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Sunday, February 24, 2013

Thursday, February 21, 2013

This is what keeps me awake nights....

Prof. John H. Cochrane, writing in the Jan. 25 issue of the Hoover Digest:
Momentous changes are under way in what central banks are and what they do. We're accustomed to thinking that central banks' main task is to guide the economy by setting interest rates. Their main tools used to be "open market" operations, that is, purchasing short-term Treasury debt, and short-term lending to banks.
Since the 2008 financial crisis, however, the Federal Reserve . . . has crossed a bright line. Open-market operations do not have direct fiscal consequences, or directly allocate credit. That was the price of the Fed's independence, allowing it to do one thing—conduct monetary policy—without short-term political pressure. But an agency that allocates credit to specific markets and institutions, or buys assets that expose taxpayers to risks, cannot stay independent of elected, and accountable, officials.
In addition, the Fed is now a gargantuan financial regulator. Its inspectors examine too-big-to-fail banks, come up with creative "stress tests" for them to pass, and haggle over thousands of pages of regulation. When we imagine the Fed of ten years from now, we're likely to think first of a financial czar, with monetary policy the agency's boring backwater.

Tuesday, February 19, 2013

Time to start worrying.

I have not given future inflation much of a thought in the last 20 years or so. Now I am. Never mind the threat of inflating our way out of any future debt problem. If central banks think they can seamlessly unwind their balance sheets with no complications, that is hubris. And they are not even close to stopping the winding.

Friday, February 8, 2013

Notable and Quotable from the Wall Street Journal...

The bad news for Congressional Democrats and their spending interests is that the noose only tightens after this year. Mr. Obama's sequester mandates roughly $1.2 trillion of discretionary cuts over the next decade. But if Democrats really want to avoid a sequester, they should stop insisting on higher taxes and start getting serious about modernizing the entitlements like Medicare and Medicaid that comprise the other 60% of government. If they won't, then sequester away.

Monday, February 4, 2013

Herbert Marcuse and the New Left. This is the guy Dan Henninger in the Wall Street Journal claims the President is emulating.

"Liberating tolerance, then, would mean intolerance against movements from the Right and toleration of movements from the Left."
"Surely, no government can be expected to foster its own subversion, but in a democracy such a right is vested in the people (i.e. in the majority of the people). This means that the ways should not be blocked on which a subversive majority could develop, and if they are blocked by organized repression and indoctrination, their reopening may require apparently undemocratic means. They would include the withdrawal of toleration of speech and assembly from groups and movements which promote aggressive policies, armament, chauvinism, discrimination on the grounds of race and religion, or which oppose the extension of public services, social security, medical care, etc"
Citation at :