Plain Sense Economics

I find that the older I get the more interested in history I become. Perhaps that’s because more events described in history texts are ones that I either experienced or knew about in contemporary times. Or, perhaps history is just comforting. Today we note some parallels with the European Debt/Monetary crisis and the early years [...]

In Macro class today we talked about what is really a dual decision. First, should our national policy encourage spending or saving? Second, should government actions favor consumption or investment?
First, some definitions and a smidgen of theory. There is a simple dichotomy over  how a family or a nation uses their income. They can spend [...]

So, who cares about the Greek debt crisis? It’s a small country, a long ways away.
Answers:
Greece as a Country: “We care!”
The Euro currency countries: “We care!”
Europe Generally: “We care!”
U.S. and International Financial Community: “We care!”
Stock Investors: “We care!”
All right, already.  Here’s why they care.
The background
Through a series of missteps over the last 10 years the [...]

If we can peel away the political posturing, there is an important argument in the issue of how best to generate a recovery in our country’s economy. Put simply, the question is whether producers (employers) are the answer and we should do everything we can to encourage them, or whether we should do something to [...]

Robert Reich served as President Clinton’s Secretary of Labor. He’s been almost more vocal than Paul Krugman in recent months about the lunacy of cutting federal spending in a time of high unemployment. For an end of summer chuckle, watch him describe the results of a credit downgrade.

More seriously, Reich has been consistently beating the [...]

The U.S. has a temporary reprieve on the debt ceiling limit – tax revenues have come in higher than expected in the early part of the year, reducing the needed pace of borrowing by the U.S. government. While this has pushed the deadline for Congressional action back by a month or more, the rhetoric in [...]

Freidrich Hayek and the Austrian school of economic policy argue for a laissez faire approach to the economy – emphasizing individual actions and criticizing government intervention. John Maynard Keynes acknowledged that economies could, over time, correct themselves, but argued that government had a responsibility to intervene and stimulate demand when the economy is in a [...]

Congress has been deadlocked on the issue of restoring or changing the tax cuts passed in 2001 and 2003. Those original cuts had a sunset provision – the cuts end on December 31, 2010. If Congress does nothing, income tax rates, including capital gains and estate taxes, return to their 2000 levels.  Democrats want to [...]

James Surowiecki writes in The New Yorker that a combination of thoughtful, but less visible stimulus decisions and some less effective decisions made it hard for the American people to believe the 2009 fiscal stimulus worked.
[The] Washington stimulus has become the policy that dare not speak its name. This wouldn’t be surprising if we [...]

Jasen Hartford, a friend and past student, recently asked me,
As we all know, the European Union has recently been under the lime light with their budget deficit problem – causing a lot of anxiety for investors in the U.S. I’m curious if there’s a reason why the even greater deficit in [...]