ravings about the Knicks and Jeremy Lin?

Links: Police Work

1.  Ex TSA agent shows TSA supervisor what was done to her.  TSA supervisor starts crying presses charges.  Citizen is put in jail for assault.  One of the most common libertarian complaints is so many violent felonies  are called "policies" if perpetrated by someone who works for the government.

2.  Telecom dares challenge the Great and Powerful Oz.  G&PO claims it NEVER needs a warrant.  Obama and co. are a disaster on basic civil liberties.  The president can kill citizens and search private records (and parts; see above!) with absolutely zero due process.  My lefty friends constantly say "He's no worse than Bush."  That's true, I suppose.  But he's also no BETTER.  Because he's NO DIFFERENT.

3.  This op-ed is amazing.  I often am sympathetic to Stuart Taylor and KC Johnson in their anti-Duke screeds; it's true that the lacrosse case was appalling.  But you'd have to be an idiot not to understand the problem of type I and type II error here.  Duke was over-zealous in prosecuting a sexual assault, which had not in fact occured.  Students were denied normal due process, and the presumption of innocence was violated.  Penn State was under-zealous in prosecting a series of sexual assualts that actually did occur.  The presumption of innocence was too strong, and they gave Sandusky the benefit of the doubt.  What is the implication for universities?  It cannot be either:  1.  Be more aggressive or 2.  Be less aggressive.  Saying "Get it right!" is dumb.  Of course Duke should have been less aggressive, and Penn State more aggressive.  But there is no general lesson to be drawn here.  Except perhaps that Stuart Taylor is not a very good statistician.

4.  "It fell through the cracks..."  No, it plunged down the escalator shaft.  But at least the police had suspended the guy's llicense.  Ten times. 

(Nod to W. Toler, Angry Alex, and the Blonde)

Your New York Knickerbockers

Holy Spumoli, what a mess. The Knicks have really screwed the pooch this time without any help from  Zeke!

A lot of people are saying that the Knicks made the right decision to let Lin go. That is true I guess of the final decision they made, which was given that they had Jason Kidd and Raymond Felton under contract and Houston had backloaded Lin's offer in an inconvenient way, they chose to let Lin go.

However, the Knicks had to make a series of really stupid decisions to even get to that point.

First off, they didn't make any kind of offer to Lin on their own. They intentionally sent him out to test the market. During this process, They signed the wife-beating, drunk-driving, brick-laying geriatric Jason Kidd. They then signed the truly atrocious Raymond Felton.

Each of these decisions on their own and especially the three of them taken to together tell me that the Knicks were never very interested in bringing Lin back.

I mean Kidd & Felton?  Really?

Kidd shot 36% from the floor last season and couldn't stay in front of a Galapagos tortoise on defense. Felton shot 40.7 percent last year and that is BASICALLY HIS CAREER AVERAGE SHOOTING PERCENTAGE!

Maybe there are some advanced metrics out there that would show Kidd & Felton to be awesome, but I don't think so. Lin might not be a great point guard, but he's better than those two put together (which isn't saying much).

I personally believe that Jeremy got D'Antoni'd by the same person who D'Antoni'd D'Antoni.

In 2012-13 it will be all Carmelo all the time.

CFPB: Cheers (?)

Don B raises the key point. And I don't know the answer. Don makes some good arguments. But it's not a slam dunk case.

  Here is the example. Worth reading.

 Now, the question: Suppose it is true that C is naive. One of the problems of being naive is not knowing the full extent and impact of one's naivete.

 Now, suppose that we know that there are people like D, people who take advantage of naivete. D is capable of making bright shiny things, or complicated things, that will induce C to pay more than that thing is "worth."

 Then, along comes B. B is a hand-wringer, the sort who really REALLY cares about other people. But B thinks B should get paid for caring about people, because he doesn't really care about other people THAT much, to work for free. So, B proposes we create a government agency whose job it is to protect C from being taken advantage of by D.

