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.
Passengers on a domestic flight deplaning in New York were asked to present ID by Customs and Border Protection agents—a likely unenforceable demand that nevertheless diminishes freedom.
American citizens had their introduction to the Trump-era immigration machine Wednesday, when Customs and Border Protection agents met an airliner that had just landed at New York’s JFK airport after a flight from San Francisco. According to passenger accounts, a flight attendant announced that all passengers would have to show their “documents” as they deplaned, and they did. The reason for the search, Homeland Security officials said, was to assist Immigration and Customs Enforcement in a search for a specific immigrant who had received a deportation order after multiple criminal convictions. The target was not on the flight.
After days of research, I can find no legal authority for ICE or CBP to require passengers to show identification on an entirely domestic fight. The ICE authorizing statute, 8 U.S.C. § 1357, provides that agents can conduct warrantless searches of “any person seeking admission to the United States”—if, that is, the officer has “reasonable cause to suspect” that the individual searched may be deportable. CBP’s statute, 19 U.S.C. § 1467, grants search authority “whenever a vessel from a foreign port or place or from a port or place in any Territory or possession of the United States arrives at a port or place in the United States.” CBP regulations, set out at 19 C.F.R. § 162.6, allow agents to search “persons, baggage, and merchandise arriving in the Customs territory of the United States from places outside thereof.”
When President Obama left, I stayed on at the National Security Council in order to serve my country. I lasted eight days.
In 2011, I was hired, straight out of college, to work at the White House and eventually the National Security Council. My job there was to promote and protect the best of what my country stands for. I am a hijab-wearing Muslim woman––I was the only hijabi in the West Wing––and the Obama administration always made me feel welcome and included.
Like most of my fellow American Muslims, I spent much of 2016 watching with consternation as Donald Trump vilified our community. Despite this––or because of it––I thought I should try to stay on the NSC staff during the Trump Administration, in order to give the new president and his aides a more nuanced view of Islam, and of America's Muslim citizens.
Long after research contradicts common medical practices, patients continue to demand them and physicians continue to deliver. The result is an epidemic of unnecessary and unhelpful treatments.
First, listen to the story with the happy ending: At 61, the executive was in excellent health. His blood pressure was a bit high, but everything else looked good, and he exercised regularly. Then he had a scare. He went for a brisk post-lunch walk on a cool winter day, and his chest began to hurt. Back inside his office, he sat down, and the pain disappeared as quickly as it had come.
That night, he thought more about it: middle-aged man, high blood pressure, stressful job, chest discomfort. The next day, he went to a local emergency department. Doctors determined that the man had not suffered a heart attack and that the electrical activity of his heart was completely normal. All signs suggested that the executive had stable angina—chest pain that occurs when the heart muscle is getting less blood-borne oxygen than it needs, often because an artery is partially blocked.
Several critical policy question remain unanswered about the emerging GOP plan: How much will it cost? How will they pay for it? How many people will be covered? And what will happen to the parts of the current law that people like the most?
In the 25 years that John Boehner served in Congress, the former House speaker said on Thursday in his eye-opening moment of candor, “Republicans never, ever, one time agreed on what a health care proposal should look like. Not once.”
The happily-retired Ohioan was explaining to a health-care conference in Orlando why he believed his party would fail to deliver on its longstanding pledge to repeal and replace the Affordable Care Act. Boehner’s prediction, which was reported by Politico, captured the headlines, but the history lesson that accompanied it shouldn’t have come as a surprise: Not only have Republicans never agreed on health care, the modern conservative movement has never before seen it as a priority to reform the entire U.S. system. That’s one of the many reasons why the GOP is struggling so mightily to replace Obamacare now. While Democrats famously tried and failed to enact universal healthcare for decades before the ACA finally won approval in 2010, the only GOP proposals that have advanced in Congress have been far more limited in scope, like the creation of a new prescription-drug program under President George W. Bush in 2003.
Two of the world’s three richest people extol the virtue, and relevance, of optimism in the age of Trump—and predict a comeback for fact-based discourse.
Bill Gates, the world’s richest man, and Warren Buffett, the third richest, are—not entirely coincidentally—two of the most unremittingly optimistic men on the planet. So when I met the two of them in New York recently to talk about the state of humankind, and about the future of American democracy, I had a clear understanding of my mission, which was to pressure-test their sanguinity at every turn.
