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President Biden Makes Three Nominations to the Federal Reserve’s Board of Governors

The terms of the seven members of the Fed’s Board of Governors are staggered with a new 14-year term beginning each February 1 of even-numbered years. That system of appointments was intended to limit turnover on the board with the aim of avoiding sudden swings in monetary policy. But because in practice board members often … Continue reading “President Biden Makes Three Nominations to the Federal Reserve’s Board of Governors”

Macroeconomics or Microeconomics? Is a Lack of Competition in Some Industries Behind the Increase in Inflation?

In January 2022, the Bureau of Labor Statistics (BLS) announced that inflation, measured as the percentage change in the consumer price index (CPI) from December 2020 to December 2021, was 7 percent. That was the highest rate since June 1982, which was near the end of the Great Inflation that lasted from 1968 to 1982. … Continue reading “Macroeconomics or Microeconomics? Is a Lack of Competition in Some Industries Behind the Increase in Inflation?”

Lawrence Summers Remains Pessimistic about Inflation

Lawrence Summers, professor of economics at Harvard University and secretary of the Treasury under President Bill Clinton, has been outspoken in arguing that monetary and fiscal have been too expansionary. In February 2021, just before Congress passed the American Rescure Plan, which increased federal government spending by $1.9 trillion, Summers cautioned that “there is a … Continue reading “Lawrence Summers Remains Pessimistic about Inflation”

Glenn’s Article from the Atlantic: “Even My Business-School Students Have Doubts About Capitalism”

Link to the article on the Atlantic’s site. During a lecture in my Modern Political Economy class this fall, I explained—as I have to many students over the course of four decades in academia—that capitalism’s adaptation to globalization and technological change had produced gains for all of society. I went on to say that capitalism … Continue reading “Glenn’s Article from the Atlantic: “Even My Business-School Students Have Doubts About Capitalism””

How Do We Know When the Economy Is at Maximum Employment?

According to the Federal Reserve Act, the Fed must conduct monetary policy “so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” Neither “maximum employment” nor “stable prices” are defined in the act. The Fed has interpreted “stable prices” to mean a low rate of inflation. Since 2012, … Continue reading “How Do We Know When the Economy Is at Maximum Employment?”

New Information on Fed Policy Affects Stock and Bond Prices

Most economists believe that monetary policy actions, such as changes in the Fed’s pace of buying bonds or in its target for the federal funds rate, affect real GDP and employment only with a lag of several months or longer. But monetary policy actions can have a more immediate effect on the prices of financial … Continue reading “New Information on Fed Policy Affects Stock and Bond Prices”

President Biden Decides to Reappoint Jerome Powell as Fed Chair

When Congress established the Federal Reserve System in 1913, it intended to make the Fed independent of the rest of the federal government. (We discuss this point in the opener to Macroeconomics, Chapter 15 and to Economics, Chapter 25. We discuss the structure of the Federal Reserve System in Macroeconomics, Chapter 14, Section 14.4 and in Economics, Chapter 24, … Continue reading “President Biden Decides to Reappoint Jerome Powell as Fed Chair”

The U.S. Dollar in the World Economy

The U.S. dollar is the most important currency in the world economy. The funds that governments and central banks hold to carry out international transactions are called their official foreign exchange reserves. (See Macroeconomics, Chapter 18, Section 18.1 and Economics, Chapter 28, Section 28.1.) There are 180 national currencies in the world and foreign exchange reserves can be … Continue reading “The U.S. Dollar in the World Economy”

The Case of the Missing Highways

In November 2021, Congress passed and President Joe Biden signed the trillion dollar Infrastructure Investment and Jobs Act, often referred to as the Bipartisan Infrastructure Bill (BIF). The bill included funds for: Highways and bridges Buses, subways, and other mass transit systems Amtrak, the federally sponsored corporation that provides most intercity railroad service in the … Continue reading “The Case of the Missing Highways”

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