 Except that, to make this work, we will also have to tax A. A thinks C is an idiot, and that D is morally defective. But A would never buy D's product, and wonders why C would do it. After all, C should be able to figure it out, if he tried.

 But, there it goes: We tax A to pay B to prevent C from being exploited by D. Don asks, "Is this justified?" I think the right question is "When MIGHT it be justified." Still, Don asks a good question.

Selling

Thirty year old man leaves wife of ten years for 22 year old other woman.

Ex-wife uses this in marketing campaign.  Husband agrees it might work, pays for half of sign expenses.  Only in Oregon.

KPTV - FOX 12

The ZLB is floor not a ceiling

Again and again I see the economy's problem described along these lines:

"At the ZLB (zero lower bound), the real interest rate is too high to get us to the optimum. The nominal interest rate cannot fall any further by definition. So to get to the optimum the expected rate of inflation must rise."

Those are Simon Wren-Lewis' words (they appear in a comment at the link), but Krugman and many others tell roughly the same story.

As always, I have questions.

In the IS/LM framework many (not Wren-Lewis) are using, doesn't this mean that we are getting "growth" by firms investing in projects with a negative NPV now made profitable by an even more negative discount rate?

Second, how is that inflation expectations rise and the nominal interest rate remains unchanged?

From Fisher, we think of the nominal rate as the required real rate of return plus a premium to offset expected inflation. So it's hard for me at least to think about expected inflation doubling (from 1.5 to 3 percent) or tripling (from 1.5 to 4.5 percent) without the nominal rate rising. For that to happen the required real return would have to fall one for one with the rise in expected inflation.

In other words, the ZLB is a floor, but not a ceiling.

There is no Great Stagnation

Wow. Turns out that Eduardo Saverin didn't really have to renounce his US citizenship to live in Singapore after all, because 7-11 mashed potato & gravy Slurpees are now available in the USA.

This, people, truly is the best of all possible worlds.

You put your cup (mouth?) under the spigot, press the "mashed potatoes" button and out they come. Then hit the "gravy" button and mix it right in.

These little miracles have been available in Singapore since 2009, which makes me wonder how the USA has any citizens left at all.

I had assumed that this was a hoax.  But it turns out that they mean it.

The moral circle as a common motivational cause of cross-situational pro-environmentalism

Boyka Bratanova, Steve Loughnan & Birgitta Gatersleben
European Journal of Social Psychology, August 2012, Pages 539–545

Abstract:  Public engagement in pro-environmental behavior and support for pro-environmental policy are essential for achieving sustainable living. We propose that the “moral circle” is a common motivational source for engagement in environmentally beneficial activities across situations and may be thus drawn upon to efficiently promote these activities. Study 1 established an association between chronic moral circle size and nine pro-environmental activities from different domains. Via experimental manipulation of the moral circle size, Studies 2a–d demonstrated its causal effect on intentions to engage in pro-environmental activities. Together, these studies offer an important initial demonstration of the beneficial consequences of more expansive moral circle in the domain of pro-environmentalism. Routes for expanding the moral circle and thus promoting pro-environmental activities are discussed.

(Nod to Kevin Lewis)

Raoul and the YYM in Seattle

So, long-time KPC friend Raoul was kind enough to visit with the YYM in Seattle. Went to dinner, and showed the youngster around the docks a bit. Seattle is certainly a beautiful place.

YYM is out there for the summer, working in a Duke Engage gig.  Duke Engage is interesting, one of the nice things about a Duke degree....

How Do Amnesic Patients Vote?

If someone has profound amnesia, what are that person's political opinions?  I know, it's tempting to say "Democrat," but let's be serious here.  It's an interesting question about how political opinions are stored.

