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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: average joe who wrote (67666)	11/3/2013 5:31:15 PM
From: greatplains_guy	Respond to of 71588

She is the result of leftist education. Don't be shocked when she is followed by legions of similarly ill informed.

To: average joe who wrote (67666)	12/10/2013 8:17:54 PM
From: Peter Dierks	Read Replies (1) \| Respond to of 71588

Janet Yellen and the Phillips Curve By Rich Danker December 10, 2013 Unlike bell-bottoms and AstroTurf, the Phillips curve is a fad from the 1970s that never really went away. With the Senate facing a vote after the Thanksgiving recess on Janet Yellen, a devotee of the theory, to lead the Federal Reserve, the Phillips curve is suddenly relevant again. That can only dismay a generation of economists who learned in the '80s and '90s that low inflation is a condition for robust economic growth. The idea of a tradeoff between inflation and unemployment was first raised at length in a 1958 paper by the New Zealand economist A.W. Phillips, in which he tracked a century's worth of wage and jobless rate changes in the United Kingdom. Phillips understood the dynamics of the commodity market -- if the demand for a product rises then so does its price -- to apply to the long-term labor market. Revisions of this model by other economists (namely Milton Friedman) in the modern paper money world found that this theory does not apply in the long run after all. Higher prices only give the appearance of an increase in real demand. Workers will ask for higher nominal wages to keep up with the inflation. Companies recognize that demand hasn't increased after all, and refrain from hiring more workers. Inflation does not create jobs after all; it just raises the sticker price of goods and labor. The main harm done by the Phillips curve, as former Federal Reserve Bank of Cleveland President Jerry Jordan describes in his 2012 paper "Friedman and the Phillips Curve," is that it quickly became a method for economists to attempt to "fine tune" levels of inflation and unemployment they believed reflects socially desirable outcomes. Allow a little more inflation to get a little less unemployment, or vice versa depending on the direction chosen. The central bank serves as the state's economic planner. Through Friedman, and later the stagflation triggered by the end of the gold exchange standard in 1971, we learned that inflation is a monetary phenomenon. It cannot boost economic output for very long, nor does output cause inflation. High inflation coincided with slow growth in the 1970s, then the economy expanded rapidly under low inflation in the 1980s. From this vista the Phillips Curve was an artifact of history. Then Janet Yellen and a coterie of likeminded economists stormed the Fed in the mid-1990s. Though the no-nonsense Alan Greenspan chaired the institution during these years, Yellen and her colleagues frequently invoked the Phillips curve during her tenure on the board of governors from 1994-1997. Greenspan's focus on the goal of price stability, combined with proposed congressional legislation to affirm that in statute, prompted Phillips curve devotees on the Federal Open Market Committee to warn about the dangers of low inflation for output and employment. Yellen, for one, was willing in the FOMC's first meeting of 1995 to stipulate how much exactly: "Each percentage point reduction in inflation costs on the order of 4.4 percent of gross domestic product, which is about $300 billion, and entails about 2.2 percentage-point-years of unemployment in excess of the natural rate," she claimed. How does Yellen arrive at these projections? She did not say in the meeting. Her husband, the economist George Akerlof, has done work on this topic and in a paper the following year for the Brooking Institution estimated that permanent GDP growth would be 1-3 percentage points lower and unemployment 2 percentage points higher under a policy of zero inflation. Akerlof has written that he and his wife have "always been in all but perfect agreement about macroeconomics." If you believe that lower inflation causes economic harm, there's not much constraint to opening the door to a little more inflation. In the same FOMC meeting Yellen said, "To me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target." Then why have a price target at all? Yellen believes that the central bank should maintain enough inflation to prop up business activity, because "uncertainty about sales impedes business planning and could harm capital formation just as much as uncertainty about inflation can create uncertainty about relative prices and harm business planning." This approach extends the Fed's mission beyond even the dual mandate of Humphrey-Hawkins and into the sphere of American corporate activity, a place that the business economist Greenspan was reluctant to go. Yellen, a disciple of predictive modeling, dismisses the notion that the Fed could go too far. To her the record shows that "tuning works even if it is not 'fine.'" Those words express the Phillips curve in a nutshell. It's the belief that economic policymaking is the practice of top-down management of the economy, informed by the assumed tradeoff between inflation and unemployment. It isn't just the 1970s, but the last few years, that show how money creation does not produce permanent employment gains. This was raised time and time again at Yellen's recent Senate Banking Committee hearing, when several Democrats bemoaned the absence of any "trickle down" effect from quantitative easing. Do we want the Fed to double-down on that folly with Janet Yellen at the helm? Rich Danker is economics director for American Principles Project, a non partisan policy organization americanthinker.com

