Calling horse manure on National Review

A Missed Opportunity at the Fed

 

If it chose another course, the Fed could minimize that danger while also doing more to enhance its ability to fight recessions. Targeting spending throughout the economy, so that it grows at a steady 4 percent rate, would allow inflation to go up and down in response to trends in productivity while sticking to the 2 percent average. It would generate lower inflation during a boom, which is when it’s most desirable. The Fed should also abandon its post-2008 policy of paying banks interest on excess reserves, which has unduly complicated its ability to hit any target. (It’s one reason there has had to be so much quantitative easing for so little payoff: Banks have been discouraged from lending out the new money.)

We shall examine the chart since the editors of the national Review are too stupid to read a chart. 

Look carefully.  The excess reserves basically follow the Fed treasury purchases. The treasury purchases are needed to tax the banks, as the government is basically broke. So the banks respond with excess reserves because they want to avoid the tax collecting job as much as possible.

The editorial is almost entirely driven by National Review being a bunch of damned welfare bums who want their special interest funded at the expense of the middle class.  The National Review crowd are the same bunch of welfare bums we find among the California unions, robbing the poor and middle class.

Even Kevin Drum gets very tiny clues:

Like most taxes, tariffs on goods and services get passed along to consumers in the form of higher prices.

Kevin will soon apply this to the Fed tax collector. Except the taxes applied to the household are three time higher than the tariffs, at 150 billion.  So, right out of Kevin Drums head, we have one of the mis-educated students of Krugman relearning economics. He is actually connecting dots here.

Also note, in the graph.  During this last tax hike the regulated banks are surrendering, closing down and letting the tax fall through to whatever is left. So, we know who to blame, all the fools who failed at connecting the dots, failed the Lucas criteria.