Remembering and Voting: Theory and Evidence from Amnesic Patients

Jason Coronel et al., American Journal of Political Science, forthcoming

Abstract: One of the most prominent claims to emerge from the field of public opinion is that citizens can vote for candidates whose issue positions best reflect their own beliefs even when they cannot remember previously learned stances associated with the candidates. The current experiment provides a unique and powerful examination of this claim by determining whether individuals with profound amnesia, whose severe memory impairments prevent them from remembering specific issue information associated with any particular candidate, can vote for candidates whose issue positions come closest to their own political views. We report here that amnesic patients, despite not being able to remember any issue information, consistently voted for candidates with favored political positions. Thus, sound voting decisions do not require recall or recognition of previously learned associations between candidates and their issue positions. This result supports a multiple memory systems model of political decision making.

Ill Doctrine on Romney

This is pretty amusing.


I found the "Condi Rice as smoke bomb" idea to be pretty clever.

With a nod and respects to my good friend and colleague Mark Anthony Neal, @newblackman  

All dressed up but nowhere to go

There are a lot of things that drive me crazy about the current practice of econometrics. People who think over-identification tests validate their indentifying assumptions. People who think that if you fail to reject the null at the 0.05 level, it's fine to proceed in your analysis as if the null was true (i.e. people who don't believe in type II error).

But one of the biggest is the practice of thinking we do no harm by using estimators we know to be inappropriate for the data at hand and thinking we somehow fully fix that issue by using robust standard errors.

I annually beat my head against the wall trying to get my students to appreciate these issues (only to often have my work undone by their reading papers/books that make these mistakes), but now on this last point, I have some help!

Continue reading below the fold

Put a bird on it

LeBron links to Stephen Williamson's post about the statistical problems inherent in calculating the vague and unobservable path of "potential output", especially when using the HP filter. I recently criticized the CBO's approach.

This is a sad but general problem in modern macro. Theories are built around unobservable variables. To calculate the output gap, we need potential output, but it's not observable. In growth & development, many issues hinge on the behavior of total factor productivity (TFP), but it is also unobservable.

Modern business cycle theory has made an art form of this. In seeking to better replicate real world data, more and more driving shocks are needed. So we discover that "shocks to the mark-up" for example (or shocks to "preferences") are now an important force in business cycles. These shocks too, are unobservable and receive even less scrutiny than do potential output or TFP (they are typically not ever displayed or forced to pass an "eyeball" test of reasonableness).

Modern business cycle theory also frequently uses the HP filter to produce the business cycle data that it calibrates to or uses for estimation. This use of the HP filter is no less problematic that the use criticized by Williamson in the original linked post.

People, when you read or hear people talking about unobservables like they were data, it's good to remember that the series in question were created by someone using a model with assumptions and limitations. Ask them to show you their series, to defend its derivation and its time series properties.

The bottom line is that no one knows what potential output is or what TFP is. I certainly don't agree with Williamson and Lacker that we are currently at or near maximum output/employment, but I do agree that we have no idea exactly how far away from that point we are currently operating.

Grand Game: "Dead Man Watching" Edition

(UPDATE:  SORRY!  LINK WAS WRONG.... Better?)

There is just so much here. I won't spoil it for you.

Dead Man Watching....NASCAR for 18 months

Oh, I can't resist. "He was the only man who was ever nice to me." Ma'am: He was DEAD.

Obedient Wives in Every Corner

Gadgets. LOTS of Gadgets, From Koopa

Koopa sends this email:

Thought you might like this. I put together for a friend, and then ended up posting on Facebook. Have talked to a lot of you about these gadgets. Feel free to forward.How I Turned Our Apartment Into the Jetsons
  As a lot of people know, I recently bought a boatload of gadgets for our apartment. A bunch of folks have been asking me about these devices, so I figured I would do a quick post.
 The goal was to make our day-to-day living hyper efficient, through three processes:
 a. Automation - I've automated a lot of my daily routines.
b. Go Wireless - We've upgraded a lot of items to make them wireless. These devices communicate with our network, and help me track more data.
 c. Go Faster - There are two components to "go faster". Either a gadget completes an existing function more quickly, or it subsumes another function in a more efficient manner.  Here's the list (below the fold):

North Korean Music Video

A North Korean music video (ostensibly).  Apparently this woman ("Excellent Horse -Like Lady") is a favorite of Kim Jong "Big Un."  It's a good story, but..... not sure.

