Rubio's call for a single mandate for the Federal Reserve is a dangerous, and potentially disastrous, idea. Unless that single mandate is targeting nominal GDP instead of inflation.
Marco Rubio wants to be president, and unfortunately for him that means he's supposed to have an opinion about everything. I say unfortunately because Rubio has had a hard enough time figuring out the age of the earth, let alone one of the great mysteries like what the Fed should be doing now. The latter came up during Rubio's acceptance speech at the Jack Kemp foundation, and, as Dave Weigel of Slate reports, it did not go well. Hey, he's not a central banker, man.
A long time ago in an administration far, far away, the Republicans were the party of Milton Friedman. It was 2004. As Paul Krugman points out, then-chairman of the Council of Economic Advisers Greg Mankiw advocated aggressive monetary policy as a way to mitigate recessions. This was economic boilerplate, but it was only boilerplate because of Friedman. After the Great Depression, economists didn't think central banks could do much to revive the economy if interest rates fell to zero -- the so-called liquidity trap -- and monetary policy consequently took a backseat to fiscal policy when it came to demand management. Friedman reversed this. He and Anna Schwarz argued the Great Depression was only so great because the Fed's inaction made it so. In other words, central banks were only powerless if they thought they were. They could do plenty, even in a liquidity trap, if they just printed money and promised to keep printing money -- what we rather prosaically call "quantitative easing" nowadays. It was a message conservatives could, and did, love. The government didn't need to spend more to stabilize the economy during a downturn as long as the Fed did its job.
And then the Great Recession happened.
With interest rates stuck at zero and the economy stuck in a growth slump, we're very much back in Friedman's world. But now conservatives aren't so sure about that "aggressive monetary policy" thing anymore. Zero interest rates just seem wrong, and quantitative easing must be a big government bailout on the road to Zimbabwe -- at least that's what they've told themselves, despite stubbornly low inflation. Of course, some conservatives claim inflation is "really" much higher than the government says, but, as Ramesh Ponnuru of National Review points out, this conspiracy theory doesn't withstand much more than two seconds of scrutiny.
This paranoid style in monetary policy has inspired a rather odd political crusade -- the crusade against the Fed's dual mandate. Most central banks are only tasked with worrying about inflation, but the Fed is tasked with worrying about inflation and unemployment. (Or, in Fed-speak, fostering the maximum level of employment consistent with price stability). This has become a bête noire for conservatives, because they think that were it not for the Fed caring about unemployment -- the horror! -- then it wouldn't have expanded its balance sheet so much, and that this expanded balance sheet will inevitably mean higher inflation down the road. Apparently Marco Rubio is one of these conservatives who sees the stagflationary 1970s around every corner. Here's what he said to say about the Fed.
Sound monetary policy would also encourage middle class job creation. The arbitrary way in which interest rates and our currency are treated is yet another cause of unpredictability injected into our economy. The Federal Reserve Board should publish and follow a clear monetary rule -- to provide greater stability about prices and what the value of a dollar will be over time.
Translation: Repeal the dual mandate and replace it with a single mandate for inflation only. This is all kinds of uninformed. As we have pointed out before, inflation has been lower with over four times less variance since Congress gave the Fed its dual mandate in 1978. And with inflation mostly undershooting its 2 percent target since Lehman failed, it's not as if the Fed even needed the dual mandate to justify easing -- a sole inflation mandate would have been enough.
But Rubio is right that the Fed needs a better, clearer monetary rule nowadays. That's not to say that Fed policy has been arbitrary, but just that its rule needs some modernizing. For most of the so-called Great Moderation, the Fed followed something close to a Taylor rule, setting policy based on inflation and unemployment, and it served the Fed well. Greg Mankiw has his own simple version of a Taylor rule, which Paul Krugman tweaked slightly, that gives us a good idea of how the Fed thought then, as you can see below.
You can see why the Great Moderation gave way to the Great Recession. Our Taylor rule says the Fed should have made interest rates negative in late 2008, but the Fed can't make interest rates negative. Well, at least not nominal rates. The Fed can increase inflation, which reduces real rates, to get borrowing costs to where they "should" be -- which is what Ben Bernanke has done, in fits and starts, the past four years. You can see all these fits and starts in the chart below that compares our same Taylor rule to Fed policy since 2006. It's not easy to get real rates down to -7 percent.
