Friday, December 26, 2014

Related to that Christmas Eve post...

There's a piece in today's Wall Street Journal called "The Fed's Needless Flirtation With Danger" in which Martin Feldstein writes that to stimulate demand, "Well-designed tax rules are a safe and effective alternative to quantitative easing".  Dr. Feldstein argues that we'd have been better served by stimulative tax policies that induce businesses to make new investments and help consumers consume, as opposed to so much QE.   

Unrelated to that X-mas Eve post...

I once saw an Economist on Squawk Box who insisted that nearly all economists collectively agree on nearly all major policy prescriptions.  I
Nassim Taleb, Wikipedia
wish I could recall his name. 
He still strikes me as wishful.  In my opinion, the guy wanted viewers to believe that the discipline of economics actually breeds the kind of certainty found in the natural sciences.  

In any case, wouldn't a Krugman-Feldstein debate or a Taleb-Krugman debate be an interesting spectacle?  I'd settle for a Twitter smack-down.
Paul Krugman, Wikipedia

I miss the old TV debates that featured thought leaders at opposite ends of a policy spectrum, hashing out their differences on politics and economics.  My favorite debater remains the late William F. Buckley.*
*Amazon Prime members can access some of WFB's old Firing Line debates -- free.
WFB, Wikipedia

Wednesday, December 24, 2014

Holiday cheers for the American consumer

Have you read about the recent boost in U.S. consumer spending?  Of course you have and you know it is widely attributed -- at least in part -- to a steep drop in energy prices, particularly a drop in gasoline prices.   

Office.com clip art
This development is often described by the financial press as a tax cut because the dollar benefit accrues to the consumer in much the same way a tax cut does.  That is, by paying less at the pump, we automatically keep more of what we earn.  I wonder how Keynesian-devotees and other Paul Krugman types (who routinely advocate for enormous government spending to stimulate demand), are reacting.  

It appears that putting money directly in the hands of taxpayers, also spurs consumption.  Shocking.