Anyway, the video has its own charm.  Not the worst I've ever seen, but then I lived through the '80s and '90s.  (Three words:  Ace. Of. Base.) The worst videos are surely David Hasselhoff's "Hooked on a Feeling" or perhaps  Jay-Z's inexplicable desire to look like "Joe Camel." 

But this is remarkable.  I give you....Excellent Horse-Like Lady!  Do check out the hot "comradess on comradess" action at about 2:00.  Forbidden love amid the thread spools.



With thanks to RPoD.  And a nod to sharp-eyed KPC fan M. Kaan.  Well done.

UPDATE:  A curious reader asks, in an email:  "Since that 'Hoff video was available, why in the world did anyone try "Rickrolling"?  Wouldn't "Hoffrolling" have been far worse.  Answers:  Don't know. Yes.  (Note to Shirley:  the link to Rickrolling is for you)

Disturbing

So, the guy needs to "serve" a code violation notice.  The woman's grass is "too long."  (Okay, that's pretty disturbing right there.  Here GRASS is too long?  Good Lord.)

He knocks.  Probably loudly.  He's REALLY fat, so he should be able to do some good knocking.

No answer.  So, because this summons is SO IMPORTANT, he goes into the house.  Walks into the woman's bedroom (she lives alone).  Announces his purpose.

Here is the video:


I have so many questions. (Below the fold)

Is the upcoming election holding the Fed back?

The US economy is going nowhere fast. Growth is low, unemployment is high and inflation (core and headline) are falling below 2%, re-kindling worries about deflation.

But the Fed is sitting pat. Sure they've done a lot in my view. Dropped rates to zero, promised to keep them there a while, pumped trillions of reserves into the system, ran a couple rounds of quantitative easing and don't forget about "operation twist". Nor do I have much confidence that, at this point in the proceedings, monetary policy is capable of a miracle cure for the economy.

But holy spumoli people, don't they have to do something? Sure they do; they're the Fed, dammit!

Bernanke can't keep saying that the Fed is not out of ammo but never fire the gun. The Wolfersons are KILLING him!

Could it be possible that the Fed does not want to be seen "goosing" the economy in the run-up to the Presidential election?

Might the Fed be guarding its vaunted "independence" by avoiding any actions that could be considered politically motivated?

Will we see QE3 or a higher inflation target on the first Wednesday in November?

I think this has to be a factor in the Fed's decision about the timing of further action. Things may worsen enough for them to feel they have to act no matter what, but I think they may be trying to muddle through with the status quo until after the election.

Tell me why I'm wrong in the comments.

Pants: daily

Fantastically funny blog, Honest Toddler, rats out parental intransigence to grandparents with a dollop of guilt for them thrown in as well.

But, to this non-parent at least, Text From Dog is still the king of this genre!

You are going to need another soldier....

Adam and Billy, doing a sketch.  Without the mustaches.

The future of higher ed: an alternative view

Brian Caplan & LeBron have been discussing online higher ed vs. brick and mortar higher ed.

I believe that the future of higher ed is brick and mortar.

 I don't think bad lectures are what is holding back students (self-serving perhaps). It's actually just LECTURES that hold them back, whether they are in a classroom on online.

Kids don't learn a ton, don't retain what they learn, and struggle to apply what they've learned.

I am becoming convinced that "peer instruction" or "the flipped classroom" is the way to go. This approach combines classroom work with online work, but the main thing it does is take the lecture out of the classroom.

Students do required reading or watch a required video before the class and then take a pre-class quiz on the material. Instructors use that feedback to generate discussion questions and instant feedback quizzes to help students work out their issues with the material. Instructors can pair up students who are getting it right with those getting it wrong for some peer to peer instruction.

Eric Mazur of Harvard is the guru of this approach. Mrs. A and I are hoping to transition onto his bandwagon. Here's a link to an article about Mazur.  Here's a link to an excellent blogpost on how the method can work.