There have been far too many fits and not nearly enough starts since 2008. Yes, the Fed tried unconventional easing in late 2008, early 2009, late 2010, late 2011 and late 2012, but it should have been easing this whole time. The Taylor rule has been negative this whole time, which means that the Fed should have been cutting interest rates, and cutting them a lot, this whole time. Instead, we got zero rates. Because inflation hasn't been that far off target, Bernanke has had a hard time convincing the rest of the FOMC to go along with quantitative easing -- so easing has been far less quantitative than the situation calls for. In other words, policy hasn't quite been arbitrary as much as ad hoc, with the unhappy result being an era of tight money.
Imagine the Fed had a single mandate, but not for inflation. Imagine instead the Fed had a single mandate for the total size of the economy, which goes by the unwieldy name of nominal GDP (NGDP). During the Great Moderation, NGDP grew about 5 percent a year, but it's only grown about 2.85 percent a year since 2008. If the Fed had an NGDP target of 5 percent a year, and was supposed to make up for any over-or-undershooting, it would have been aggressively easing the entire time since 2008. It's a dual mandate that doesn't get confused by low inflation and low growth.
Trump’s greatest gift to the GOP may be the distraction he’s provided from other party meltdowns.
Even though 2016 appears to be the year of painful, public disqualification from higher office, you may be forgiven for not noticing the extraordinary implosion of New Jersey Governor Chris Christie. After all, the Trump surrogate and White House Transition chair has benefitted from his early endorsement of the Republican presidential nominee in unusual fashion: Christie’s power in the Grand Ole Party has decreased, rather than increased. The likelihood of a plum position in the Trump administration—Attorney General, perhaps, since Christie was spurned as the Republican running mate—is decidedly dim, what with the presently apocalyptic predictions about November 8.
Instead, Trump’s gift to Christie has been shadow: the top Republican’s national meltdown has obscured that of the one-time rising Republican star and sitting New Jersey governor. But make no mistake—Christie’s is a fall of epic proportions, precipitated by an unfathomably petty revenge plot. The contrast of the two, the top-heavy-ness of the fallout compared to the insignificance of the initial transgression, would be comic, were it not so tragic. Remember that in November of 2012, Governor Christie had a 72 percent approval rating. Today, it stands at 21 percent.
The president’s final appearance on the whimsical late-night show indulged in some humor, but for the most part it made a case for seriousness.
The Choice, Frontline’s quadrennial documentary about the two final candidates who have become the major-party presidential nominees, made a remarkable argument this cycle around. Donald Trump’s candidacy, the documentary suggested, may have arisen as a result of some jokes made by President Obama. During the height of Trump’s birther phase in 2011, Obama gave a speech at the White House Correspondents’ Dinner, laying into Trump with joke after joke.
“It just kept going and going,” recalled Trump’s now-campaign staffer, Omarosa Manigault, “and he just kept hammering him. And I thought, ‘Oh, Barack Obama is starting something that I don’t know if he’ll be able to finish.’” Trump’s fellow adviser, Roger Stone, agreed: “I think that is the night that he resolves to run for president. I think that he is kind of motivated by it. ‘Maybe I’ll just run. Maybe I’ll show them all.’”
Some researchers believe that the microbiome may play a role in regulating how people think and feel.
By now, the idea that gut bacteria affects a person’s health is not revolutionary. Many people know that these microbes influence digestion, allergies, and metabolism. The trend has become almost commonplace: New books appear regularly detailing precisely which diet will lead to optimum bacterial health.
But these microbes’ reach may extend much further, into the human brains. A growing group of researchers around the world are investigating how the microbiome, as this bacterial ecosystem is known, regulates how people think and feel. Scientists have found evidence that this assemblage—about a thousand different species of bacteria, trillions of cells that together weigh between one and three pounds—could play a crucial role in autism, anxiety, depression, and other disorders.
Hillary Clinton and Donald Trump prepare for the final sprint to Election Day.
It’s Monday, October 24—the election is now less than three weeks away. Hillary Clinton holds a lead against Donald Trump, according to RealClearPolitics’ polling average. We’ll bring you the latest updates from the trail as events unfold. Also see our continuing coverage:
Services like Tinder and Hinge are no longer shiny new toys, and some users are starting to find them more frustrating than fun.
“Apocalypse” seems like a bit much. I thought that last fall when Vanity Fair titled Nancy Jo Sales’s article on dating apps “Tinder and the Dawn of the ‘Dating Apocalypse’” and I thought it again this month when Hinge, another dating app, advertised its relaunch with a site called “thedatingapocalypse.com,” borrowing the phrase from Sales’s article, which apparently caused the company shame and was partially responsible for their effort to become, as they put it, a “relationship app.”
