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.
A professor of cognitive science argues that the world is nothing like the one we experience through our senses.
As we go about our daily lives, we tend to assume that our perceptions—sights, sounds, textures, tastes—are an accurate portrayal of the real world. Sure, when we stop and think about it—or when we find ourselves fooled by a perceptual illusion—we realize with a jolt that what we perceive is never the world directly, but rather our brain’s best guess at what that world is like, a kind of internal simulation of an external reality. Still, we bank on the fact that our simulation is a reasonably decent one. If it wasn’t, wouldn’t evolution have weeded us out by now? The true reality might be forever beyond our reach, but surely our senses give us at least an inkling of what it’s really like.
President-elect Donald Trump has committed a sharp breach of protocol—one that underscores just how weird some important protocols are.
Updated on December 2 at 7:49 p.m.
It’s hardly remembered now, having been overshadowed a few months later on September 11, but the George W. Bush administration’s first foreign-policy crisis came in the South China Sea. On April 1, 2001, a U.S. Navy surveillance plane collided with a Chinese jet near Hainan Island. The pilot of the Chinese jet was killed, and the American plane was forced to land and its crew was held hostage for 11 days, until a diplomatic agreement was worked out. Sino-American relations remained tense for some time.
Unlike Bush, Donald Trump didn’t need to wait to be inaugurated to set off a crisis in the relationship. He managed that on Friday, with a phone call to the president of Taiwan, Tsai Ing-wen. It’s a sharp breach with protocol, but it’s also just the sort that underscores how weird and incomprehensible some important protocols are.
A hotly contested, supposedly ancient manuscript suggests Christ was married. But believing its origin story—a real-life Da Vinci Code, involving a Harvard professor, a onetime Florida pornographer, and an escape from East Germany—requires a big leap of faith.
On a humid afternoon this past November, I pulled off Interstate 75 into a stretch of Florida pine forest tangled with runaway vines. My GPS was homing in on the house of a man I thought might hold the master key to one of the strangest scholarly mysteries in recent decades: a 1,300-year-old scrap of papyrus that bore the phrase “Jesus said to them, My wife.” The fragment, written in the ancient language of Coptic, had set off shock waves when an eminent Harvard historian of early Christianity, Karen L. King, presented it in September 2012 at a conference in Rome.
Never before had an ancient manuscript alluded to Jesus’s being married. The papyrus’s lines were incomplete, but they seemed to describe a dialogue between Jesus and the apostles over whether his “wife”—possibly Mary Magdalene—was “worthy” of discipleship. Its main point, King argued, was that “women who are wives and mothers can be Jesus’s disciples.” She thought the passage likely figured into ancient debates over whether “marriage or celibacy [was] the ideal mode of Christian life” and, ultimately, whether a person could be both sexual and holy.
The Daily Show host was measured, respectful, and challenging in his 26-minute conversation with TheBlaze pundit Tomi Lahren.
Tomi Lahren, the 24-year-old host of Tomi on the conservative cable network TheBlaze, feels like a pundit created by a computer algorithm, someone who primarily exists to say something provocative enough to jump to the top of a Facebook feed. She’s called the Black Lives Matter movement “the new KKK,” partly blamed the 2015 Chattanooga shootings on President Obama’s “Muslim sensitivity,” and declared Colin Kaepernick a “whiny, indulgent, attention-seeking cry-baby.” At a time when such charged political rhetoric feels increasingly like the norm, Lahren stands at one end of a widening gulf—which made her appearance on The Daily Show with Trevor Noah Wednesday night all the more fascinating.
In his first year at The Daily Show, Noah has struggled to distinguish himself in an outrage-driven late-night universe. He has sometimes seemed too flip about the failures of the country’s news media, something his predecessor Jon Stewart made a perennial target. Noah’s 26-minute conversation with Lahren, though, posted in its entirety online, set the kind of tone that Stewart frequently called for throughout his tenure. The segment never turned into a screaming match, but it also avoided platitudes and small-talk. Lahren was unapologetic about her online bombast and leaned into arguments that drew gasps and boos from Noah’s audience, but the host remained steadfastly evenhanded throughout. If Noah was looking for a specific episodethat would help him break out in his crowded field, he may have finally found it.
They say religious discrimination against Christians is as big a problem as discrimination against other groups.