I tried, and failed, though not completely. Both men appear to doubt some of President Trump’s innovations in rhetoric and policy. Both men have warm feelings about immigrants, and also about facts, and so are predisposed to react skeptically to recent developments in the capital. When I asked whether they believed America needed to be made great again, Buffett nearly jumped out of his chair: “We are great! We are great!” And when I asked about the Trump Administration’s problematic relationship with empiricism, Gates said, “I predict a comeback for the truth.” He went on to say, “To the degree that certain solutions are created not based on facts, I believe these won’t be as successful as those that are based on facts. Democracy is a self-correcting thing.”
Did the prank with “Gary from Chicago” and his band of tourists humble Hollywood—or just condescend?
If the last-minute twist at the Oscars was seen to echo all the last-minute twists in American culture lately—the Super Bowl, the election—a silly five-minute segment earlier in the night should be noted for what it captured about the country’s ongoing tensions and tastes in iPhone peripherals.
Host Jimmy Kimmel’s team arranged for a sightseeing bus of supposedly “real” tourists to walk into the room, expecting a museum exhibit about the Oscars but instead finding themselves in the middle of the actual thing. “Welcome to the Dolby Theater,” Kimmel announced. “This is the home of the Academy Awards, which are, in fact, happening right now.”
You can tell a lot about a person from how they react to something.
That’s why Facebook’s various “Like” buttons are so powerful. Clicking a reaction icon isn’t just a way to register an emotional response, it’s also a way for Facebook to refine its sense of who you are. So when you “Love” a photo of a friend’s baby, and click “Angry” on an article about the New England Patriots winning the Super Bowl, you’re training Facebook to see you a certain way: You are a person who seems to love babies and hate Tom Brady.
The more you click, the more sophisticated Facebook’s idea of who you are becomes. (Remember: Although the reaction choices seem limited now—Like, Love, Haha, Wow, Sad, or Angry—up until around this time last year, there was only a “Like” button.)
Former Labor Secretary Tom Perez may be as progressive as Representative Keith Ellison, but the race for DNC chair was about the reactions each evokes—not the policies they’d pursue.
During an unusually charged race for leader of the Democratic Party, analysts and liberal commentators argued that former Labor Secretary Tom Perez, who won, was basicallyjust as progressive as Representative Keith Ellison, who was backed by progressive standard-bearers Senators Elizabeth Warren and Bernie Sanders. But they missed the point. The race for DNC chair wasn’t about policy or, for that matter, facts. It was about ideas, ideology, and symbolism—the very things that mainstream liberals are (still) uncomfortable talking about.
As Mother Jones’s Kevin Drum has argued, the very fact that the race had become so charged was “ridiculous,” since Perez and Ellison are “about equally progressive.” Or as his colleague David Corn wrote: “There’s truly not much ideological distance between the two. They are both grassroots-minded progressives.”
In an era when audiences are so sure about so much, the mistake—simple, dramatic, human—can be a wonderful thing.
Last year, the comedian Marc Maron brought the author Chuck Klosterman on as a guest on his WTF podcast. The two discussed many things (including Klosterman’s then-new book, But What If We’re Wrong?, which he was there to promote), but one of them was sports—and the particular thrill that they offer to audiences. Sporting events, Klosterman argued, promise that most dramatic of things: an unknown outcome. Unlike other widely watched events—the Super Bowl halftime show, the Grammys, the Oscars—the primary selling point of sporting events is that their endings are, by definition, unpredictable. Within them, anything can happen.
Well. While you can say a lot about the Oscars on Sunday, you can’t say that the glitzy awards show was boringly predictable. The 89th Annual Academy Awards ceremony, right at its conclusion, brought a mixture of confusion and shock and full, deep delight to its viewers as Warren Beatty and Faye Dunaway teamed up to announce the Best Picture winner and proceeded to, because of a backstage flub, announce the wrong movie. Chaos—and really, really good TV—ensued. Tired East Coasters were summoned back to their living rooms from their bedrooms, on the grounds that “ohmyGodyou’veGOTtoseethis.” Twitter erupted with jokes—about Bonnie and Clyde being at it again, about Schrödinger’s envelope, about “Dewey Defeats Truman” getting an Oscars-friendly update. It was late on a Sunday evening, and the unexpected had happened in the most unexpected of ways, and the whole thing was, as my colleague Adam Serwer perfectly summed it up, Moon-lit.