Burning Questions

Hat tip to CZ, aka PR.

Monday's Child is Full of Links

1.   Kid thought he was having nightmare.  To wake up, shot himself in forehead.  Mushrooms were involved.  "It didn't feel real."  I bet it didn't.  Until it did.

2.  We have no idea what is going on in Iraq.  But it is probably not good.

3. Timmy Mac wants to compete for "Biggest idiot since Joe Morgan" prize. But that's a big idiot to fill. My own experience with Locks of Love, in 2007. As for Mr. McCarver's question: Actually, quite a few young women turn out to have alopecia areata, and it's pretty tough.

4.  Man lives off Craig's List for a month, then sells the story.

5.  Conservatives are happier.  I'd say the reason is straightforward:  if you don't expect the world to be perfect, you are not bothered that it is not perfect.  Liberals project their goals onto everyone, and their wring their hands because they don't want to be authoritarian.  That conflict, a rigid narrow view of a just society, and the unwillingness to try to impose it, are always going to leave lefties unhappy.

6.  If you need a pig for emotional support....you might be a redneck.  At least now "when pigs fly" has come true.

(Nods to the Blonde, to Angry Alex, and to Dutch Boy)

California was a friend of mine. Maryland, you are no California.

 California may be able to get away with constantly increasing taxes, because it's beautiful.  Or would be, except for the fact that it's full of Californians.  

 But Maryland?  The urban parts are a dungheap.  Now wonder people are baling out.  Maryland apparently wants to be the new Michigan.

Music as Cultural Data

Emotional Cues in American Popular Music: Five Decades of the Top 40

Glenn Schellenberg & Christian von Scheve
Psychology of Aesthetics, Creativity, and the Arts, forthcoming

Abstract: Some musical characteristics are cues to happiness (fast tempo, major mode); others are cues to sadness (slow tempo, minor mode). Listening to music with inconsistent emotional cues leads to mixed feelings and perceptions, or simultaneous happy and sad responding. We examined whether emotional cues in American popular music have changed over time, predicting that music has become progressively more sad-sounding and emotionally ambiguous. Our sample comprised over 1,000 Top 40 recordings from 25 years spanning five decades. Over the years, popular recordings became longer in duration and the proportion of female artists increased. In line with our principal hypotheses, there was also an increase in the use of minor mode and a decrease in average tempo, confirming that popular music became more sad-sounding over time. Decreases in tempo were also more pronounced for songs in major than in minor mode, highlighting a progressive increase of mixed emotional cues in popular music.

(Nod to Kevin Lewis, and thanks to LeBron, now that I think of it...)

Government = Anarchy

Chile and Bolivia find common ground.  Okay, not in politics, but in markets.  Okay, illegal markets.

But isn't that interesting?  Far from anarchy, the ONLY place these two countries can cooperate is in a sector where the government is not only not there to enforce contracts, but is actively trying to suppress the cooperation.  In every other way, Chile and Bolivia are nearly at war (to the extent that a national clown car like Bolivia can be "at war" instead of "at lunch").   POLITICS is anarchy, markets are orderly.  Even without government.

For markets, war is a liability, a cost.  For governments, war is an asset, and a revenue source.

They just need more frequent summits

Eurozone policymakers have produced an endless stream of summits with an endless stream of announcements, that generally make folks happy for a week or so. The latest summit that produced "Euro-wide" bank supervision/bailouts is no exception, as this graph from Soberlook demonstrates:

Spanish interest rates fell and stayed down for around 4 days before rising above pre-summit values (I know the graph is of the spread, but the same is true for the Spanish rate). The Euro appreciated and stayed that way for around 4 days before falling below pre-summit values.

I now believe there is only one way to save the Euro: Weekly Summits!!

Panda-mania!

        


Vote your preference in the comments.

Mr. Green Links

1.  I am agnostic about fracking.  Seems complicated.  But here we have the opinions of Natalie Merchant and other "artists," whose only qualifications for participating in the fracking debate is an incapacity for self-doubt.  Brought to you as always by the NYTimes, which is careful to provide the full range of views from the mildly wacky left to the completely insane left.