Despite the difficulties of modern dating, if there is an imminent apocalypse, I believe it will be spurred by something else. I don’t believe technology has distracted us from real human connection. I don’t believe hookup culture has infected our brains and turned us into soulless sex-hungry swipe monsters. And yet. It doesn’t do to pretend that dating in the app era hasn’t changed.
In the 1970s, a new wave of post-Watergate liberals stopped fighting monopoly power. The result is an increasingly dangerous political system.
It was January 1975, and the Watergate Babies had arrived in Washington looking for blood. The Watergate Babies—as the recently elected Democratic congressmen were known—were young, idealistic liberals who had been swept into office on a promise to clean up government, end the war in Vietnam, and rid the nation’s capital of the kind of corruption and dirty politics the Nixon White House had wrought. Richard Nixon himself had resigned just a few months earlier in August. But the Watergate Babies didn’t just campaign against Nixon; they took on the Democratic establishment, too. Newly elected Representative George Miller of California, then just 29 years old, announced, “We came here to take the Bastille.”
We can all agree that Millennials are the worst. But what is a Millennial? A fight between The New York Times and Slate inspired us to try and figure that out.
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We can all agree that Millennials are the worst. But what is a Millennial? A fight between The New York Times and Slate inspired us to try and figure that out.
After the Times ran a column giving employers tips on how to deal with Millennials (for example, they need regular naps) (I didn't read the article; that's from my experience), Slate's Amanda Hess pointed out that the examples the Times used to demonstrate their points weren't actually Millennials. Some of the people quoted in the article were as old as 37, which was considered elderly only 5,000 short years ago.
The age of employees of The Wire, the humble website you are currently reading, varies widely, meaning that we too have in the past wondered where the boundaries for the various generations were drawn. Is a 37-year-old who gets text-message condolences from her friends a Millennial by virtue of her behavior? Or is she some other generation, because she was born super long ago? (Sorry, 37-year-old Rebecca Soffer who is a friend of a friend of mine and who I met once! You're not actually that old!) Since The Wire is committed to Broadening Human Understanding™, I decided to find out where generational boundaries are drawn.
The Barefoot Contessa’s latest cookbook doubles as an insight into the workings of “the most cherished celebrity couple in the world.”
There are some couples in pop culture who are more than simply couples. Barack and Michelle. Rita and Tom. Ellen and Portia. Bey and Jay. They could always break up—romance is romantic in part because it is so fundamentally fragile—but the more urgent point is that nooooooooooonono they can’t break up, because their enduring togetherness suggests not just that contemporary coupledom can work, but also that a chaotic world can be made sensible, and the cruelties of entropy can be resisted, through that most unpredictable and yet stabilizing of things: love.
Ina and Jeffrey—Garten, officially, but they have also, at this point, transcended their shared surname—make up one of those couples. They are, in fact, according to one assessment, “the most cherished celebrity couple in the world.” The Gartens met in the ’60s, when he was a student at Dartmouth and she caught his eye as she was visiting her older brother there; they married when she was 20 and he was 22. And nearly five decades later, now that Ina is a culinary celebrity and Jeffrey is an occasional guest star on her popular Food Network show, they seem more in love than ever.
In the Republican nominee’s nostalgia-fueled campaign, older voters see their last chance to bring back the 1950s. But he could be starting to lose them, too.
PANAMA CITY, Florida—The crowd at the Donald Trump rally was a sea of gray and white. They hobbled on walkers and canes into the massive amphitheater, searching for a place to sit on the lawn.
They were old enough to remember a different America—an America that was great. A place of strength and confidence, where men were men and women were women, where people respected the flag and their elders and prayed to God. That was not the America they saw today.
“I am 72 years old, and I have seen our country absolutely fall apart,” Jim Smith, a gray-haired grandfather with an eagle on his T-shirt, told me. Smith retired to the beach after a career in the Army that took him all over the world; at one point, he worked for NATO running logistics in Bosnia. But today, he did not like what he saw all around him.
Just why was Tom Hanks dancing in a black-and-orange suit on Saturday Night Live so funny?
This weekend’s episode of Saturday Night Live offered a mini masterpiece: a gloriously silly Halloween-themed piece revolving around a “Haunted Elevator” ride and its unusual star attraction. Beck Bennett and Kate McKinnon played a couple looking for spooky thrills who instead found something far more bewildering: a pumpkin-suited man who would randomly appear alongside two cheerful skeletons and perform a dance routine. “Who are you?” asked a frustrated Bennett after the man (played by Tom Hanks) appeared for the second time. “I’m David Pumpkins!” came the reply.
McKinnon followed up: “Yeah, and David Pumpkins is … ?”