J. Bradford DeLong's Blog, page 2255

DeLong Smackdown Watch: Mark Thoma

Mark Thoma writes to inquire why I am endorsing a helicopter drop--a money printing-financed mass mailing of tax rebate checks--when a money printing-financed increase in government purchases dominates it from an economic point of view. Aren't I surrendering to the dysfunctionality of our political system rather than fighting it?

Mark Thoma snarks:

I am very simplistic.

When you trade money for bonds, it simply changes the composition of what people have in savings. Before it...

After the British Financial Crisis and Depression of 1825-6, Jean-Baptiste Say Was too Smart to Believe in Say's Law

Jean-Baptiste Say (1828-30), Cours Complete d'Economie Politique Pratique: Ouvrage Destiné à Mettre sous les Yeux des Hommes d'État, des Propriétaires Fonciers et des Capitalistes, des Savants, des Agriculteurs, des Manufacturiers, des Négociants et en Général de Tous les Citoyens, l'Économie des Sociétés, I, pp. 474-5:

La crise commercial qui en lieu en Angleterre est propre à faire sentire les inconvénients qui peuvent naitre de cette faculté illimitée de multiplier l'agent de la...

Added to the Pile: The Childish Babble of a Say...

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Liveblogging World War II: July 14, 1940

BBC reporter Charles Gardner comments live on a dogfight over the Channel:

Air Battle off Dover

Ladies and Gentlemen, Start Your Engines...

Tyler Cowen is enlisted in the helicopter drop squadron:

Marginal Revolution: Will a helicopter drop of money stimulate aggregate demand?: I am happy to see Paul Krugman address the question. He writes.... "[A:] helicopter drop is just like a temporary lump-sum tax cut. And we would expect people to save much or most of such a tax cut — all of it, if you believe in full Ricardian equivalence." I hold a different opinion for two reasons.  First, cash and short-term bonds may be...

Lawrence Summers: The Economic Case for Extending Unemployment Insurance

Lawrence Summers:

The Economic Case for Extending Unemployment Insurance: The lapse in extended unemployment insurance benefits at the end of May has resulted in 2.5 million jobless Americans exhausting their assistance.  If we do not reinstate benefits by the end of the month, this number will grow to 3.2 million.  These losses are exacting an enormous human toll on families who count on these benefits as they continue to search for jobs.

As the President recently remarked:&nbsp...

Helicopter Drop Time: Paul Krugman Gets One Wrong

He writes:

Nobody Understands The Liquidity Trap: [W:]hen you have bought so much debt and created so much money that [short-term safe nominal:] rates are near zero, the public is saturated with liquidity; from that point on, they’re holding money simply as a store of value, which makes it no different from bonds — and hence a perfect substitute for bonds. And at that point further open-market operations do nothing — they just swap one zero-interest asset for another, with no effect on...

Slower Economic Growth in the Future as a Result of the Financial Crisis

How much slower? I don't know. But it will be slower. 0.2% per year? 0.1% per year?

We are live at the Economist:

Will the financial crisis and its aftermath lower the world economy's potential rate of growth?:

Yes, largely because central bankers will behave differently

Brad DeLong our guest wrote on Jul 14th 2010, 12:56 GMT
I THINK that the answer has to be yes.

The net result of the financial crisis will be that the world's average unemployment rate and level of capacity...

Jonathan Bernstein on Barack Obama

He writes:

Energy in the Executive: [Y:]ou can't win if you don't play, and that's been the story far too often on appointments.

And Erskine Bowles Worries Me too...

Dean Baker:

Bowling Alone? Erskine Bowles Goes Off the Deep End: When the co-chairman of President Obama's deficit commission gets his deficit numbers off by 100 percent, you would think this would be worth a little media attention. But apparently this is not the case. Therefore when Erskine Bowles warned the National Governors' Association that the country would be spending $2 trillion a year in interest on the debt in 2020, virtually no reporters thought it was worth mentioning that he...