2.  At first I thought this was a hoax.  But it appears to be real.  At least, in the sense that any of the Obama "green jobs" hoaxes are real.  Okay, yes, so the whole "green jobs" thing is a hoax.  But it's a real hoax, not a hoax from "The Onion."  Again, the NYT appears never to have read any actual news.

3.  Not surprisingly, "green jobs" are a significant net cost.  Far from creation, these kinds of "investments" are actually job prevention.  How are you going to save the environment if you always go 'round breaking windows?  The Dub-MOE explains about broken windows.
BTW: Title with apologies to Hugh Brannum.

Another sh*&^y jobs report

Wow. 80,000 net new jobs in June. The last three months (after revisions) now come out to 68,000 - 77,000 - 80,000 and that "trend" is not going to help anyone anytime soon. As Mungo noted, job growth needs to almost triple for unemployment to significantly fall.

People, an infrastructure bank is not going to fix this. QE III is not going to fix this. Retroactive NGDP level targeting is not going to fix this. Tax increases are not going to fix this.

This morning Twitter is again ablaze with calls for the Fed to "finally" act.

Remember this is a Fed that has already kept its policy rate at nearly zero for multiple years and promised to do so until late 2014. A Fed that has vastly expanded its balance sheet pumping trillions of new reserves into the system. A Fed that has already engaged in a couple rounds of quantitative easing.

I believe that at the core of the calls for the Fed to act is a desire for higher inflation. Sure, that's fine with me, lets give it a try. But I don't think running inflation at say 4% is going to be a magic bullet.

Are there still nominal contracts that haven't yet been expired, adjusted or abrogated 4 years into this mess?

Can inflation double and nominal interest rates stick at their current rates? Will the Fisher effect really be neutered?

Even if real rates become a bit negative, will firms really start to make massive investments in projects they would expect to be unprofitable when discounted at zero percent or one percent?

When people call for the Fed to finally act or accuse Bernanke of dereliction of duty ask them this question:  What can the Fed do that will fix this mess, how exactly would the policy action be implemented and by what mechanism would it effect the cure?

And if their answer is that merely adopting a new policy target will cause an expectational change that fixes the mess?

RUN!!!

Gotta Love the NYTimes

The lede on the story on the jobs report, from the Grey Lady:

The increase in jobs, reported on Friday by the Labor Department, is not enough to significantly reduce the backlog of unemployed workers.

Um...yes. That's something of an understatement, since the cut-off for producing new jobs fast enough to reduce unemployment is 175,000 per month, and more like 225,000 per month if you take into account labor force participation effects. (What THAT means is that if we start creating jobs at 250k per month, people will reenter the labor force, and the unemployment rate may even go UP slightly).

David Leonhardt, playing the "Defend Obama at all costs!" game, said in May that 150,000 was the cutoff. And he also bent over backwards to say that things were getting better, when there is exactly zero evidence that that is true.

Look, folks, until someone makes some effort to (a) reduce military spending, (b) solve the growth of entitlement spending, and (c) turn off the spigot flooding businesses with new and unpredictable regulatory burdens, there will be no increase in jobs created. We are doing the deficit-spend thing about as much as is possible, and the Fed keeps firing its own bullet, right into the ocean. Ploop! Nada.

If this helps Romney, it's not because he has any kind of plan, or deserves to be helped. Romney has given no specifics of what he would do, or even how he thinks of what he might do.

Romney is running like an incumbent, in fact. Even though he has no indication of being able to address the three problems above. And the reason is, just like David Leonhardt said in May, that bad job growth numbers mean Obama loses. Not that Romney "wins," but that Obama loses.

I never thought Obama and co. would be this inept and pigheaded, but they are. They absolutely refuse to move from their position that the solution to the economic malaise is to pay more money to government employees and to fund their pensions.

