Benjamin Studebaker

Yet Another Attempt to Make the World a Better Place by Writing Things

Tag: Federal Reserve

May 15, 2023

Biden Edges Toward Repeating Obama’s Worst Mistake

President Biden is negotiating with congressional Republicans to raise the debt ceiling, and there are reports that progress is being made on a deal that involves “cutting spending.” There has been talk that Biden might try to avoid a deal by minting the coin or invoking the 14th amendment. But Biden has always emphasized that he values consensus and compromise. The conservative Supreme Court might not go along with an attempt to use the 14th amendment, and shoving the coin down his opponents’ throats has never really been Biden’s style. It all reminds me of the debate from a decade ago. This blog was young back then, and I wrote a lot about Obama’s negotiations. Let’s revisit that period, shall we?

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March 22, 2023

The Reaction to the Fall of Silicon Valley Bank

The fall of Silicon Valley Bank (SVB) generated several different media narratives. All seem to agree that SVB failed because it was dependent on low-yield long-term US treasury bonds. These bonds were safe in the years following the global financial crisis of 2008, but they lost value when interest rates increased in 2022. The disagreements are over what this fact means.

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May 16, 2020

Why Federal Stimulus is Always Too Small

We never seem to learn anything. The global economic crisis of 2008 should have taught us a lot about how governments cope with major economic shocks, but the level of analysis in 2020 has been abysmal. The Great Recession reduced US economic output by 4.2% and destroyed 8.7 million jobs. To counteract the loses, the federal government injected stimulus, first through the Bush administration’s Troubled Asset Relief Program (TARP), and then through the Obama administration’s American Recovery and Reinvestment Act. Combined, these two programs provided about $1.2 trillion. That’s about $285 billion per percentage of point of GDP. It wasn’t enough. The economy recovered very slowly, too slowly for the Obama administration to maintain public support. The Democrats lost the House decisively in 2010. Obama tried to get an additional $447 billion in 2011, but the Republicans had no interest in it. Instead, they pushed for deficit reduction. Obama tried to play nice with them, signing the Budget Control Act in August and making one last push for more stimulus in the Fall. They took his cookies. The second stimulus never happened. As the years went by, rural America continued to lose jobs, and grew more and more resentful, setting the stage for Donald Trump in 2016.

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October 26, 2016

John Oliver Doesn’t Understand How Stein’s Student Debt Policy Works

Last Week Tonight‘s John Oliver recently ran a segment in which he slated Jill Stein’s proposal to eliminate student debt through quantitative easing:

His criticism seemed to suggest that the Federal Reserve is obviously irrelevant in this policy area:

It’s basically akin to saying, ‘I’ll make us energy independent by ordering the Post Office to invade Canada.’ No, Jill. That’s impractical, it’s a terrible idea, and you don’t seem to understand anything about it.

Oliver, who is usually quite perceptive and well-informed, gets this wrong, and he gets it wrong in no small part because monetary policy is complicated and difficult to understand, both in terms of the economics and in terms of the politics. So let’s talk about how Stein’s idea works.

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January 2, 2014

Bartels Redux: The Fed’s Political Influence

I have been somewhat dissatisfied with the explanations I offered a few days ago for the surprising gap between democratic and republican economic performance in election years. Today I have decided to dig a little deeper, and I believe I have found a more satisfactory explanation for the gap.

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