Tuesday, December 13, 2016

Yglesias needs you do better then recite bad theory

Yglesiasvrecites the usual ctheory aboutnthe right time for Congress to go spending. He talks about the Bubble Dance that Janet is going to do. Let's look at her real actions.

She lowered rates, starting in early 2015, as we see her buy short term.  Now, the bogus theory has two terms: buying treasuries, and doing bubble dance to influence expectations.

Nothing in this chart says any spending in 2013 would have been effective, where is the Yglesias evidence?  There is no evidence, the theory stands on one conclusion, Paul Samuelson did not have correct probability theory available to him, so he made shit up, and the curve relating inflation to employment is barely useful.

Economist have looked at the US economic timeline since the Nixon shock, and have never found a significant  instance where intentional government spending had the stimulus effect.  By stimulus we mean government doing the unexpected to solve some problem,it has never really happened.  Most of the economic trend has been about getting prices back to stable after the Nixon shock.

There is no analysis other than hand waving that I have seen, Yglesias simply had lunch one day and the Kanosians gave him the secret copy of the talking points.

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