"The private sector is doing fine," indeed. That was NOT a gaffe. It was a statement of core beliefs. Some people have said that Obama does not trust markets.  That's actually not true.  He has too MUCH faith in markets.  He thinks he can tax, regulate, and abuse people, and they will still doggedly go to work and try to make that cheddar.  That's not actually working out very well for him.

Or for us.

Possibly the worst cover of all time

Because Mrs. Angus is addicted to passionfruit iced tea, I now frequently go into Starbucks. Today I heard the most hideous cover of a great song I've heard in my half century plus on the planet.

It's Julia Stone, trying to sing like Joanna Newsom, covering the National's "Bloodbuzz Ohio"

Here's the original:




and here's the cover:





Curse you Starbucks and your delicious shaken iced tea!!

the possibilities are endless

Mrs. Angus and I recently bought a piece of dirt outside Santa Fe and are considering building there.

Originally we were going old school with traditional adobe walls both exterior and interior.

However, a somewhat new to America concept called Passive House, has caught our eye.

The idea is to build in a way that requires very little energy to heat and cool the house (often 80% less than typical new construction).

We are thinking of adding a smallish grid-tied solar system to make the house a net energy generator!

Kyrie!

As you all know, "Uncle Drew" was Kyrie. Nicely done. The video of the transformation, which you likely have also seen, is cute. On the off chance you haven't seen it... Kyrie is an extremely charismatic young man. I saw him on campus a few times, but of course he didn't stop and talk.

Andy Griffith

• In honor of our 26th wedding anniversary
• Because the Bishop needs cheering up (he scheduled a conference on his 40th anniversary, and will be hearing about this for the rest of his life on earth)
• And to honor Andy Griffth...

We give you Brad Paisley's "Waitin' on a Woman," featuring AG

You say it's your birthday

Here at KPC, we'd like to wish a Happy 4th of July Birthday to Malia Obama and The Situation.

However, there is a special trio of famous 4th of July birthdays that deliciously symbolize the state of our Republic on this its birthday.

People I give you the following holiday equation:

 PT Barnum + Rube Goldberg + Meyer Lansky = American Politics in 2012!
 

Marital Advice

Some quick marital advice:  I will celebrate 26 years of being with the LMM, on Thursday!  Hooray!  She is somewhat less excited.

It may be because she just got a new iPhone.  And then she could not get the voice mail set up on her iPhone.  She was more than a bit miffed about this.

So I set it up, with the following message, using my voice:  "This is [LMM's] phone.  She is digitally challenged, and so could not get her own voice on this greeting.  But if you leave a message, I promise that she will accidentally delete it and then yell at me."

For some reason, the LMM was MUCH more than miffed about this.  Now she is hearing my actual voice say,  "It was just a little joke, sweetie!  Sweetie?"

Anyway, the advice.  Don't try this at home.  I am TRAINED.  Sweetie?

The Grand Game

Is the US Government like a player of global "Monopoly?"

Should it be?

This is a truly odd paper.  The question is interesting, I suppose ("Should the US have purchased Alaska?"), but the answers...well, it's time for the Grand Game!  Please do share your views in comments.

Links

1.  Women who really like politics have more frequent....um, fun.

2.  The US should bury its power lines.  Because Germany does.  (David Frum is an idiot, in other words.  Germany has a population density of 600 per square mile.  The US has a population density of 83 per square mile.  Even the state of Virginia, where Mr. Frum is whining about missing his AC, has only a pop density of 196 per square mile.  It's just not economical, not even close to it...)

3.  Election determined by...100 million year old coastline, and geology of soil.  Closer to the Annales school, which is little known in US outside of history depts.

4.  In Korea:  Fan Death.  Yes, really.

5.  If Assange should be prosecuted for espionage, then the NYTimes should be, also.

Worst Fans? Most Dangerous Stadium?

Long-time reader RL writes, with considerable joy, that this means that Philly no longer can be said to have "the worst fans."

Some points:
1.  In Philly, if you get hit with a bullet, it was not "fired in celebration."  It was fired at you.  Probably by the police.