Many, many Christians believe they are subject to religious discrimination in the United States. A new report from the Public Religion Research Institute and Brookings offers evidence: Almost half of Americans say discrimination against Christians is as big of a problem as discrimination against other groups, including blacks and minorities. Three-quarters of Republicans and Trump supporters said this, and so did nearly eight out of 10 white evangelical Protestants. Of the latter group, six in 10 believe that although America once was a Christian nation, it is no longer—a huge jump from 2012.
Polling data can be split up in a million different ways. It’s possible to sort by ethnicity, age, political party, and more. The benefit of sorting by religion, though, is that it highlights people’s beliefs: the way their ideological and spiritual convictions shape their self-understanding. This survey suggests that race is not enough to explain the sense of loss some white Americans seem to feel about their country, although it’s part of the story; the same is true of age, education level, and political affiliation. People’s beliefs seem to have a distinctive bearing on how they view changes in American culture, politics, and law—and whether they feel threatened. No group is more likely to express this fear than conservative Christians.
A single dose of magic mushrooms can make people with severe anxiety and depression better for months, according to a landmark pair of new studies.
The doom hung like an anvil over her head. In 2012, a few years after Carol Vincent was diagnosed with non-Hodgkin lymphoma, she was waiting to see whether her cancer would progress enough to require chemotherapy or radiation. The disease had already done a number on her, inflating lymph nodes on her chin, collar bones, and groin. She battled her symptoms while running her own marketing business. To top it all off, she was going through menopause.
“Life is just pointless stress, and then you die,” she thought. “All I’m doing is sitting here waiting for all this shit to happen.”
When one day at an intersection she mulled whether it would be so bad to get hit by a car, she realized her mental health was almost as depleted as her physical state.
Hallucinogens may help people break free of destructive thoughts and addiction. Can a “mystical experience” be had legally?
TOWSON, Maryland—Kathleen Conneally had smoked since she was 12, but one day in the spring of 2013, that changed in an instant. Conneally arrived at a lab in Baltimore that looked more like a cozy living room, with a cream-colored couch and paintings of mountains on the walls. She took a pill from a golden goblet and popped it in her mouth. Under the watch of a pair of trained guides, she began to see wild colors, shapes, and ideas. She began, for lack of a better term, to trip.
Conneally was a participant in an addiction study conducted by researchers at Johns Hopkins University, who wanted to determine whether the relentless pull of nicotine could be weakened by another drug: psilocybin—the active compound in magic mushrooms.
At the time of this writing, the Powerball jackpot is up to $1.5 billion. The cash grand prize is estimated at $930 million.
In a Powerball draw, five white balls are drawn from a drum with 69 balls and one red ball is drawn from a drum with 26 balls. If you match all six numbers, you win the jackpot. If you match only some of the numbers, you win a smaller fixed prize.
At $2 for each ticket, then, it would be possible to buy every possible ticket for $584,402,676. As a journalist, I don’t have that much money sitting around, but either a consortium of a few million Americans or a large and wealthy institution like a bank could conceivably assemble that level of cash.
A few weeks ago, I was trying to call Cuba. I got an error message—which, okay, international telephone codes are long and my fingers are clumsy—but the phone oddly started dialing again before I could hang up. A voice answered. It had a British accent and it was reading: “...the moon was shining brightly. The Martians had taken away the excavating-machine…”
Apparently, I had somehow called into an audiobook of The War of the Worlds. Suspicious of my clumsy fingers, I double-checked the number. It was correct (weird), but I tried the number again, figuring that at worst, I’d learn what happened after the Martians took away the excavating machine. This time, I got the initial error message and the call disconnected. No Martians.
“A typical person is more than five times as likely to die in an extinction event as in a car crash,” says a new report.
Editor’s note: An earlier version of this story presented an economic modeling assumption—the .01 chance of human extinction per year—as a vetted scholarly estimate. Following a correction from the Global Priorities Project, the text below has been updated.
Nuclear war. Climate change. Pandemics that kill tens of millions.
These are the most viable threats to globally organized civilization. They’re the stuff of nightmares and blockbusters—but unlike sea monsters or zombie viruses, they’re real, part of the calculus that political leaders consider everyday. A new report from the U.K.-based Global Challenges Foundation urges us to take them seriously.
The nonprofit began its annual report on “global catastrophic risk” with a startling provocation: If figures often used to compute human extinction risk are correct, the average American is more than five times likelier to die during a human-extinction event than in a car crash.