To: average joe who wrote (67666)	12/11/2013 8:42:15 AM
From: Peter Dierks	Respond to of 71588

Warren's Way or No Way (Elizabeth Warren the fake Indian) Liberal Democrats try to silence two of our op-ed writers. Dec. 10, 2013 7:18 p.m. ET Remember when Bill Clinton was twice elected President as a "New Democrat" who wanted to get along with people in the private economy? Nowadays even writing in favor of ideas that Mr. Clinton supported can get you branded a heretic and banished from impolite liberal society. Witness the political tempest that blew up in response to the December 3 op-ed we published by Democrats Jon Cowan and Jim Kessler of the Third Way think tank. The former aides to Andrew Cuomo and Chuck Schumer, respectively, would be considered liberals in most places outside of the Harvard faculty lounge. But the campus and union left that increasingly controls the Democratic Party has launched a campaign to purge them for their deviation from progressive dogma. Messrs. Cowan and Kessler had the temerity to suggest that the average American voter might not be as liberal as the New Yorkers who chose Mayor-elect Bill de Blasio or the Massachusetts voters who fell for Senator Elizabeth Warren. They argued that economic populism of the redistributionist kind was a political loser in most of America. The authors were also guilty of acknowledging research from the Congressional Budget Office showing that Social Security is going broke. Progressives believe it's high treason to admit the undeniable fact that such entitlements are paying out more in benefits than they collect in taxes. If left unchecked, such candor might motivate politicians to consider reform, and the last thing the left wants is a debate over the limits of the welfare state. But the progressives didn't try to rebut the op-ed's arguments. Instead they set out to silence Third Way, intimidate Democratic politicians and donors into disavowing the group, and discredit the think tank on grounds that—gasp!—some of its supporters work at financial companies. The Progressive Change Campaign Committee and other liberal groups called on Representative Allyson Schwartz (D., Pa.), a Third Way honorary co-chair and gubernatorial candidate, to cut ties with the group. Ms. Schwartz, who is running for Governor of Pennsylvania, denounced the op-ed faster than you can say Reeducation Camp. Senator Warren made her contribution to the new progressive orthodoxy by sending a letter to six large banks demanding that they disclose donations to think tanks. "If the information provided by think tanks is little more than another form of corporate lobbying, then policymakers and the public should be aware of the difference," wrote the Member of the Banking Committee that oversees banks. Ms. Warren, who was well paid as a lawyer for business clients even as she pursued her liberal political causes at Harvard, seems to think that every think tank is merely a mouthpiece for donors. Heaven forbid Messrs. Cowan and Kessler might believe what they write. Times sure have changed. In the early 1990s, Bill Clinton and other Democrats were only too happy to pick up the ideas of the business-financed Progressive Policy Institute that promoted free trade and government reform. The idea was to prove to a skeptical electorate that Democrats could be trusted with economic policy. But many of today's ascendant Democrats are out to prove that they don't trust anyone who works for a profit-making institution and who doesn't also carry a union card. If their ideas are so superior, then why are they so afraid of debating them with other Democrats? online.wsj.com