2.  In Philly, the fans don't get hit.  The players do.  Oh, and Santa Claus.  As Chuck Brodsky put it:

Philly fans, they’ve been known to get nasty
When Joe must go, they’ll run him out of town
I saw Santa get hit by a snowball
And then get hit again when he was down

So, no worries, RL: Philadelphia is still the place that would get wet first, if the world got diarrhea.

Entrepreneurship Summer Camp

So, I got myself into something difficult.  Being a professor, I do what many of us do, and assume that if students don't "get it," it's their fault for not being smart enough.  (I'm not as bad about this as Ricardo G, "El Certificador!"  He actually believes he stands between idiots and their diplomas, which would be meaningless without El Cert's watchful eye.  But I know I do sometimes blame the consumers when in fact the product is bad.)

But, in this case, I have agreed to give two four-hour* "classes" to a summer church camp.  The kids are 11-17 years old, and they come from (as the director described it) "urban backgrounds."  The time I have is 8:30 to noon, on Monday July 9 and Monday July 16.

My job?  To teach about (1) the American Constitution, (2) the importance of property and exchange, and (3) entrepreneurship.

You see the problem?  This is what people like me always whine about.  "No one is teaching our kids today about (1) TAC, (2) TIOP&E, or (3) Entrepreneurship.  THAT's the problem."  So, here's my chance. 

What you do?  I need advice.  Activities.  This obviously CANNOT be a lecture, or anything like a lecture.  11-17, summer, in a church basement, 8:30 am to noon.  What can I do that will help the kids think about the Constitution, property rights, and entrepreneurship?

I have gotten some ideas on some activities from http://www.econteachinglab.org/ .  And I can use some of those excellent videos from http://www.learnliberty.org/ (I think they will enjoy this one. http://youtu.be/oiZIsP7Ttqw  And of course this one by the Great Zwolinski** is wonderful http://youtu.be/NxBzKkWo0mo )

So, that will take up about...an hour.  Out of seven hours.  This needs to work, folks. I need advice.  Please comment, or send an email to mcmunger at gmail dot com

__________________________________

*Look at that.  "Four" "hour".  How can two almost identical words be pronounced so differently, with different numbers of syllables, in fact?  Bizarre.

**The Great Zwolinski should either be a magician, or a porn star, in my opinion.  A shame to waste that name on a philosopher.

Promises, Promises

Yesterday, Slate's Matt Yglesias tweeted,

"If Bernanke ended the recession tomorrow, it would be an admission that he could have ended it two years ago. So he won't."

Let's break it down, KPC style:

1. Matt, the recession is over. The NBER dates the business cycle and puts the end of the recession as June 2009!  Matt is not the only one doing this, but it is misleading and quite incorrect to do so.

2. For argument's sake, let's replace "ended the recession" with "accelerated growth". Then the conditional statement would be true. If BB could instantly accelerate growth tomorrow, he also could have done it two years ago.

3. Consider all the things BB has done to try and accelerate growth. Short term rates at zero. Promising to keep short term rates at zero for years (until late 2014). Pumping reserves into the system at an historically unprecedented rate. Two rounds of quantitative easing.

4. Matt doesn't say how BB could accelerate growth tomorrow (he only had 140 characters). I assume Matt means that BB could make a policy announcement that would instantly change everything. Something like a retroactive commitment to an nominal GDP path or a retroactive commitment to a price level path. If that's not what Matt means, then I apologize and withdraw what follows below.

5. The key for policies like that to work, even in theory, is that BB must, in Paul Krugman's words, "credibly promise to be irresponsible" and I see no way for the Fed to do so in general, let alone in this political environment. It's a lot harder than it might seem (to get an idea of how hard, check out Svensson's "foolproof way" paper).

6. I too am unhappy with the current state of the US economy. Growth is too slow and unemployment is too high. But it simply is not in the power of any single person in the world to change that in a day. Implying that BB is deliberately keeping the US economy down does not serve any constructive purpose.